of agustus there is no law at all. now, the story was an agreement with dr. king's description of the relationship between natural and positive law using the example of marriage to illustrate his view. he observed miernlg arrises from the law of nature because it channels otherwise dangerous sexual appetites towards the mutual good of the spouse, and the responsible procreation and raring of children. from these premises, story concludes if marriage be an institution derived from the law of nature, then whatever that has a natural tendency it discourage it destroy its value is by the same law prohibited. in other words story believes positive law must conform to

natural law. remarkably for the story as other natural law thinkers, positive law that conflicts with natural law is not law at all. having examined stories general philosophical work let us see how he applied his law in cases. in the case of the an american public armed vessel seized an allegedly french ship as suspected of engaging in the trafficking of slaves. the american captain asserted that the trafficking of slaves from africa to a foreign court violated the law of nations, and therefore, the con my accusation of the ship was the appropriate

penalty. stories opinion begins by claiming the law of nations rests on the eternal law of nature. the law of nature he said is deduced by correct reasoning from the right and duties of nations and the nature of moral obligation. natural law for story is the basis for the law of nations. however, story is careful to note that he as a judge only has the authority to end force the law of nations if it has not been relaxed or waived by the concept of nations as seen in their general practices and customs. indeed story was willing to enforce the fugitive slave act of 1793 in the opinion versus

pennsylvania despite the strong view that slavery was inhairptly unjust. the story, a proponent of the natural law recognizes limits on ability to apply natural law. in another setting, i have expressed a similar view about the power of the american judiciary to enforce natural law but i will leave that issue to one side for our purposes this evening. turning to the practice of slave trafficking, story writes that and i quote it can want admit a serious question that such exploitation is founded in a violation of some of the first principles which ought to govern nations.

there's obligations of good faith and morality and the eternal maxims of social justice. when any trade has these ingredients, it is impossible that it can be consistent with any system of law that proports to rest on the authority for reason or revelation, end quote. remember that story believes that positive law is the only law in so far as conforming to natural law and natural law is derived from reason. there's slave trafficking, story explains that no system of law that proports to be based on reason can sanction such

activity. therefore story writes it is sufficient to stamp any trade as interdigit by public law when it can be justly affirmed that it is rebug inapt to the principles of justice and humanity. the court held in that case that slave trafficking violated the law of nation and refused to order return of the vessel to its owners. nevertheless, for reasons of comedy the court did hand the vessel over to the french con sill despite the scart's skepticism about the true gnashalty of the ship. the interpretation, an interpretation of the natural law was thus decisive to the outcome of that case.

several features stand out in the opinion. in the primacy of natural law over positive law it is prominent as is the idea that the natural law is rooted in the common nature of man such that the natural law is universal to all mankind. we'll revisit the themes later but let me examine philosophy of positive law. as many of you know story was a self-proclaimed disciple. they emphasized the importance of tradition and the formulation of positive law. they are afraid to put men to live and trade on own private reason because we suspect stock in each man is small and the

individual is better to avail themself of the general bank and capital of nations and of ages. when surveying the men at the start of the french revolution, he observed that the best were only men of theory, lagging in all practical experience. as burke put it from the moment i read the list i say distinctly and nearly as it actually happened all that was to follow. in burke's view, the chaos of the french revolution depicted by charles kick pes in a tale of two cities was a direct result of the attempt to divorce itself from history custom, and

experience. emphasis on experience and tradition derived from the understanding of human nature believing the nature of men is detailed and no simple disposition or direction of power and to man nature or to the quality of the affairs. therefore a deep knowledge of human nature he said is required of statesmen and history and traditions are the best way of knowing what institutions of laws are best suited to human nature. now, joseph's story was of the same mind. in the introduction to his commentary on the constitution, story wrote a constitution of government is addressed to the common sense of the people and never was designed for trials of

logical skill or visionary speculation. he believed it essential for any public official to disstress the theory and cling to practice call good to rely on experience more than reasoning, more upon institutions than laws more upon checks to vice than upon motives to virtue. it is clear then that story embraced the approach to government and law making one that prizes experience and tradition over theory and novelty. the -- this theory of law making accords with stories views of natural law. as professors robert george

reminded us natural law theory distinguishes between two kinds of positive law. those that follow as logical conclusions from natural law such as laws against homicide and those that are not required by natural law but are consistent with it and these latter types of laws are called determined, and they include laws like the one requiring drivers to drive on the right side of the road. the vast majority of positive laws are determined. they require lawmakers to make judgments about the best way to achieve some end rrng deduces laws directly from natural law principle. thus they derive the behinding nature from the fact they were

promulgated by a recognized competent legal authority rather than being compelled by the natural law. a plaintiff says in the determined lawmakers should follow advice and pay as much attention to the undemonstrated sayings and opinions of persons who surpass us in experience age and prudence as to their demonstration. aristotle argued that law has no power to commend obedience except that of habit, and so laws should not be lightly changed. there's a view of law discussing enactments of emperors cautions that new laws must have some clear advantage in view such as to justify departing from a rule

of law which has seemed fair since time and memorial. stories fit comfortably with the bushing approach to positive law. the criewrnl point of similarity between the two theories is this. both assume that man kind has a fixed nature. the modern idea of a socially constructed human nature is alien to burke and the plaintiffs and therefore alien to story and as we will now see story's view of nature was cast aside by our own supreme court as it exited the 20th century and entered the 21st.

how it would be today had this not been so. in the 1992 abortion case the opinion famously or perhaps for some infamously incerted the following. at the heart of liberty is the right to define one's own concept of existence of meaning of the universe and of the mystery of human life. beliefs about these matters could not define attributes of personhood where they normed under the compulsion of the state.

it's been much criticized and indeed it's been said that this right salt could mean virtually anything, but regardless of whether one believes that the passages are beknown the philosophical premise is clear. the law can want assume that human nature has an objective reality. the pass camming -- the passage does not deny human nature but encysts the law can want reflect a particular conception of human nature. as the passage says, each is to decide for ourselves what defines our existence ands mystery of life. story by contrast believed that man's nature gave rise to

specific institutions, duties, and principles of morality that can be embodied in law where natural law philosophy transcend the individual, casey's victim presumes an awe autonomy of self that makes the individual the sole arbiter of what is true. moreover, it's important to understand that this passage makes a claim about the nature of liberty and rights. it purports to be construing supreme court presence dense but it's language is far broader. it's theoretical implications are far more ambitious than the court's descriptions of liberty had be prior to casey. it's implications are profound.

because if the law cannot protect human nature, it necessarily protects a subjective one. casey thus places a conception of human nature at the heart of the liberty protected by our constitution. this is found in the court's 2003 decision which struck down a texas criminal prohibition on homo sexual sodomy stating that liberty as a regime rule should counsel against attempts by the the state or a court to define the meaning of the relationship or set its boundaries ab sent injury to a person or abuse of an institution the law protects.

in doing so it discounted the significance of history predating the sexual revolution as when the courts said we think that our laws and traditions in the past have century are of the most relevance here. all this is consistent with casey's relativism. after all human nature receivers as the basis for human relationships and sexuality and a subjective view of the former will lead to a subjective view of the latter. it was no accident that the example chose to show the connection between natural law and positive law was marriage. the belief in a fixed human nature logically entailed a fixed conception of marriage. having adopted the subjective

assumptions of casey they extend them to protect a relatively conception of human sexuality. now comes the united states and windsor and the past term. they defined marriage as theupon between a man and women for purposes of federal law. a deaf nation that accords with what i call the view of marriage. commentators noted it is difficult to determine the precise rationale a confusion reflected in the contrast between the chief justice report's characterization as a federalism decision and justice schee ya's view that windsor leads to invalidation of state marriage law.

notable scholars like professor hadley interpret as standing for the proposition that the deaf nighs of marriage is per se irrational, and justice alito's defense in this case pointed out supporters of doma who sounded very much like joseph, argue that there are unchangeable truths about human nature that have everyone cation -- implications for sexuality and mandate the definition of marriage. this argument has been advanced by professors george and ryan anderson in the recent book "what is marriage?" now, if windsor rejects the definition and i'm not saying so that it does a a legal

matter. that's a separate issue, then it does so on the basis that there is no on objective reality to what marriage is. the opinion repeatedly implies that marriage is not a prepolitical institution arising from the law of nature to use the words but it is instead subject to change by the state. for instance, the view has been discarded by some states in favor of a new perspective a new insight and the states have enlarged the definition of marriage but if marriage has a fixed meaning derived from man's nature, it cannot be enlarged.

if my friend is right about the holding, our jurisprudence not only protects the relative conception of marriage; it affirmatively declares there is no objective reality to marriage and that any contrary view is irrational. this goes towards ultimately declaring that the objective view of the human nature is itself the void of reason. there's a chasm between philosophy and that of the recent supreme court cases. before i elaborate, i want to know my discussion of the cases is focused on their fill philosophical assumptions, not

on their holdings. i take no position here about the scope of the cases or their application to future ones. i only wish to describe the deep tension that exists between the philosophy under girding decisions and on the one hand and justice stories on the other. that is manifested in numerous ways, and most fundment tally, story would have disagreed with the relative assumptions of casey. lawrence and windsor because it precisely mans fixed nature that makes the law appliable as our own decoration of independence makes clear. go back to story's opinion in

which he declares slave trafficking to be social justice based on the natural law philosophy. if there are principles of justice as story believed there were, those principles must exist by virtue of what it means to be a human being. if there is no such thing as stable human nature, then there can be no such universal principle. without principles, it makes no sense to speak as windsor does to protect personhood and identity since thieves words appeal to concepts inherent in all humans. from the perspective the court's recent gurs prurns is at

war with itself protecting principles of justice yet its assumptions undercut the very idea of universal principles. he would object to the willingness of the decisions to depart from history and tradition. he regarded that to positive law. remember he was cop tent to minimize importance of presexual revolution history. windsor after acknowledging the definition of marriage has existed throughout the history of civilization minimizes this significant fact in order to discuss the new perspective of same-sex marriage. when one reads passengers one is confident that story would reiterate his warning.

and i quote. the rage of theorists who made constitutions a vehicle for the conveyance of their crude and visionary government requires to be guarded against with the most unceasing vigilance unquote. the story might say the vigilance urged is replaced by the philosophical blindness of abstract theory detached from experience, tradition and the very nature of man. he probably would not have been surprised by the court's tendency like all human institutions to fall into what he perceived to be grave terror but from this perspective the damage done to the law however

predictable is compounded by their source. the faith in the law stemmed from his belief that the common law tradition was the just application of principles to the actual concerns of life. it is one thing for a legislator who is buffeted by the wind of politics and self-interest to warp the positive law. it is another for a judge who is deliberately i understandlated from such concerns to break the union of natural and positive law. the former example of reason obscured, the latter an example of reasonignored. io low me to conclude with this thought. in one of the most powerful pass

cammings in burke's reflections, he assails the french revolutionaries for disregard of the own history. he sketches an image of the future they might have had. harvesting wisdom of their ancestors to produce an idea worthy of their ideals. as burke said respecting your forefathers, you would have been taught to respect yourself. they had not chosen that path. instead, their ex-- extravagant speculations led them to despise all their predecessors and all their con seven rares and even to despise themselves until the moment in which they became truly dispickble. burke believed we are

constituted by our past and by destroying the past the french had destroyed themselves. justice joseph's story poses a similar challenge to us. we must ask whether denial of our past is a general of ourselves. we must ask whether abolition of nature is the abolition of man. i leave the answers to these questions to your own reflections. thank you very much. [applause]

>> judge, i think that expression by the audience here reflects the quality of that excellent talk today a what i consider a critical part of kinds of things that the freedom based legal scholars that are here for their conference at the present time have been fighting for giving us a firm basis to look at constitutional history in the future, and the hope that this will prarps be persuasive to your colleagues in the judiciary in the united states. it's now time to turn to the audience and to open it up to questions, and if you'll resume the platform here. >> certainly. >> we'll ask for the first question. >> yes manny? would you wait for the microphone, give your name. >> manny from los angeles foundation and individual rights

foundation. my question for the judge is looking backwards on your own career as judge are there particular opinions that you take greatest pride in any that you like to call our attention to tonight? >> i suppose the first opinion that comes to mind would be coalition of equality versus wilson, the prop 209 case in which the vetters of the state of california voted by a substantial margin to e eliminate preferences in state employment and state contracting based on race and other considerations.

that case came up through my court, the circuit court of appeals and we determined that the proposition was institutional almost an invo -- invocation of the equal protection clause. there are some interesting language in the case. manny, you can probably recite parts of it, i don't know. i certainly remember that case very, very well. i was always reluctant to be too specific about cases because there are a lot of collateral issues and aspects that surround them, but that's one i remember very well. >> judge, thank you so much for a brilliant talk.

you mentioned a story that he couldn't end force natural law at times, but at other times used to apply jurisprudence. how did he negotiate the line and how do you? >> i think if you recall that passage he identifies that the law of nations is built upon natural law and the exclusions except to the extent it is then modified by concept of nations or when we're in that situation where it's been modified by concept of nations then you follow the law identified by that enactment, and that's, obviously the same way i approach things. there are laws i come across

quite frequently which i disagree and i'm not entirely sure they are based on what ill to be supportable premises, but they are behinding on me as a federal judge and it's my job to end force that law as it has been dually written by the congress assuming it's a federal law and to carry it out. that's the brilliant solution we have in terms of our own system of checks and balances and as burke pointed out legislators make mistake and it's not up -- in my personal view -- not up to me to correct the mistakes of legislators but follow positive law and comply with it.

>> i'm roger with the cato institute. i'll pose a critical, but not a hostile question. [laughter] >> okay, all right. >> first of all i want to commend you for taking on this subject seriously of the natural law. too few judges do and it's to your credit that you've done so. i want to then go back to distinctions drew at the outset between the natural rights tradition and natural law tradition and say that i'm with you on casey but not lawrence. here's why. you have spoken of objective conception of man and i fully agree with that as the starting point, but i wonder if you have not packed into it more than you can without facing circularity and it has to do with the fundamental and ancient

distinction between the right and the good the declaration of independence speaks of the right to pursue happiness. what makes you happy may not be what makes me happy. we have subjective values and objective rights, and that's how it is that one can distinguish between cases like casey and lawrence. lawrence, let's remember, was justified in the name of dignity, the liberty to pursue your own conception of what is right or good for you even as you respect the equal rights of others to do the same so i wonder if you care to respond to that line of argument. >> well i'll accept that is a fair comment, and i think that

there will be times when these principles start to collide. i was comfortable with what i said about lawrence because i felt very troubled by the fact that lawrence was decided pretty much on the basis of a case decided in the european court of human rights. i didn't think that that's where we should go to interpret our own constitution. i think reasonable persons differ when it comes to applying the principles and it could very well be that larches is on the cusp. if you can accept that as a response, i think that's as much as i can say.

>> walter weber with the american center for justice. again, thank you judge, for your talk. one of the dangers i see in the mystery of life approach is not unique to that is that when you have a standard that is sufficiently broad and subjective like that while it purports power and liberty of individuals but i suspect it's a grandize the power of judges because in any other context outside of abortion and sexual revolution related cases those arguments would not go anywhere. that applies to the endorsement test, and has what is and is not opinion on the questions and is your sense that the -- this is a psych loming call question but judges that adopt the positions, i assume are not doing this in attempts to constitutional

grandize, but rather than to adopt liberty for people, but i wonder if it crosses their mind that they are the institution that decides which liberties count, which ones are important and which ones are not so it's only those liberties that the judges decide are worth putting on the extra higher level opposed to being yes everyone can decide the meaning of the mystery of human life. >> i'm not quite sure what the question to me is. in the doma cases, of course, congress elected a inerm dation of -- a determination of what it perceived consistent with the constitution, and obviously there was a split of opinion on the supreme court with strong opinions going different

directions. i apologize for not locking on to the essence of the question, but can you help me more or have i have said enough? >> [inaudible] >> oh oh oh i'm sorry, of course. i think that -- and frankly, i blame the legislative branch in many respects. so often we have cases that require us to interpret statutes that are purposely vague because the members of the legislature was the congress or state legislature couldn't get the act together and couldn't agree on something so they said, all right let's pass the bill and let courts figure it out. that's irresponsible conduct on the part of the legislature.

once we get it it's our job and it's incumbent upon us to act at least in my view in a minimalist way. i don't take the position that we have this authority. our authority is limited by article three and by the judiciary agent and other constraints on us so anything giving courts the wide latitude, i think i find uncomfortable. >> judge i'm, and i think many folks are certainly troubled by a break down of education of the content of natural law is. do you have recommendations for

sources folks could go to to educate themselves or others about the natural law? >> well, the first thing i recommend is read story's entry in the encyclopedia. it's four page long a good start, and i mention some authorities in the remarks and people like relationship george at princeton and they write in that area and have good commentaries to help you and i commend them to you. >> david burrton with the heritage foundation. the framers were influenced by more than one philosophical tradition but the natural rights tradition by the historical british institution, the right the of englishmen as

articulated the scottish enlightment, but also a lesser degree the natural law tradition of acquiring. the question to you is when interpreting the institution since the framers were influenced by different and conflicting traditions how do you resolve differences, and what role does the differences between traditions play in assessing the original meaning of the constitution? >> well like i take the view that the declaration of independence has relevance to the interpretation of the constitution, and that's the view that many of my colleagues exclude the declaration as not having anything to do with the interpreting any of the bill of rights or whatever.

i take it the declarations, some of which i quoted, these are principles that have recognizable heritage. i derive from those passages the view based on natural law heritage but as mentioned in remarks there's natural law or natural rights, and i think the rights theory comes more from a scientific approach popular

mongs many philosophers. i don't regard it as confrontational. i regard it as very heavily overright. >> one more question. >> back there. ryan anderson from the heritage foundation. i don't think we mapped the last three questions from the heritage fellows but thank you for your kind words. i wonder if the problem didn't start earlier, if we go back before casey to griswald because comments discussing what marriage is why marriage matters he says those actions that would be tracked for marriage would be contrary to the natural law and in our constitutional reading the states had the police powers to promote public health safety, and morals. if this was in the viewed of subjective preference but

objectiveness and states had to promote this. with griswald, rhode casey, and lawrence, there's court cases striking down ability, and how is that contributed to the erosion of a healthy marriage culture and to a sound constitutional regime? >> that is another 45 # minute lecture i think in response. [laughter] my purpose was to identify stories and interest in the theory. where we are today is deeply cultural issue and the fundmental principle i hold dear is that it's up to the legislature to make those ships

and turns and departures clearly and overtly and not the job of the jew judiciary. that in my view, ought to be the break, ought to be the guide that remind everybody where we have come from what the country should do and mean and take that stand back and look view rather than what is current or popular at the moment because that is going to change whereas fundmental principles originally founded on really should remain true.

>> judge, thank you very much again. [applause] [applause] it is now my opportunity to present to you what we have developed here again, as part of preserving the constitution series and the defender of the institution award, and we'd like you to take it back as a remembrance of how much we appreciate both the work you've done as a judge and excellent presentation this evening. [applause] >> thank you ed i will treasure this. thank you so much. >> also this may be -- we happen to have the books here

which are commentaries on the constitution of the united states by joseph story -- [laughter] as described and commented on my thomas cooley and you probably have them in your library but now have a set at home as well. [laughter] this was thought up by my colleagues at the center, not my idea by i joined with it a familiar exposition of the constitution of the united states by joseph, and it happens to have a forward by me -- [laughter] which i want you to understand was not cop temp rain yows. [laughter] [applause] at this time we invite you to the foyer, personally meet the judge gather, and enjoy yourselves. please join us at the reception

now. thank you for being with us tonight. [inaudible conversations] [inaudible conversations] >> there are lots of stories

about slaves and free men of color who made choices, and when i began the book i was convinced that americans were the good guys and the british were the bad guys but the more i worked on this project, i became more and more convinced that as the war came to an end that it was the americans who were not the good guys. it was instead the british and the spanish who were the good guys. the british and the spanish offered freedom to their slaves. the man who served with them. they took them away from this land of bondage. for the americans? well, the americans will keep slaves in bondage until 1865 #. >> choose: fight for the u.s. or your freedom with the invading british," saturday night at nine eastern on american history tv

this weekend on c-span3. just hours after the japanese attack on pearl harbor and before her husband addressed the nation first lady roosevelt was on the radio talking with america. >> good evening, ladies and gentlemen, i'm speaking to you tonight at a very serious moment in our history. the cabinet is convening and leaders in congress are meeting with the president. the state department and army and navy officials have been with the president all afternoon. in fact, the japanese ambassador was talking to the president at the very time that japan's air ships were bombing our citizens in hawaii and the philippines and sinking one of our transports loaded with lumber on its way to hawaii. by tomorrow morning, the members of congress will have a full report to be ready for action. in the meantime we the people are already prepared for action. for months now the knowledge that something of this kind

might happen has been hanging over our heads, and yet impossible to believe impossible to drop everyday things of life and feel there was only one thing which was important preparation to meet an enemy no matter where he struck. that is over now, and there is no more uncertainty. we know what we have to face and we know we are ready to face it. >> watch the program on c-span.org/firstlady or on c-span saturday at 7 p.m. eastern and continue the series live monday as we look at first lady beth truman. >> now a discussion on u.s. health care and market competition. a panel debates whether health insurance exchanges increase competition and drive costs down. the american enterprise institute hosts this 90-minute

event. >> hello welcome to the latest installment of cultural competition here at the institute. i'm a senior political columnist and visiting fellow here working on culture of competition where we discuss competition all sorts of industries from good trucks handmade toys, banking and health care and discuss the ways in which competition in different contexts has different effects and pursuit of profit may not always produce value for all society depending op context of that. our panel today is going to discuss competition in health care competition makes it better, but others say health care is different and obamacare will change things, and we did not have a free market beforehand.

will things be better after obamacare? to discuss this, we have a panel of experts not just in health care but in health care competition. if you guys picked up the papers, you have the full bios. i'll briefly tell you the bios in a second. i wanted to note the format here. way we do at the events is not opening statements followed by q&a, but it's a discussion a question and answer from the audience, from me from us will be more interspersed. think of your questions pretty much as soon as these people start telling you their thoughts, and a final note before i introduce pammists is make sure your cell phones are silent or off. if you want to you know tweet about this feel free to do so but no phone ringing or phone conversation. we have joining us elizabeth a professor at dartmouth college of medicine and health care

delivery science a senior institute associate after harvard's institute for strategy and competitiveness coauthored redefining health care, creating value based competition on results. we have david, a chair-in-law directing the program in health, law, and policy. david was a project leader for joint undertaking for federal trade commission and u.s. department of justice. you know how much fun it should be to simultaneously work with two different government agencies at once, but he did and they turned out a 2004 report called improving health care: a dose of competition. he's author of the genera defining medicare there's a fantasy thriller in health care. thomas miller is a resident fellow here at aei focusing on health policies a coauthor of "why obamacare is wrong for america," and author of "when

obamacare fails," he's not been appointed to any positions in obama's health and human services. [laughter] he directs beyond repeal and replace project served the national advisory counsel for research and a staffer and senior analyst adviser for john mccain's presidential campaign in 2008. >> [inaudible] >> ha-ha, and so we're going to start with you david again, competition makes things better. health care is different, people say, as far as the two cliches that clash when it comes to this. in health care is it true and in which ways does competition make things better? >> so you know the quick comeback is i helped write a

400-page report talking about a variety of ways in which it could make things better and lots of ways in which the setup was not achieving that and so you know the question to ask yourself is gee what are the sources of market failure because in general competition is an effective mechanism for ensuring people get what they want at the lowest cost. there's, obviously, a whole host of factors in health care that are potential sources of market failure. you know information, barriers to entry some for good reasons so you have to go to medical school to be a physician. some of them for other protective reasons. we, the local community hospital don't want a single specialty hospital to open up particularly if they invest and refer their own patients to it. other sources of information,

other sources of market failure include limitations on ability to transact across state lines, in some ways a subset of barrier to entry problem. the fact that it's not only hard to tell whether your doctor is good before you receive treatment, but hard to tell whether the treatment was the one you needed and whether it was effective even after the treatment has occurred, and then health care's obviously expensive to say the least so for most of us if you don't have a chronic illness you don't come to the attention of the health care system frequently and you know you can't tell. it's not like buying a phone. the stakes are higher consequences for getting it wrong are higher, and you can't pick the second doctor. you know one goes on. i once wrote i would fail any

student that didn't have three sources of market failure in health care, but it's an important thought. the question, then is then what; right? you can say these are sources of market failure, we have to remedy them limit them and make information available and try and sub sigh dies the things we ought to be subsidized that are public good that are not -- that are underprovided. you can alternatively say consumers are stupid, and they are never going to get better, and so we know what's best for them and frame it in all sorts of ways to try to limit the boundaries of competition both on costs and quality grounds and that, i think, you know the fight of the provisions animated a chunk of our policy over the last 40-some years. in general the people who want

to regulate more seem to be having a fair amount of success especially at the federal level, medicare part d is a qualified exception to that. it's a question and fill philosophical question and trying to disentangle those is part of what i think the people in the room will spend the next 20 years working on. i'll stop there. >> elizabeth, you in your book and article write about value based competition and misaligned incentives. explain that and the relevance of that, please. >> thank you. there were people standing in the back before. there's two empty chairs here if there's somebody sitting on something that doesn't resemble a chair and would prefer to move. we started in on this looking at

all the student incentives in health care. you know it's well-known that you don't see the improvements in the health sector as seen in other sectors we think of occurring with competition. you have a cell phone? it probably does more for you than it did a few years ago and if you pay for that you're not super up happy about it because you get value for it but that's not the way dynamic health care tends to work. we look at incentives, wrote a piece on that in the early 1990s, but decided that you can't fix the skewed incentives in the health sector because when you change the incentives in one place they prop up someplace else. there's a grand game of whack-a-mole and as we looked

at solutions and changes overtime, you can't change it in the current structure. the problem with the structure is that the services aren't organized to deliver structure around the way value is created for patients and families. okay. this is business 10 # 1. you design the services or the product line in the way that value is created for your customers, and it's not like that in health care. as a result there's a structure where you can't fix skewed incentives without fixing the structure. if i could fix one thing you asked at lunch fix one thing with a magic wand what would it be? i fix the organization and structure of care delivery and then there's the question of okay if you don't have a magic wand, how do you get from here to there? that's an interesting discussion, but in the current

system, i don't think you can fix it as it stands, and we keep viewing, then ourselves in a trap of we either have to pay more or do less spend more or ration more but that's a false dichotomy because if we make the effort to improve the value that we deliver then you can do more for the same amount of spending or you can do the same amount for less so improving value gives us a way out of the standard political trap. >> tom, the question for you is how thoroughly can and should free market principles apply to health care? >> well we can try them have done them thus far and most of the history of health care policy is how to hide prices, how to suppress competition how to keep incumbents comfortable

opposed to open it to change forces seen throughout the rest of the economy. david's right about the traditional litany of market failures, starts with ken arrow, goes from there, and more politicized matters. we don't have discussion about government failure in health care, and david can speak to that as well, a long list of its own, and there's concerns about the rationality of consumers. we don't think about the unbounded irrationality of government policymakers, and the problem in health care and health care policy is getting to the concept of who really should be deciding and who is the customer? up until now, we know who it is. it's not the party or person spenting a fraction of the money for the cost but someone else. the prices you see to the extent you see them are part of the costs and what is really going on. we got third party payers fourth and fifth party payers

and in the examining room or billing counter opposed to those who say what do i want who is serving me better? the patient consumer is last on the list of the parties involved. a little bit of the history on this though, i mean, we think of the antitrust remedies. that came late to the table in health care field. there were a lot of abuses in terms of folks keeping other competitors out of the field with some therapeutic power in that and composed limits as to what tools antitrust can do because that's a mixed tonic which often tends to supply anticompetitive effects as much as competitive ones. the other part that's hard in this although we talked about it in health care delivery we think of health care competition only in the insurance context. well, the the insurers do it. they are the only folks who have the big wide view lens even though we dmonnize them for other things, we say well in this case they are redeemed in order to handle this opposedded

to whether even if you get the ideal insurance branner, are you still getting the effective health care beyond that insurance coverage, a whole other level on that front. why we are caught up in this other than the political dominance other than the consumers behind determining policy is the distinction between public taxpayer money and private money. because we are reaching half of the health care dollar directly spent by taxpayers or channels of government in addition to the tax subsidies, that's a dominant influence in terms of who calls the tune for the piper or the piper playing, whatever, we'll pipe it out later on in the editing. [laughter] you know there may be a threshold consideration as to whether taxpayers are getting value for the money always an interesting proposition whether it encourage randomly or occasionally, but if you want to spend own money, how do you do

that, and are you able to do that in a way to express values and preferences? >> elizabeth, on insurers as the ones to bring about and employers you've written on that; right? >> the most startling thing that i saw after writing " redefining health care" is when i worked in europe, central america, and my coauthor, mike porter, did asia africa, south america europe and the u.s. and elsewhere but you go from country to country different payment systems and sometimes two or three systems per country. all the payment systems, and the problems in care delivery are stunningly similar worldwide. they differ in low resource settings and higher resource

settings, but other than that divide, the problems are stunningly similar. it's surprising but what that said to me is getting the payment system right won't happen. there's not a right payment system and say well if you pay this way, then the problem's fixed because there's no evidence for that none, and so we need to tackle problems in health care delivery in the structure of health care delivery, and we won't fix those by the payment system. it's one of those things that isn't part of the way the press discusses the problem. we keep presuming that somehow we can get the payment right and stuff lines up. there's no evidence of that. >> i mean i certainly want to agree with most of that. that said, i think you can get payment systems wrong and they

can go wrong in different and interesting ways and you get the pathologies of you know overpaying for certain things and under paying for other things opposed to, you know, turning the screws down on everything and not trying to control quality or price per unit of service; right? we see -- i mean i would have expected hybrid arrangements to dominate for paying people because it's hard to design a pure system that's going to work well under any set of circumstances let alone the kinds of circumstances in which we're delivering health care. you know you can sort of look at different governmental programs. leave aside private programs and look at government programs and there's consequences of different choices on financing. the medicare program historically, very aggressively controls price per unit of service indifferent to the

service as a general proposition and when you control price per unit volume as an open girl people shoot pucks into the open goal and we drive increases and volume of services, and we don't know often whether the amount that's delivered is too much too late, or just like. there's informed guesses but that's quite different than another program run by the federal government which is the medicaid program. that basically doesn't pay too much attention to number of services either leaving aside the managed care portion but not only is aggressive of the controlling cost but sets the price lower than the medicare program and then guess what happens? suddenly, you got access problems because nobody's willing to take most of the patients, litely control of the number of the parties they see end up handled by the subset of

providers specializing in the area. there's the veterans administration that places its employees on salary, doesn't try to pay per unit of services. it has a different set of consequences some beneficial features some real costs, and we can sort of talk about each of those as people are so inclined. there's no perfect way to pay people better and worse ways to do it, but there's not a magic bullet to solve things. last point, i think, is set up worldwide in financing and delivery of health care services. the point that she dbt mention, but important is if you ask people in the world how happy are you with your health care system? you find almost uniformly high levels of dissatisfaction with one's health care system regardless of how it is financed

and delivered. there's some variation but in general they are not happy with the health care system no matter how it's designed, and i don't think you say that the same of other parts of the consumer products market at least not uniformly. i'm not wild about cable and we can talk about what markets you don't like, but uniform dislike is an unusual finding. i want to press on the idea of competition and there's a free market vision in a bit of an extreme and ask what the problems with that might be. imagine sort of health savings accounts so everybody is putting money away that's sort of tax preferred. you put it in a special checking account to use on health care expenses, and people are encourage to buy health plans, and so you go out and you buy a health map with a low preach

yom, but for the first whatever, a family for $6000 you pay 100%. maybe the insurer covers something, preventative stuff, but after the $6000 there's -- you split the insurer pays 80% of it until there's an out of pocket maximum. the idea is that the insurer covers it or government comes in. setting aside the problem of the person who gets cancer or hit by a bus or two busses and just saying what regular health care within 95% of what people are going to encounter you make it so that people are paying out of pocket for health care. will this introduce sort of price transparency and price competition? when paul ryan spoke about this to obama in 2009, he said, no because people won't go to the doctor enough. they don't -- inspecting sorting

to health care is different for the reason it's sensitive. people don't know enough about it and can't be educated. there's other arguments against this too in that poor people get wars health insurance even if we have a safety net so with that idea high health plans with a safety net is this going to work in the way that you know competition for smart phones worked? whoever wants to answer that first. >> well i was going to say health care traditionally is paternalist tick but it's ma termistic, mothers infants who can't walk on their own. the free market proposition is a freer market. it's not a free market because you allow people to get whatever insurance they wanted and there's legitimate reasons why people want to choose whatever subsidy of their own money spent to buy a different package of insurance. sometimes up front services are important.

we think of this in terms of middle to upper middle class values thing. might want to protect myself against bankruptcy or losing all my assets. if you are judgment proof, you look at it different in terms of access to some care rather than everything. certainly, to the extent that we reduce the cacoon or bubble in which people don't know some of the costs of care by pulling back on the all encompassing nature of subsidies or coverage of the prices, you'll get some effects. ..

>> kelso work with providers quite a bit and it is what i do but when one of the employers to work with has a puzzle because they have a

lot of employees using the emergency room for things that were primary-care services. then they transferred everybody into the health plan with so they had first dollar exposure in their praise the co pay than 100 to 200 and 250. these are plant workers and they don't see it doesn't at that point covers of the -- abuse of the emergency room did you see a dent in that? when it opened a clinic available these are insured people who have no access to care there was no place to go other than the emergency room. we talk about access liposome the money but it is

partly structure. did when we try to achieve what we try to they have the information they need? are there choices you can make? sometimes you don't you could didn't appointment cannot if you have the infection. but the other part is to do clinically integrated care we have this charge some

thieves are repeated appointments to comply. if they want to hold the job they cannot comply with all of that you can structure the care so one morning seven appointments have been in there all electronic. but to make 35 different choices if you have your health savings account good luck. with those alternatives available is not uniform that everybody doesn't like it. i am in agreement in every

country i can find people that hate the health care system in people that love it it is people who -- easier to find people who love their doctor but the higher rates of discontent when they feel the discontinuities. then to find your way back to reach care again? they need the health care system. but then to die than deep after those first pages it is the lack of continuity or clinical integration of care when they try to give people a choice. >> did is they -- important to think of the delivery side dealing with people who

don't get sick between 930 and 430. and they can wait two weeks for an appointment if we can see someone today or tomorrow they will go to the unpleasant place which is a big city emergency room or a suburban emergency room a couple of hours waiting out you can use your smart phone very inconvenient to very risky place for people to receive health care who could have problems that think of them as divergences but delivery is important. >> one of the first words

out of your mouth was tax that is another source of the market's failure you subsidize the health care system than we are surprised then we are surprised their behavior if they don't spend their own money. a lot of people get coverage through their employer and perceived a foot the bill although they do it with no wages but it is hard for them to figure out how much their employer is contributing even deficit is printed on their paychecks. or depending on how much. to make it tax preferred

maybe we should start rolling back the tax subsidies if it is not due to the cost but the last thing that is important to recognize chronic illness for a sizable share which time with the health care system. so they could be very effective hoover those it don't have major problems and worried they will say i have nothing better to do today so let's go to the doctor or they are or imaging studies.

the for those with chronic illness that you have this interesting paradox with this arrangement and then that they associated with them but then they are low risk but they never would have spent on health care. you want to think about the population that this is an effective strategy. as long as it fits all strategy's but a second bite of the apple but what you were posing some were there

will be $1 of health spent would it be the high deductible hsh plan or stuck in the middle or is it on the back end? the other end is there is more than one choice. there is a choice with regard to the type of treatment or you go to. that is the health care treatment choice. then another decision either a chronic illness or more catastrophic that is what you want to be careful how you select your insurance. then where i will go and then what we do in the general sense?

but then to extend the corridor of decision making. if it is covered by someone else to have a wider corridor of cost seven you have some element but did you use insurance with 50 percent say you see a lot of the bill either a deductible but that is the difference to pick up on the value proposition but the main ones are that is all i need to think about. said a whole bundle of things that will happen depending on their real decision maker but the other

party is we don't care if you happen to match the latest guidelines for a couple of discrete services you like to know the would not die. then maybe to fix the problem so the more reeking getting information to tell us about those types of outcomes that is a greek and ambition. that would make the types of plans are choices available real as opposed to hypothetical. but the good news is we have the affordable care act as of now patients are covered and care is affordable or maybe not.

with the question of competition either through providers or insurers are the attraction a policy how do you see obamacare harming things started with david? >> there is some of big bill some will phase in soon some will phase in already. to make predictions either listed here is a hazardous business. [laughter] but the bill was primarily broadening access through insurance. some of it is pilot projects

to change the financing arrangements in the direction of shared savings a lot of pilot projects as such as improving the health care work force. but the heart of the program is to pieces to expand medicaid with setting of the exchanges such as a marketplace. in to face death -- stiff headwind that with the supreme court decision of the states cannot opt out and flatteries seat -- remains to be seen off but if the basic claim is we are

creating competition rather wasn't any before. that is perhaps true in some sense i left off the important part does the insurance components in a way that historically with the mandated benefits standardize grouping policies but once you have taken as price competition because what else is left? maybe. it will defend forth on the population that enrolls and if people think they can make money by offering less.

some major players have declined to play. there are things that could create a particular form of competition everything has to line up properly with a set of standardized products the remains to be seen if they would buy those products if they are more expensive policies if they pay some of the difference out of pocket you could take a pass on anything below the absolute minimum standard. and the medicare supplement policies you'll see another version as well. because the price is salient and other components not so much so that is one difficulty but if the risk

pool is unfavorable things will head south very quickly and we don't know yet how that will work out. a dozen health the rollout has been so rocky you need people that are healthy since i said some. me and tom are older. him and we wished to have a free ride. [laughter] there is a lot of talk about competition and some things that have the potential of although it is a very specific type of competition that i will allow you to have rather than what you might want in terms of mixed policies.

>> so back to the bill overall is huge their parts eli kim parts that you don't but every nation is universal coverage should just roll up the health care cost all of them 40 efficiency we need access opened up because the games will stop as long as you complete more -- make more by playing the game. so if efficiency motivates you you want to push a net injection if they both do then great move in that direction. but if we're going to do to it in succeed as care for

everybody we have to change delivery. i think how do we get people to stop compute -- competing over the wrong stuff then we are tightly aligned to measure the outcomes but if we think about health care we even spell the wrong with one word that means treatment you don't want it is two words it is healthy and care in the bulls' matter so the good is health culet the carefree gives you more health. so there is a question that can we get people to measure the outcomes in ways that are meaningful for patients and families did in this bill there is some information whether the rules better written in the

implementation there is always that question how it will be implemented but there is some pretty good stuff on the outcome. >> i have to tell you. my mom is a physician i was raised with my parents thinking i would be a physician and i really really did not want to. i got as far away from taking care of people as i thought i could get. [laughter] now i have ended up back at health care because as a mom idealist to kids who have extreme problems he will never tell me we did not have skin in the game we had bones in the game all the time it is critically important so for be the notion of discipline have enough skin enough in the game when it is my son or my

mother or my father yes. that did not help us to get them well or to continue working while they were stacked -- sec none of the extra financial burdens that we put of people on their sec help us. people paid for part of it. but it is not because they don't care about the loved ones health care unless you make them pay for it just get that out of the popular discussion that is not even make sense of. >> despite what i have written in the past i am not totally critical of it. portion of the law of the spelling and punctuation is

remarkably accurate. >> in the competition cents we have to think about what type of competition is it necessary to deliver at a better place a rollover value or how do i stayed in business or what do i have to do to please the government? which is why we like to set more of the table these are the terms and this is what you have to do to remain a surviving incumbent it takes that even further to the health care competition that is washington's center in dominated it should be the concern to those who like to do a good job this said different rules being put in

place but the dangers of this environment are different from the theory but they think when it is all over and done they will be back finley's see this in other areas and then if you come from the last they're not doing what they're doing and nobody is protecting the public. the other model is about maximizing political support such talk to those that will keep you folks at the next election. i tend to favor said view of this symbiosis there is a relationship but you have to know who is dominant in who lives off the other hand act accordingly.

'' we are not going to see the mac some destructive aspects of the private sector but that is more politicized in creative destruction that this is from a better functioning market place but also behind the delivery system reforms this is what i call aggregation by yes. we have to have really big systems that is the way together he and around this and it is much easier if you only deal with a half a dozen to make sure they got the message clearly but you don't want to let those little competitors. so there is some validity so for certain types of care it makes sense to have someone in charge there is a point

it is much more of a political preference because the work better in the political market rather than functioning economically. also talking about health care delivery if we should think about it if it is not all economical or unwise variation you want to say do it this way that presumption is it is above-average. the manufacturing process has better health care things are better or worse

from the bottom up some believe may have a different way to do something little of the economic process but something will work better if you throw something against the wall something will stick with the innovation process fable find something something somebody has already done and claim credit but what we have seen this far with those organizations mixed results will not go beyond what is already working at this point you can improve quality not much evidence to

bring down costs is a difficult process that means you have to get outside the bubble to have somebody breaking in from the inside out. a couple of other quick things this is the law that says it is for transparency as long as it is not really transparent. so it is only the part that actually matters. those who only have value measures our transparent mostly designed by committees by way of government. but in general there is a tendency to hold disinformation tightly. just today going to parties to the outside we need to

improve on that front is a start in that iraq -- direction but maybe those of the more vigorous competition in one final thought of the future of the exchanges it is hard to think of it today but there will be a second stage and are these humble versions of the current exchanges that will live in the load over they will build the hubris to say we can do more we can do expand improve quality and that is the version we ought to be worried about because that is different political steam

>> two quick things before questions. i will make a quick comment eyes sought elizabeth striking down a couple of notes and we will go to questions we put together where all the top staffers of the house commerce committee those to thank you to help write the affordable care act to the drug industry as a lobbyist or the lawyers one thing is the incentive than i think that is a large part of the competition and those that help you to navigate the pace of the law with the

procedure or the product that yours deserves a positive and not the negative treatment. >> one more point? we keep talking about competition but why it is so dysfunctional do you want a weekend in the hospital? you don't want to that. that is not what you go to the hospital. so that is the wrong level of the value treated is when you get help with a condition that you have. if you think at that level

if you have type diabetes with the effective help and don't go on to kid the failure it is a lot less for your quality of life and now what you judge jean my dentist he went to think what is it you tried to achieve? think a fast set of circumstances with those outcomes it it does not have to be always serious like type diabetes. then every entity can report to the registries to improve

and clearly succeeding with patients is why they went into health care in the first place so there is a cycle when value is created. >> we have a microphone coming to you please state your name or question. >> want to say this is one of the best panels ever had with health care so thank you. with health care it seems to

me not that the health care system is broken but the health care funding is broken and sometimes that is the worry about the insurance or on the left with the government but the rates of the american people comes from the fact that many people do like their health care and are happy with it. also on the weekends you have to go to the emergency room because there is no doctor with obamacare want access be worse than under the private insurance plan because obamacare has more funding for nurses and the cna but not really opening up doctors and limiting access to general practitioners? >> i'm sure obamacare will

access to doctors be worse? >> that is the standard analogy right now we are pretty good at stimulating demand the supply-side is like being. but there is always problems of forecasting when necessary level of physicians that they see what's coming ahead kithara was a fully trained doctor it would take up your entire workday you never have

enough doctors we have to go to alternative providers that is a basic model we can argue were those lines will be drawn but inevitably we will see somebody other than a doctor did he think about how to do that review tell them it is free and paid for by somebody else than a previously happened the amir over committed on this front i think we will do some work around that we will mediate that to some degree. >> to what degree do we have anti-competitive rules keeping nurses or physician's assistants doing what they can do to what degree doctors protected by

the market base our regulatory base? just ended with the question >> there are multi disciplinary medical teams are not bringing in the people they could to help patients because of the payment structure but the forward-looking one spring and whoever they need and figure how to divide the pool of money that they get. >> i roll up my sleeves to design and you care structure with various kinds of diseases. 75% of spending is driven by the diseases we could do a lot better. the use of local roles is very helpful. with those of breast cancer a high-risk fin deaf for

your surgeon is probably not the one to guide you through that. you may need a broader team to get you through it. you need help making a lifestyle change with type two diabetes it is the held coach not the physician not who could be there on a regular basis to the dozen delays take your doctor but when you work with a group of doctors who have much more reach for all aspects aspects, they are afraid it will mess up the personal relationship. what we actually see is a

hot the physician relationship gets tighter because there is more support a and reach. and the doctors never think that is what happens but they would come in literally with their sweat from their elbows to their waist we had to get a new lab coat but at the end of the day consistently this is the most rewarding day of care i have never been involved. after a couple of lines i have patients reversing their diagnosis of diabetes. this is cool. it is different. we may end up with more care being delivered but that may not be bad. and my own physician who might interact with the

health coat very rigorously i do think it is second-class but the care that i want to. >> a lot depends on how it is done if people like kidder not. in to sort that out in to then go to the apple store in then those that are concerned then dumping people into the market to promise them they get access to care but nobody a different to deliver that is a grass -- recipe for a lot of unhappy people who felt. there are physicians and try to attempt in the longer run address some components part of the complication is it takes a long time to become

a physician. we're also bad at predicting our need for physicians. if you look at the history we thought they would be not enough not quite a pendulum that we're not that good because with a good number of doctors for% of what it is you do. with some level with the provision of some services is probably sensible why retail clinics are appealing in to buy weber not typically see a physician or the nervous practitioner who is operating according to

protocols the prices our transparent a hint there is a section of the of market you should not assume that tells you anything meaningful other than how to do with a diabetic who is 100 pounds overweight with multi system disorders but the notion there is one right way to do this and we just have to keep havering overlooks the of broad diversity of preferences preferences, the problems and ability to pay. >> there are continuing issues of practice that but there are some boundary crossing lines to their retail clinics sorting themselves out. we will not have a shortage but that is the compensation

structure and despite a couple of years of primary care that goes away and we still have problems. >> more questions? in the middle? >> both the view of talk about cost sharing the wavy structure is very blunt would it make sense is this is specific to the episode of treatment rather than and the time it takes for the earth to revolve in the sun. says.

>> it makes sense dan hardy you doing? if it is discretionary we will treated some way i was a little adult stage when they said the embassy chef for my son's open heart and a procedure was discretionary. there is a problem with implementation. that is part of the of discretion. talk about employers or should they have a role when things they find over and over for those who pay more but it's but to save for a rainy day and they don't get the early stage care for chronic disease there is a

huge movement to to distinguish between progression of something that can get awful forces if it is a one-shot or lots of major payers say we will pay for everything that prevents progression that is in a stable of a good use of the approach that you're talking about to i think. >> paradigm or cartoon version is called the you based insurance design we have decided it is terrific then there is no cost sharing. there are those of you could pay more for it. lowe's of our politically more rewarding the more

nuanced version is done through tears in insurance the interests of his treatment but who provide it. any different types of panels are groups get better results that you could pay for it to them the old key cheaper approach. if you want to go to this obstacle or special even if it does that make sense you get a lot of push back the and they have a lot of market power lately and what if you don't make him work transparent as to why in view of jay a pullback even from your cu