year. my district and the state of new jersey were hit hard by hurricane sandy. .. even when power lines go down so my question of mr. cicconi is because at&t has a large legacy

copper communications network and significant plans to deploy new fiber infrastructure how will the new fiber networks handle natural disasters like hurricanes? we know that the copper continue to operate but what happens now with the new fiber networks and you know dealing with that issue? how are you going to deal with them? >> there is unfortunately no ip technology congressman that allows you to power the line. you cannot put power over a fiber connection. fiber has many other advantages in addition to its internet capacity and one of them i think is relevant in a hurricane or a flood zone or a sandy type situation is that seawater will destroy copper and make it unrepairable. fiber is very resilient in that type of situation frank desoer our wireless networks.

we get them up and running quickly after these storms and i say that knock on wood because we are still in hurricane system. >> again i think that we all agree that these community should not lose services they rely on simply because they are unlucky enough to be in the path of the storm. so if there are you know different consequences from these replacement services with fiber i guess this goes back to the trial but what else can we do? is there anything else we can do and what are you going to do with these real world trial so so -- how do they relate to the problem that i just discussed? >> well cerc, i don't want to second-guess a decision made by other carriers but i think what trials and proper planning for the ip transition would allow is for us to discuss the capabilities of the services and

not a people surprised if you deploy a service and the fax machine doesn't work the same way and things of that nature. i do think it's iterative. the technology will evolve and frankly we can help of the ball that we know what we are trying to do. for example in our wireless home phone service we had actually asked the manufactures to add data capability. that came on line this summer so we actually have that in our wireless home phone product but i think as we go forward over the years i would expect that the wireless capabilities will evolve and change to meet those needs so that frankly it could be more robust and more reliable and provide all of the same services and more that our copper line facilities do. >> did you have your hand up? go ahead. >> thank you. one of the things we have asked the fcc to do and to put a priority on this is to initiate a separate proceeding for

disaster guidance. as the situation and men awlaki new jersey and fire island where verizon didn't know what they were supposed to do and they didn't want to rebuild their copper network but they also and had no guidance for what they should be doing instead. we think that the fcc in order to address this problem of public safety needs to get out there and start a proceeding right now first thing is we are doing this transition. we know that carriers want to put in new infrastructure as they rebuild after storms like sandy. what are their responsibility is? are they supposed to do and what can the people in those communities rely on in order to be able to rebuild their lives? we have asked that and we had 17 public interest organizations join us in asking the fcc to begin a proceeding on this and hopefully we will see action on this as soon as chairman wheeler is confirmed.

>> go ahead. with the chairman's approval, go ahead. >> i would like to point out one key thing here is to make sure we embrace the small and middle sized business market. a lot of the conversation focuses on residential and that's certainly important. the charts that i see on the site here talk about it degradation and copper-based usage at the residential level. that's not the case of the business level. that's typically the only connection in that copper facility. that copper facility can handle the powerline backup requirement it needs so we often deployed and work in parallel where we have a next generation ip technology taking care of all the those and we have the copper-based services taking care of all those other critical functions and allowing that to work its way out as time goes on. >> thank you mr. chairman. the gentleman's time has expired and the job --

chernow recognize the gentleman from missouri mr. long for five minutes. mr. chairman think well for being here today and giving her testimony. i am kind of the cleanup here so if they would have started with me we would have been done along a long time ago. [laughter] but mr. cicconi you mentioned earlier the questioning portion of this hearing that you have read the fcc's national broadband plan and being that you have read that i will remind you that they came to a conclusion the fcc national broadband plan to quote regulations require certain carriers to maintain plain old telephone service and they highlighted requirements that are not sustainable can lead to investments and assets that could be stranded. so if the fcc believes that maintaining legacy telephone service is not sustainable and investments art risk of being stranded, shouldn't the fcc changed its policies regarding

this problem? >> i do think it's appropriate for the fcc to move forward and put together an excellent planet your direction at congress's direction that has been widely endorsed and anticipated in this very issue with the words you quoted, and unfortunately we are four years along here and i don't think we have seen the implementation of some of the things that they recommended. but i remain very hopeful that once the commission is back up to full strength that they will do so and again our petition last year for the ip trials was designed in part to spur along the very process you just highlighted. >> okay. again when you are the last guy at that some of this he touched on before but let me ask you to to elaborate if you will on the types of services that would he

available through the internet protocols that are not available on the copper networks. >> well i think the ip transition, and i'm at risk of oversimplifying. i'm a liberal arts major and not an engineer but by and large it's about voice becoming simply another application riding on the internet pipeline. so as we build out fiber we are building out internet capability and voice then becomes just another application. and so i think what that provides obviously is competitive opportunities for a lot of people but it also provides much more accessibiaccessibi lity. it allows people to design and innovate based on ip so you can bring that to voice services through this ip transition some of the same innovations you are seeing in every other form of internet service. if you pull out an iphone and it goes through the app store

you can get a sense of innovation that's available. i think as we transition these networks toward ip i think we will see the same types of innovation there and i think it's obviously important for the country and from every standpoint of economic act to the date but also i think from a consumer standpoint. >> okay. i represent missouri's seven which is bring filled branson area and the southwest corner of the state and i think we can all agree out of the 435 congressional districts that i have the best one in the united states. in that area there are 11 counties, part of 11 counties so i have a lot of rural areas along with springfield and joplin branson and a lot of my constituents don't have ready access to the latest medical technology and even the number of doctors you find in urban areas and that's another topic

but can you elaborate on the types of telemedicine and mobile health applications that would be available to my constituents in the best district in the united states if they didn't have the ip services? >> well, again i think if we are able to get the broadband connections into those areas and they are full some and wired and wireless i think you have an infinite or i.d. of services available that are being actually put together by innovators today. i think our entire health care system notwithstanding the current difficulties is actually innovating quite well in terms of making records available and things of this nature. >> can you give me any more specific -- telemedicine, mobile? >> we could certainly pull

something together for you mr. long and give it to you but i don't have anything specific. >> i have zero seconds. if i had any time i would yield it back to xp the gentleman yields back and his time has expired. seeing no other members wishing to ask questions this afternoon i want to thank you for this excellent panel i am sure that the chairman would also want you to extend his heartfelt thanks for you all being here today. without anything else coming before the committee today, we will stand adjourned. [inaudible conversations]

president obama called on the house to move forward with immigration legislation that the senate passed earlier this year. he was joined by business and people from the labour industry. here is some of what he had to say. >> everybody knows that our current immigration system is broken. across the political spectrum people understand that. we know -- we have known it for years. it's not smart to invite some of the brightest minds from around the world to study here and then not let them start businesses here. we send them back to their own countries to start businesses and create jobs and embed new products someplace else. it's not fair to businesses and

middle-class families who play by the rules when we allow companies that are trying to undercut the rules work in the shadow economy to hire folks at lower wages or no benefits, no overtime so that somehow they get a competitive edge for breaking the rules. that doesn't make sense. it doesn't make sense to have 11 million people who are in this country illegally without any incentive or any way for them to come out of the shadows, get right with the law, meet their responsibilities and permit their families than to move ahead. it's not smart, it's not fair and it doesn't make sense. we have kicked this particular can down the road for too long.

now the good news is this year the senate has already passed an immigration reform bill by a wide bipartisan majority that addressed all of these issues. it's a bill that would continue to strengthen our borders. it would level the playing field by holding unscrupulous employers accountable if they knowingly hire undocumented workers. it would utter nice our legal immigration system so that even as we train american workers for the jobs of the future we are also attracting highly-skilled entrepreneurs from beyond our borders to join with us to create jobs here in the united states. it would make sure that everybody plays by the same rules by providing a pathway to earn citizenship for those who are here illegally one that includes passing a background check learning english paying taxes, paying a penalty, getting in line behind everyone who is trying to come here the right way.

so it had all the component parts. did it have everything i wanted? it didn't have everything that everybody wanted that address the core challenges of how we create an immigration system that is fair, that is just and true to our traditions as a nation of laws and a nation of immigrants. that has passed the senate by a bipartisan majority. [applause] so here is what we also know, that the bill would grow the economy and shrink our deficits. independent economists have shown that if the senate l. became law over the next two decades, our economy would grow by $1.4 trillion more than it would if we don't pass the law. it would reduce our deficits by nearly a trillion dollars. so this is in just the right

thing to do. it's the smart thing to do. now a discussion on whether or not the health care law spurs competition among insurers. timothy carney at the "washington examiner" moderates

the discussion hosted by the american enterprise institute. it's an hour and a half. >> thank you. welcome to the latest installment of our culture of competition initiative here at the american enterprise institute. i am tim carney. i'm a senior political columnist at the "washington examiner" and a visiting fellow here working on culture competition where we discuss competition and all sorts of industries from food trucks and handmade toys to health care and discuss the ways in which competition in a different context has different effects and a pursuit profit may not always produce value for all of society depending on the context of that. our panel today is going to discuss competition in health care. competition generally makes things better we say but some people say health care is different and obamacare will

change things and we didn't not have a free market beforehand will things be better after obamacare? to discuss as we have a panel of experts not just in health care but health care competition. if you picked up the papers you have the full bios. i will briefly tell you there bios in a second. i just wanted to note the format here. what we do at the offense is not open statements followed by q&a. it's going to be more of a discussion in question and answer from the audience from us will be more interspersed so start thinking of your questions now pretty much as soon as these people start telling you their thoughts. one final note before introduced the panelists is please make sure your cell phones are on silent or off. if you want to do do you know tweet about this feel free to do so but no phones ringing or phone conversations. we have joining us elizabeth olmsted teisberg 3g is a

professor at dartmouth college school of medicine and center for health care delivery science. she is also a senior institute associate at harvard's institute for strategy and competitiveness. she co-authored redefining health care creating value-based competition on results. we also have david hyman the chair in law and professor of medicine at the university of illinois where he directs the epstein program in health law and policy. david was a project leader for a joint undertaking of the federal trade commission and the u.s. department of justice and you can imagine how fun it must be to simultaneously work with two different government agencies at once but he did and they turned out a 2004 report called health care dose of competition. he's also the author of the genre defining medicare meets mephistopheles. thomas miller is a resident fellow at aei where he focuses on health policy and the

co-author of why obamacare is wrong for america and author of when obamacare fails, as a playbook for market-bamarket-ba sed reform. he is not appointed to any positions in obama's department of health and human services. he directs aei beyond repeal and replace project. he served at the national advisory council for the agency of health care research and was a hill staffer and a senior health policy analyst adviser for john mccain's presidential campaign in 2008. and so we are going to start i guess with you david. again competition generally makes things better. health care is different people say. those are the two sort of clichés that clash when it comes to this though in health care, is it true and in which ways as competition make things better?

>> so, you know the quick comeback is i wrote a 400 page report in a variety of ways it could make things better in lots of ways in which the setup was not actually achieving that. and so you know the questions to ask yourself are what are the sources of market failure because in general we think competition is a very effective mechanism for ensuring that people get what they want at the lowest possible cost. so there is obviously a whole host of factors of health care that are potential sources of the market failure. you know information asymmetries , barriers to entry some of them for good reason so we have to go to medical school to be a physician. some of them for more turf protective reasons. we the local community hospital don't want a single hospital to open up particularly if physicians can invest in

referred their own patience to it. other sources of information -- other sources of market failure and clued limitations on the ability to transact across state lines which is in some ways a subset of the barriers to entry problem. the fact that it's -- not only is it hard to tell whether your doctors are needed for your patience or see treatment or whether the treatment was the one you needed and whether it was a effective after the treatment has occurred and then health care is obviously kind of expensive to say the least. so for most of us if you don't have a chronic illness you tend not to come to the attention of the health care system very frequently. and you know you can't really tell. it's not like buying a phone where you might do it every year. the stakes are of the say higher and the consequences for getting it wrong are higher. you don't get to pick the second doctor to do the appendectomy.

i once wrote i would fail if i couldn't come up with the resources of market failure in health care i'd and it's an important but, the question then is then what? you can either say these are sources of market failure and we have to try to remedy and limit them and make information available and try and subsidize the sorts of things that we think ought to be subsidized under public goods that are going to be provided. 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 then frame it in all sorts of ways to try and limit the boundaries of competition. both on cost and quality grounds. and that i think, at the fight between those two kinds of fish

kinds of fish and it has animated a fair chunk of our health policy over the course of the last 40 years. in general, the people who want to regulate more seem to be having a fair amount of success especially at the federal level. the medicare part d is in some eyes ache qualified exception to that. i guess it's ultimately an empirical question but it's also a philosophical question. and trying to disentangle those is heart of what the people in the room are going to spend the next 20 years working on to let me stop there. >> elizabeth in your books and articles related to value-based competition and fixing misaligned incentives, explained that and the relevance of that please. >> thank you. there were people standing in back before. there are two empty chairs up here if there is anybody sitting on something that doesn't resemble a chair and would

prefer to move. so we started in on this looking at all the skewed incentives in health care. it's well-known that you don't see the kind of improvements in the health or that you see another set there's that we think about occurring with competition. do you have a cell phone? it probably does a lot more for you than it did a few years ago and if you are paying more for that you are not super unhappy about it because you are getting more value for but that's not the way the dynamic in health care tends to work. so we started off looking at skewed incentives and wrote a piece on that in the early 90s but decided that you can't fix the skewed incentives in the health sector. when you change the skewed incentiveincentive s in one place they pop up someplace else danny cortese calls it a grand game of whack-a-mole.

as we looked at the solutions and the changes that occurred over time we ended up deciding you can change 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. this is business 101. he designed the services or the product lines in the way that value is created for your customers. it's not like that in health care. as a result you have a structure where you can't actually fix the skewed incentives without fixing the structure. so if i could fix one thing and you asked at lunch if you could fix one thing with a magic wand what would it be? i would change the organization and structure of care delivery and then it becomes the question of if you don't have a magic wand how do we get from here to

there and that's it interesting discussion. in the current system i don't think you can fix the incentives as it stands and we keep viewing than ourselves in this trap. we either have to pay more or do less. spend more are rash and more. but that is 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 trend. >> tom my question for you is how thoroughly can and should free-market principles apply to health care? >> well we could try them. it would be nice to have some competition in health care. most of the history of health care policy is have to hide

prices, how to suppress competition, how to keep the incumbents relatively comfortable as opposed to open it to the type of change voices we have seen through our economy. david is right about the traditional lifting of the market failure. we don't have as much discussion about government failure in health care which has a pretty long list of its own. there is concern about the dahlia and rationality consumers. we don't think about the unbounded irrationality of government policymakers and then the fundamental problem in health care and health care policy is getting to the concept of who really should be deciding who is the customer. up till now we know who it is. it's not the patient or a person spending a fraction of the money for the cause. the prices you see to the extent you see them are far from the falling cost and what's really going on. we have third-party payers

fourth party payers fifth party payers a lot of folks in the examining room are at the billing county -- counter as opposed to folks who are saying but who i want and what am i getting and who is serving me better? a little bit of the history on this though, we usually think of the antitrust remedies. antitrust 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 so there was some therapeutic power nap. we may have exhausted the limits though as to what tools anti-trust uses because antitrust is a mixed tonic which often takes anti-competitive effects as much as competitive ones. elizabeth talks about health care delivery we often think of health care competition only in the insurance context. the insurers are the only folks that have a wide view lends even

though we will demonize them for many other things and then we will say in this case they might be redeemed in order to handle this. as opposed to weather even if you get the ideal insurance rapper are you still getting the same health care or as effective health care beyond that insurance coverage which is a whole other level on that front. the other distinction i make one of the reasons we get caught up in this aside from the political dominance of everybody but the consumer behind what determines policy is the distinction between public taxpayer money and private money. because we are now reaching half of the health care dollar directly that people spent by taxpayers in addition to tax tax subsidies that's a dominant influence in terms of who is calling the tune for the piper. the courts are like whatever. we will type it out later on in the end. there may be a threshold consideration as to whether taxpayers are getting value for their money which is always an interesting proposition whether

it occurs randomly or occasionally but then if you want to spend your own money how do you do that and are you able to do that in a way in which you can express your values and preferences? >> elizabeth insurers as the ones to imply those are even employers on that, right?. >> i think the most startling thing that i sought after writing redefining health care was when i started working in europe and other countries central america and my co-author mike porter was doing asia and africa and south america as well as europe and the u.s. and elsewhere. but, the startling thing when you go to country to country they have different payment systems and sometimes two or three payment systems for country so all these different payment systems and the jaw-dropping thing is that the problems and care delivery are

stunningly similar worldwide. they differ in very low resource settings and higher resource settings but other than that defied, the problems are stunningly similar. and what that said to me and i found it it surprising but with that said to me is getting the payment system right won't happen. it isn't a right payment system. you can't say well if you pay this way than the problem is fixed because there is no evidence for that, none. and so we need to tackle the problems in health care delivery and the structure of health care delivery and we won't fix those by a payment system. i think it's one of those things that isn't part of the way the press discusses the problem. we keep resuming that somehow we can get the payment right and then stuff would all line up and there is no evidence of that.

>> i mean i certainty want to agree with most of that. that said i think you can get payment systems wrong and they can go wrong and different and interesting ways and then you get this sort of pathologies of overpaying for certain things and underpaying for other things as opposed to you no turning the screws down on everything and not trying to control either quality or price per unit of service. so, 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 sort of circumstances let alone the circumstances in which we are delivering health care. you know you can sort of look at different governmental programs. leave aside -- look at governmental programs and you'll see the consequences of different choices in financing so the medicare program aggressively controls

price per unit of service and is completely indifferent to the volume of services as a general proposition. and guess what? when you control price per unit volume is an open goal people shoot pucks into the open goal so we start driving decreases in volume of services and we don't know often whether the amount that is being delivered is too much, too little or just right. we can make informed guesses as to the likely direction but that's quite different than another program run by the federal government which is the medicaid program. which basically doesn't pay too much attention to number of services either leaving aside the managed-care portion. but not only is it aggressive about controlling costs it basically sets the price much lower than the medicare program and then guess what happens quick suddenly you have access problems because nobody's willing to take most of the

patients. they have tightly controlled with a number of patients they will see and they will be ending up under a subset of specialties. then you can add another program that veterans administrations that places this patience on salary. it has a different set of consequences some beneficial features, some real cost and we can talk about each of those people are so inclined. the core insight here as there is no perfect way to pay people. there are better and worse ways to do it and you shouldn't expect that you will be able to come up with a magic bullet that will solve things. the last one i wanted to make is i think elizabeth has nicely set up the diversity worldwide in both financing and delivery of health care services. the point that she didn't mention but is important is if you go and ask people in different parts of 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 regardless of how it's delivered. there is some variation but in general people are not particularly happy with the health care system no matter how its design. i don't think you can say the same of other parts of the consumer product market, at least not uniformly. i'm not so wild about cable. we can talk about which parts of the market you don't like but uniform dislike is an unusual finding. >> i wanted to press on the idea of competition in health care and markets in health care, sort of a way out of something of a free market vision and a bit of an extreme and ask what the problems with that might need. and imagine sort of health savings accounts so everybody is putting money away. that is sort of tax preferred. you put it in a special checking account that you use on health care expenses people aren't courage to buy high deductible

health plans. and so you go out and you buy a health plan with a low premium and but for the first whatever for a family of $6000 you are paying 100%. maybe the insurer cover something some preventative stuff, but after the $6000 there is a split that the insurer pays 80% of it until you reach some out-of-pocket maximum. then the insurer covers it or maybe even government covers it so setting aside the problem of the person a gets cancer or the person who gets hit by a bus or two buses and just saying what regular health care within 95% of what people are going to encounter you'd make it so that people are basically paying out-of-pocket for health care. will this introduce sort of christ transparency and price competition? when paul ryan spoke about something like this with barack

obama obama said no because they won't go to the doctor enough. amounting sort of to health care is different from -- for the reason that people don't know enough about it and people can't be educated. there are other arguments against this too in that poor people will get worse health insurance even if we have a safety net so with that idea high deductible health plans still having a safety net, is this going to work in the way that competition for smartphones works? whoever wants to answer that first. >> well i was going going to say health care traditionally has been paternalistic but if that's the more paternalistic. your premise of that being a free-market proposition or a freer market proposition. it's not a free-market issue allow people to get whatever insurance they want and there are legitimate reasons where people i'd want to choose whatever subsidy their own money can be spent to buy a different

package of insurance. sometimes it's more important or family to get upfront services and that's a legitimate choice. we usually think of this in terms of middle to upper middle class values saying i want to protect myself against bankruptcy or losing all my assets. if you are judgment proof you may look at that a little bit different in terms of coverage and access to some care rather than everything. but certainly to the extent that we reduce the cocoon are the bubble in which people don't know some of the costs of care by pulling back on the all-encompassing nature of potential subsidies or coverage of those prices you will get some effects and we have seen that in the marketplace not dominating the market where there is more interest in can i do something other than go to the emergency room? there is certainly a corridor of decision-making in which many americans would be quite capable of using their money and managing it. wouldn't make perfect decisions

but the decisions thus far aren't perfect either. we have a long track record of everybody else telling us what's good for us and that is produced to system we currently have. that would provide at least a window in that direction. i will stop at that point. it's not the end-all be-all because the hsa approach solely is the same type of thing driving people to one place as opposed to other options they may want to consider and we are thinking this is not only a financial issue or subsidy issue and still not talking about what care you are actually getting or how you were getting better health through a number of steps rather than simply what is the financial transaction? >> you are right. i work with employers quite a bit. i work with providers quite a bit too. it's sort of what i do. one of the employers that i work with had this proposal going on because they have a lot of

employees, a lot of employees using the emergency room for things that work coded as primary care services and so they said -- they transferred everybody over into this sort of health plans so that people had first dollar exposure exposure and they raised the co-pays on the emergency room from 50 to 100 then from 100 to 200 from 200 to 250. these are plant workers. $250 is a lot of money and you are not seeing it dent at that point in the use of the emergency room for things coded as primary care. do you know when they did see a dent in its? when they opened a clinic that was available so that people could actually ask. these are insured people who had no access to care because there was no place to go other than the emergency room. so when we talk about access as if it were only money it's partly structure and partly not

just money. we need a broader look at what it is that is getting in the way of achieving what we are trying to achieve. so again go back and sort of look at your popular presidents. we talk about who pays and who is responsible for paying it and we talk about to be at the information they need? important things. and we need to talk about are there choices that you can make? because sometimes there just aren't so you are blocked out of access because there is no place to go and if you can get an appointment with your pcp two weeks from now but if you have an ear infection it's not going to do. the other part of having choices is being able to choose your way into clinically integrated care that will help you with the whole problem. if you look at what somebody with diabetes is supposed to do we have these charts.

33 different employments that somebody is supposed to make, some of them repeated in order to comply with what they are supposed to do as someone with diabetes. if they like to hold a job they can't comply with all of that stuff but you can structure the care so that in one morning seven of those appointments happen and follow up his electronic trade we have done that with some of them so you can change the structure so that you can make a reasonable choice but right now if you have to make 35 different choices in order to exercise the choice that you have for your health savings account, good luck. so there is a bigger problem in terms of what alternatives are available to people. the dislike of the system is not uniform. it's not uniform in the sense that everybody doesn't dislike it. it's widespread and i'm absolutely in agreement in every country i've been and i can find

people who hate the health care system and you can ice find people who love it and it's easier to find people who love their doctor. the highest rates of discontent, in places where people feel the discontinuities of care. when you feel like you and out of the hospital and got pushed off a ledge and then had to find your way back before you could get care again those people had had -- hate the health care system and that is what drives higher discontent when you read the on the first page of those reports and dive in deep. it's the lack of continuity, the lack of clinical integration of care that makes it so that what we end up with this consumer coordinated care when we are trying to give people choice. consumer coordinated. >> i think i will hit on some of the things you have heard. it's important to think about the delivery side and ask yourself how good or bad a job you are doing it dealing with people who don't get sick

between 9:30 and 4:30 and can't wait two weeks for an appointment. if they can't see someone today or tomorrow are going to go to what is often a very unpleasant place to receive health care services which is a big-city emergency room or even a nice suburban emergency room. you spend a couple of hours waiting. it's better if you have a smartphone because you can play with that unless they won't let you use it but you know it's a very inconvenient very expensive and somewhat risky place to go receive health care for people who often have problems that might be emergency. they might think of them as emergencies. they might just not be able to tap into the system anywhere else so that i think there is a tendency to focus on financing in washington but delivery is really important. the second and i want to just focus on the hsa questions is one of the first words out of your mouth was tax preferred.

that's another source of market failure. we subsidize the health care system and then we are surprised and not just the system but the financing of the system and then we are surprised that people behave as if they are not spending their own money. we have done all sorts of things to try and make that hard to figure out so lots of people get their health care health care coverage from their employer and they perceive that their employer is footing the bill but they are footing it in forgone wages but even if they recognize that it's hard for them to figure out how much their employers actually contributing if you printed on their paychecks. life is short and there better things to do than to realize the health insurance policy for a family runs 12 to $14,000 or up depending upon how rich the benefits are. so the argument for making a tax preferred as we have given tax preferences out elsewhere so it

seems to me you ought to ask a question gee maybe we ought to start rolling back the tax subsidies if we think part of the problem is people are not sensitive to the cost because everyone perceives they are spending somebody else's money. the last thing that is important to recognize and brings the two points i just made together is chronic illness is responsible for a very sizable share of delivery services. how much time people spend interacting with the health care system and a big chunk of the cost of the health care system. hsa's depending on how they are designed can be very effective for people that don't have major problems and you are worried about a small hazard pay they will say i have nothing better to do today, but let's go to the doctor or the er or a couple of imaging studies why the heck not i don't want to go to the baseball game.

i am exaggerating to make a point but for people with chronic illness you blow through the cap relatively quickly so you have this interesting paradox where you have structured their findings in arrangement in a way that basically doesn't create any good incentives at all for a big chunk of the people and the expenditures associated with them and for people who are low risk you are giving them tax subsidized money they never would have spent on health care to begin with trade so you want to think carefully about the population for whom this will actually be an effective strategy and then at least worry about the selection of people opting into or out of hsa's as long as it's not the one-size-fits-all strategy which would have its problems. >> talking about financing despite the dash what we are talking about and the question you were posing as where we going to put the doughnut hole? somewhere there's going to be a dollar of health spending that

is not subsidized. is it going to be at the front end in the traditional deductible hsa plan or somewhere stuck in the middle if you have given people preventive services or so going to be on the backend of the catastrophic coverage? the other end of that is if you think about there is more than one choice here in terms of an economizing consumer purchaser. there is a choice with regard to the type of treatment you might want to have rvu go to. or more of the front in services. that is the health care treatment choice. when choice. when do i go where do i go and who do i go to? there's another decision where this is just too big for me to handle. i've been major chronic illness or a more catastrophic situation and that is what you want to be careful about in terms of how you select your insurance plan. what does it really mean when it's in someone else's hands? have i handled a bit of the preliminaries regarding what they are going to do in a general sense? there is an older proposal which straddles us a little bit by

extending that corridor of decision-making. david you have a high deductible and 12 and la-la land nothing else goes on in your covered by someone asked. the proposal called major risk insurance was to say let's have a wider corridor of car sharing with income related caps on your out-of-pocket so you have a little bit of a progressive helmet but you use coinsurance in the old proposal was actually 50% coinsurance. you ucf a lot of the bill but not all of the bill and not at the deductible or nothing and that's the difference. to pick up on the value proposition. you need to understand there are a couple of components and it's always a juggling propositipropositi on that the main ones are what are the cause for what i'm going to be treated for not just the one time this price for this thing here and that's all you have to think about. you walk in the door and there might be of one role of other things that happened you depending upon who is the real decision-maker and the accountable physician chart

deliver payer paid the other part are the outcome measures. we don't care whether or not you happen to match the latest guidelines in terms of process of care for a couple of discrete services. you would like to know you are not going to die and secondly perhaps you will feel better or won't get worse and maybe even they will fix the problem so the more we get information that tells us about those types of outcomes balanced against the overall cost that is about function and that's a grand ambition. we are not there yet but that's a type of information which will make the type of plants or choices available to consumers you are talking about real as opposed opposed to a little bit still hypothetical. >> allalready want to now move n to all of these problems. the good news is we have something called the patient protection affordable care act so patients are now protected and care is now affordable. or maybe not.

on the question of competition neither competition among providers or competition among insurers or the interaction of policy and competition, how do you see obamacare affecting, improving or harming things starting with david? >> look it's a big bill. there are all sorts of things and it. some of it will phase end soon. some of it has faced in already. some of it may never phase end. we will have to make protections even when you have tenure as a hazardous business. that said the focus of the bill irrespective of the names of the bill ended up having was primarily broadening access through insurance. there are all sorts of other things in their some of which is pilot projects to try and improve the quality of the care that it's being delivered and to

change the financing arrangements and the direction of shared savings or value-based purchasing that has gone under of variety of names. there are lots of pilot projects on the delivery financing interface. there is stuff about improving the health care workforce. there are i.t. issues and all sorts of stuff in there but you know the heart of the program is really two pieces expanding medicaid and setting up exchanges, which are now i guess called market place or maybe it's the other way around. the medicaid rollout shall we say has faced stiff headwinds and the light of the spring courts opinions that states cannot enter out. exchange rollout i think has been show we say rocky and it remains to be seen out ultimately that's going to play out. and the basic claim if you listen to the administration as

we are creating competition where there wasn't any before. that is perhaps true in some sense but not at all true in other senses. i left off an important part of the insurance component is the substantive regulation of insurance in the way that historically the federal government has not involved in so the idea here was to try to standardize specific mandated benefits, standardize specific groupings of policies and then assume that insurers would compete aggressively once you have taken substantive policy quality provisions out so we get price competition because what else is left? well maybe. it's going to depend a lot on the population that in roles and whether or not people think they can actually make money by offering this. i think some major players have declined to play.

so, there are things which could create a particular form of competition if everything works out properly. everything has to line up more dust properly to get lots of insurers competing, offering a set of standardized products. it remains to be seen whether people ask they want to buy many of those products for two distinct reasons. one is more expensive policies where you are paying some of the difference out-of-pocket. you might just take a pass on anything below the absolute minimum standard. and the medicare supplement policies you see some version of this as well. the less expensive policies tend to be much more popular even when there are more expensive policies available because prices salient and other components not so much. that is one sorted difficulty. the other though is that the risk pool is unfavorable and if

things head south very quickly. i think we just don't know yet how that's going to work out. it doesn't help that the rollout has been so rocky. what you need are people like the young people in the audience who are healthy and can subsidize people like some of the people up here who are older i said some. i said some. me and tom who are older and wish to have a free ride. no. so i think there is a lot of talk about competition and there are some things that have the potential to create competition although it's a very specific kind of competition. it's a competition that i would allow you to have rather than a competition that you might want in terms of the make sub policies you can buy. >> elizabeth.

>> okay so back to the bill overall. it's huge and so there are going to be parts of it that you like in and parts of it that you don't like that you know every nation with universal coverage has lower per-capita health care costs than we do. not some of them conquered not most of them, got all of them. for efficiency we need access because the games won't stop as long as you can make more by playing the games. so, if efficiency is what motivates you you still want to push in that direction and if equity is what motivates you and you probably want to move in that direction in that they both motivate you, you want to move in that direction but if we are going to succeed with make sure we have care for everybody, we

are going to have to change delivery. when i think about how do we do that? how do we get people to stop competing over the wrong stuff and start competing over the right stuff, that is where we find ourselves tightly aligned. we have to measure the outcomes. we have to measure the right stuff. if you think about it we think about health care we even spell it wrong. we spell it as one word. it means treatment and you don't really want to. its health and care and they both really matter. the good is health. you only want more health care if you think it will get you more health and so there is a question about can we get people to measure outcomes in ways that are meaningful for patients and families and actually in this enormous bill there is some stuff on outcome measurement and it's pretty good. whether the rules that are written and the implementation of it --

they're a size that question when the law passes is how it will actually be implemented that there is some pretty good stuff in there on outcomes. i have got to tell you, my mom is a physician and i was raised with my parents thinking that i would be a physician and i really didn't want to. i have a ph.d. in engineering and got as far away from taking care of people as i thought i could get. i ended up back in health care because as a mom i have dealt with two kids who had extreme problems. you will never ever tell me that we didn't have skin in the game. we had skins and -- skin and i had bones and i had parents in the game all the time. it's critically important so for me this notion of does someone have enough skin in the game? when it's my babies skin and when it's my sons skin or my

mother's or my father's skin or my father-in-law's skin that's plenty. it didn't help us to get them well. it didn't help us to continue working while they were sick. none of the extra financial burdens that we put on people while they are sick help us to be more responsible in taking care of our families. so there are reasons to have people paying for part of it. there are but it's not exist they won't care about their loved one's health care amnesty make them pay for it. ..

like to set more of the table in term of these are the terms and here is how you succeed, and this is what you have to do remaining a surviving incumbent who will be around after the dust settles. it's the transmore make even further that is a type of health care competition which is more washington-centered, bureaucrat and government dominated. it should be the greater concern to health care providers who like to do a good job and the patients would like to receive one. there's a difference, you know, world maker being set in place even further than already before. the danger of this type of

competitive environment. you can spin your different academic theory. the old one used to be when it's over and done watch out for the boys in industry it will be big capture. the big dog eats one again. the public utility regulation and it's somewhat a smoke game. if you are coming from the left the evaluate interests are doing what they're doing and nobody is protecting the public. the other model of this is to say it's about maximizing political support. you might toss a few providers or health care interests over the side if it will get you votes a the the next election. i tend to favor more of a view of biological sense. that there will be an interrelationship between the interest in the health care industry and the government. you have to know who is dpom nant and who is submissive. what we're not going see is very much creative destruction. we may see some destruction in

aspect of the private sector. that's more than -- creative destruction, which from this arises a more efficient and better functioning health care marketplace. there's also behind most of these delivery system reforms, this is a thinking of the folks who design this. what i calling a gracious bias. we have to have really big systems. tbhaws the way we get our hand around this. it's much easier if you're looking in washington's only deal with a half dozen dominant players or big systems in order make sure they got the message clearly. what you don't want is the scattered competitors who are messy to round up and deal with. and so although there are some politically insane for certain type delivery of air, it makes sense to coordinate, integrate, and have someone in charge what is happening and responsible for it. there's a point beyond this where it's more of a political

preference for things because they look better in the political marketplace than whether or not functioning economically. there's also, i think we haven't talked about in term of thinking about health care delivery. when we should be thinking of it as how to get a better version of a commodity being delivered, or whether, in fact, there's a lot of variation. it's not all uneconomically or unwise variation. when you want to prescribe you want to do it this way and everybody will fall in to place. that presumption also then is everybody will be lifted up to become above average. once they have the right secret ingredient and follow the formula. the manufacturing process works and you have better health care. in fact, we know some things about what is going on in delivery of health care. there are things better or worse. and some no-brainers. there's a lot of mystery from the botment to up sense of things you might find out

someone has a different way to do something and it works. that's the scientific process, the medical process, let alone the comirk process. -- economic process. the pilot i often bring in the slide of the cam -- air force at this point. in the law there's sudden a medley of science fair project. if you throw enough at the wall, something will stick. one of those will work. what is going to happen in term of the innovation process through cms and the government is they'll find something already has done in the private sector and claim credit and hope they can scale it off. what we have seen thus far in the accountable care organizations, mixed result but not likely to go beyond. medical home you can improve quality not much evidence thus far you're bringing down costs. it's a difficult process, which means so you to get outside the bubble for someone to break in

and have others follow them think they diabetes design it from the inside out. a couple of other quick thicks. transparency, it's a law that said we're for transparency as long as it doesn't make real prices transparent. we can give you the artificial. it's at war in term with the transparency that matters. we have a long effort to make value measures or quality measures or cost measures more transparent. again, mostly designed by committees by way of government. something will come forward on that, but in general, there's still a tendency to hold the information tightly within the political process. there's a letter going the hill today from the good parties on the outside saying we need to open up the process. more people need to get to lay-in this place. it's not a narrow preserve far couple of folks. we need improve on that front. same type of thing in term of payer claim data base. it it's a start in the direction, but sometimes things

that are designed by the incumbent players don't allow do you actually have a more vigorous competition you want. one final thought on the future of the exchanges. it's hard think of a future today based on what is going on. there will be a second stage. we know whether they will be humbled version of the current exchange plan that do a little bit of a job and not much more. begin to lighten the load. do they go on stage two more aggressively. build up a little hubris. proposed be some folk. we can do more. we can expand to the larger part of the marketplace. we can improve quality through the exchange and set down more rule. that's a version of the health exchange or marketplaces that we ought to be worried about if in fact it gets momentum. that's a different type of political scheme than marketed and advertised in to -- >> all right. two quick things before we move to questions. one, i'm going it make a quick comment on the political congressmennation. two, i saw elizabeth writing

down a few ♪s. she's going pick the most important and then we're going questions. the examer put together something called charting great health care cashout. all the top staffers for the senate health committee, the house commerce committee, everyone who got mention order the house or senate floor and a thank you for helping write the affordable care act have been tracking them as one by one they go and work for the drug industry. the insurance industry, as lobbyists or lawyers or consult assistants. for one thing is the incentive is ever going craft the mexico major reform. they're going to be eyeing an industry job. two, i think it's a large part of the competition. you compete to higher up the insiders who then help you navigate the amaze of the law or persuade hhs or center for medicaid and medicare services that, you know, the procedure, the product, the medical device

you're selling is one that deserves a positive treatment and not the negative. that's something that i would emphasize. but elizabeth, one point from you before we take questions from out here. >> when you think about what you're hearing from, you know, all of us, we keep talking about the competition being at the wrong level. it's over the wrong stuff, which is why it's so dysfunctional. even hospital system to hospital system, do you want a weekend in the hospital? that's the wrong level. you don't want that; right. so that's not why grow the hospital. so hospital to hospital competition is the wrong level. the right level, the level where value is created is where you get help with some health condition that you have. when you think about it at that level, then we can use better results to drive down costs. if you have type-2 diabetes and

you get effective health, and you don't; therefore, go on to kidney failure, and you don't; therefore, go on to amputation. it's a lot less expensive as well as being a lot better for your quality of life. and all the mystery of outcome measures, you know, i adopt want you judging my dentist whether or not i came out of the cleaning alive. you don't want -- [laughter] you don't want the same outcome measures for everything. you want to think about what is it that we're trying to achieve for this set of circumstances. and so and think about set of circumstance. there are meaningful, functional outcomes that patients can record. it doesn't have to be all mysterious. then every little entity can report in to registries that then enable providers to improve and presumably succeeding with patients is why they went in to

health care in the first place. there's a virtuous cycle when we focus it where value is actually created. >> all right. put up your hand if you want a question. we have a microphone that will come to you. please just state your name, state your question. we've probably got at lough them to try to make as quickly through as possible. and one last note, i want to brag that every one of these events the audience member survival rate is 1900%. [laughter] >> i wanted to say, first, i think it's one of the best panlts i've ever been on health care. so thank you. i want to go back to two comments you made and ask a question that combines them. there are problems in the health care system. it seems to me it's much more that not the health care system is broken, even though there are some problems. but that the health care funding is broken.

on the right side, that's sometimes funding in the insurance and worry about money there, on the left side it's sometimes worry about the cost of health care to government. i think the rage of the american people comes from the fact that many people do like their health care and are happy with it. that leads know the question. on weekend you have to got emergency room because there's no doctor. under obamacare won't access to md be worse than it is under a private insurance plan for most people? because obamacare and the new system have more funding for nurses and more funding for cnn a and things like that. they weren't really opening up doctor schools and they are kind of limiting access to general practitioners. >> under obamacare will access to doctors be worse? >> you've got the standard

analogy of the accelerator on the car and the brakes. right now we're pretty good at stem-- stimulating demand through obamacare. the supply side is lagging just like the delivery of the exchanges experience is lagging. a slight correction. there's always problems in forecasting beyond whatever you imagine you forecast. what are the necessary level of physicians, the long history of that. on either side of it. i believe the medical colleges are beginning to expand slots on the last year or two. it's not directly due the act itself. they see what is coming ahead. they're not going to be able to catch up with the degree to which if you presume access to a fully-trained doctor for everything you can manage, and all the preventive -- which would take up the entire workday. you never have enough doctors go around. we have to downsize and go alternative cost or alternative providers. it's a basic model that tends to

work. we with can argue where the lines will be drown. inevitably you're going to be seeing someone owner a doctor for more of the care. you think about how do that and break down the barriers for that occurring without regulatory interference and folks holding to the protection. if you tell people they're going to get everything. which they're not going get, and tell them it's free and paid for by someone else. we're already somewhat overcommitted on this front. i think we'll go some work around that are not satisfactory. we'll mediate it to some degree. >> let me -- you can answer if you would like. to what degree go we have anticompetitive roles keeping nurses or physicians assistances from doing what they can do to what degree are doctors protected by as a cartel market base or regulatory base. throw that in with the

question. >> there are situations where the multidisciplinary medical team aren't bringing in the people they could bring in to help patients because the way the payment structures are. the forward-look ones bring in whoever they need. and figure out how to divide the pool of money they get. i get out there and roll up my sleeves and work with groups designing new care structures for various kinds of diseases, you know, 75% of spending is is driive by chronic disease. if we can do that we would do a lot better. but people, the use of multiple -- look up the divorce rate for women with breast cancer. it's stunning. it's a bigger risk than death on for most people with breast cancer.

your surgeon probably isn't the person to guide you through that. you may need -- [laughter] you may need a broader team to get you through that. people who need help with making the lifestyle changes. they need to make with type-2 diabetes. it's probably their health coach, not their physician who is most able to be there with them on a regular basis on the phone talking to them through what they need. it doesn't all take your doctor. the stunning thing is when you work with a group of doctors on creating a very different multidisciplinary team that have more reach to you on a regular basis for the aspect of this, the doctors are afraid it's going mess up their personal relationship with their parents. so are the patients. people are afraid it's going get hurt. what we actually see is the physician-relationship with the patient gets tighter. because there's more support, there's more reach, and so the

relationship with the physician tends to tighten. and the doctors never think that's what is going to happen. and the patients come in worried about it. but we've had stuff where the doctors came in the first meetings literally with sweat from their elbows downtown waist we had to get them new lab coats to make it -- it's a big change to work in one of these groups. but at the end of the day, consistently we get people say, man, that's -- this is the most rewarding day of care i've ever been involved in. i'm doing an after a couple of months -- i have patients reversing their diagnoses of diabetes. this is cool. so it's different. we may end up with more care being delivered by people who aren't md. that might not be bad. i'll tell you, my own physician i interact through a health coach very regularly. i don't view it as second-class care somehow. it's the care i want.

>> yeah, i think a lot depends on how it's done as to whether people like it or not. right, we normally think of market as being good at sorting that out. do you go to best buy to buy a computer and gate level of support there. guy online, got apple store? do you use dell? and i think the work force issue is something that people are very concerned about because you damp bunch more people in to the insured market, and promise them they're going to get access to care but there's nobody at the other end to deliver the care, that's a recipe for a lot of unhappy people who vote; right. so there are provisions in the bill that attempt to in the longer run address some component of the work force issue. part of the complication it takes a long time to become a physician. we really bad at predicting our

need for physicians. if you look at the he's i -- history of reprigses we thought there were not going not enough and then too many then back to not enough. it's not quite a pendulum. we're not very got at that probably because we just dividing projection about the population against what we think is a good number of doctors per person doesn't reflect changes in what it is you do. and how it is that you go about doing it. so i think i guess the last point i wouldn't -- i would make is some level of deskilling is probably a perfectly singable thing. and not typically see a physician but a nurse practitioners is openly parking is free. the prices are transparent, and reasonable there's a section of

the market for whom it's an effective solution. it -- but again, the sort of no more questions there's one right way. and we have to keep hammering until we come up with it overlooks the broad diversity of preferences, problems, an ability to pay. >> to address the competition -- there's continuing. that's a state level issue. i don't think we want to address it at the federal end. there's boundary crossing line like the early resistance to the retail clinics. that can sort themselves over time. we know one thing. we are not going have a shortage of dermatologist in the future. we might be running short of primary care physicians. that's a company station structure. a lifestyle issue, and despite a couple of years of funding for primary care as a token.

it that all goes away. we still have a problem. more questioning in the middle here. okay. here we go. thank you. i think my question is for professor -- you talked about cost sharing copay and deductible. i've been concerned the way we structure them is blunt. given what we have learned about psychology and economics an how people react to the choices. would it make sense to move to a system where the cost sharing is more specific to the diagnose is or the episode of treatment rather than the amount of time it takes years to reinvolve around the sun. are there other barriers that reinvolve around that? thank you. >> go ahead. >> yeah. it makes sense.

traditionally they said if it's discretionary, we'll treat it one way. if nondiscretionary we'll treat it another way. i was told -- the -- that was one of part of your question is how do you -- what should the, you know, should be -- the thing is do at lough work with big employers. should they have a role here which is an interesting question. one of the things that they find over and over and over again you put in these situations where you have people, you know, pay more. then you have people using them the same way they're doing their retirement funds. saving for a rainy day. as a result they not getting the early stage care they should get for their chronic disease or places where they are at risk. so there's a huge movement by those groups to distinguish

between things that are preventing the profession of something that can get awful versus things that are one shot and lots and lots of major payers saying we'll pay for everything on the stuff that prevents presentation of things nap would be an example of good use of the kind of approach you're talking about, i think. the paradigm cartoon version is called value based insurance design, where we have decided that something is terrific and you have to have it. therefore, there will be no cost sharing. they're a little lagging in development design that say it's not worth it. you probably have to pay more for it. the more nuanced version is done through tier and insurance is

try to measure this not as much in term of the treatment but in term of who is providing it. this is how you basically distinguish among different type or panel or group of did veers get better results. it's a softer version. but you'll pay more if you say i want to go this hospital or this specialist or i want this even though it doesn't seem to make sense. one of the two limitations. you have a lot of push back on insurers from providers with market power and hospitals have a lot of market power lately. that's going away right away. and secondly, if you don't make it a little bit transparent as to why you're doing it it may look an arbitrary picking and choosing. you'll get blow back even from the customers. it's a good concept, also you have to take in the larger sense how much do people want to

engage in this. we have to have an on onramp and off ramp for people -- want to have everything their hands. if they're not treating themselves directly. but there are other folks who say just take care of me. buying a japanese car. i buy a honda because i don't want to take care of it. >> david. do you have anything on this? >> no. i have another question. you talked about market power of hospitals, and the american hospital association actually is the most consistent supporter of this law. they filed a brief to defend it at the supreme court. they lobbied for it and put up money. one thing we're seeing antidotally is provider consolidation in small practices selling out to join big hospitals because for market force that existed before

obamacare, but they think that obamacare pushes things in that direction. i wonder whether it's bad for consumers if there's less choice among providers bad for price competition and bad for choice. second, how it might effect the interactions between device providers to hospital insurers, insuressers of hospitals and how doctors and nurses fare if there are fewer people there to hire them. >> look, there are a lot of interactions here. i don't think you want to try and explain the american hospital association support for on the rounds, but there are consolidated already and want to become more so. it's a much simpler explanation. they figured they would have more people to pay the bill rather than have to giveaway charity care. and as an incident l bonus got take out the specially hospital

that were an important source of disruptive innovation in that space. so you can explain the support more simpler version. on the broader issue, you know, market consolidation proceeded the enactment in the hospital space, and, you know, it is not helped by the challenges that both the department of justice and the federal trade commission had. when you lose seven cases in a row. it tends to discourage you from taking another wack at the particular apple. it's part of the reason why the federal trade commission started doing merger and try fog challenge the consummated mergers they could demonstrate the adverse consequences they were otherwise warning on. right. and do them with administrative proceedings rather than trying to persuade a federal judge who often was golfing buddies with other people on the hospital board.

so things have changed a little bit. the challenge we already significantly consolidated the hospital market. a lot of people are receiving care in that setting to begin with. it creates some incentive for hospitals to further consolidate because go big or go away would probably be the short version of tom miller's formulation. bigger you are -- against the state medicaid program and to ensure that not only are you in every insurance product that is offered, but you're not tiered. if you threaten to exit if put in an unfavorable tier you have to be big in order make it stick. there are no shortage of examples of precisely these strategy. it didn't do much of anything to unwind the problem. how precisely it could have is a separate issue.

it creates some incentive for it to continue. some of that, again, you know, i feel like on the one hand, on the other hand person here. some of that could be procompetitive if it results in better integration of services and dpe fragmentation. if it all it results in consolidation and higher prices there's no real procompetitive benefit. it's just incumbents getting bigger, fatter, and consumers being worse off. it was the early worry about the aco. they would be largely hospital-dominated organizations and leverage -- >> and organizations. right. >> okay. well, that's at least a theory. wewaiting -- the affordable care act i suppose we'll take the plain language. ultimately, you know, i think the education presentation in golf when you take out the driver let the big dog eat. at least let it eat something for the larger providers. david is right in term of the history and hospital consolidation.

going on before. they have a few other targets they can still probably roll out. but running out of that. but the more interesting aspect what you're talking about is the vertical integration with medical practices. we have all the numbers coming in. the idea not that they're going go away entirely. the small group practices are rolling up in to a larger entity. some of that is we don't need the hassle of dealing with it. it's a bit of insulation against reimbursement cut and you are a larger organization to shelter you as things may be as tight run. that is an area in which i don't think people projengted what it's going mean for your experience of care. but it suggested as being somewhat artificially driven rather than a natural response to simply the economy's in place. and among the newer doctors they're certainly moving in that direction. i have some regular hours. i have a salary, i'm out of here. i'm not a businessman or entrepreneur anymore.

that can take away something from a medical practice. >> all right. more questions. i guess we have one more in the middle here. >> david mentioned that if the risk pool doesn't get big enough for the exchange it would go south. for someone like me, i work for the chic ran -- i'm not an health care expert. if i were to write the headline at some point in the future, health care exchange not working, failed or something like that. how would i know it happen. what it would look like? >> bankruptcies of insurance companies, market access by major players and no new players coming in. >> are they allowed to pull out -- are they allowed to exit exchanges already in? >> well, you know, there are

contracts, right. and so you can make exit costly. on the other hand, there's a constitutional right to sort of market rate of return if they fall below that and sue the government recoup their losses on this. you're going see political pushback before bankruptcies. and before you see litigation. i think the government's own estimate, the government mean the cbo own estimate are we need 7 million people of which we expect this percentage to have a sort of low risk demographic. i doubt that they would want to be bound by that now. if you don't get anywhere near it, you should, you know, sell your insurance company stocks. and, you know, unless you want to own a utility.

>> all right. >> well, my name is jamie, i'm actually european. i come from a country, spain, where there's a huge welfare system. when the economy was well, everything was nice and happy. everyone was covered. but now -- now a recession for almost three years, and suspense of federal state are transferred -- and i remember very clearly that they in which -- [inaudible] which i live come out and said we simply don't have anymore money to keep this going. we simply don't. it costs on average 600 euro which is abouted $800 per patient per day. i know, that america did the

affordable care act is nothing like any european health care system. it falls way short of that. but what is the plan of that. like, is it going expand? stay the same? are you going to a i void the system of being bankrupt in the case of a recession in the future or bad economic times? thank you. >> women, the printing presses are back in action at the department of treasury. that provides some short term relief. we haven't maxed out on the credit card completely. you should have a warm feeling in your heart you scored well on the w. h. o. now you can't pay for ten years later. look, we don't know where we're going to be in a couple of years. we have elections and further shoes to drop in term of how u it plays out. what we know from the history or early history of medicare and

medicaid they change. it won't be exactly the same system in the best world of the folks who designed this. it will get modified. but we have some longer term collisions with all of the ways in which we have racked up commitments on our credit card. that can't paid for ultimately. we are counting on the young folks to keep paying more until they run out of money. it takes care of the folk already in line to receive the services. that's pretty much a formula for the moment until there's a bit of a push back. and there's been a few -- of folks may be a pitch on college campuses. otherwise just live in your parent's basement and get on the coverage until you're 26. >> the gentleman there. >> we're seeing people to move to the high-deductible plan.

do you see there's any kind of competition in the free market. or will the reduction of choices really offset that? >> we're still not competing over the right stuff. all it's doing is changing and buying insurance. and the actual care delivery is completely different thing. so -- >> yeah, i guess part of the push -- doesn't it turn people in to more consumers whether they've got see how much money is in there. you know if it's an hsa or whatever. i want to spend the money better. i'm going look for primary care physicians who is, you know, priceless looks good to me. i'm going decide emergency room or nonemergency. in other words, doesn't the financing change the behavior of the providers? if people want something that is open on weekends, then the fact

people are spending more of their own money should line up the market with what the desires are. or no? >> i don't -- i -- so couple of things. first is when we talk about patients and families as consumers, i think we're sort of indicating that we don't really get it. they may be customers in some sense or clients in some send. -- sense they don't want to be consumers. it's not something we want to consume. it's a bad not good. health is the good. and so we want to, you know, think about it a little bit -- i think we want to think about a little bit differently on that front. >> i want you to say more on that. you hear almost a moral argument at time. it's not the sort of thing we should treat as consumers because it's fundamental and in fact a right. you're making a different argument because it's not like

chocolate. it's not something we want. there are all sorts of things we have to do. i'm a consumer of auto repair. i don't like repairing the brake pads. it's not something i like to do. or look forward to it. i goat repair them in six months! i'm still a consumer of that. a lot of times we're consumer of things umbrella. i really don't like umbrella. i use it only to offset a negative. same with going see a doctor about my knee problem. how does it be something that we would rather not buy makes not consumers. >> it's the wrong mind set about it. there's a -- there were famous study it is -- s that candidate people want more. if you and look at it, the people in those studies were given no way to distinguish between more health care and better health. they were -- there wasn't information about

how to get to better health without more health care in that. we have this -- these conventional -- we have a conventional wisdom that drives some of our thinking in health care. there's a lot of it, actually, that is misaligned with how people really think about it. people don't really want more health care. that is sort of one of the, you know, left to their own devices you would think when you look at the debate left to the own device we would spend the -- we spend all of our time, you know, seeking colon os -- probably not. same with most drugs. you don't want to take them. they have side effect, they shorten your life, they can -- so i'll stop. >> we've set the menu so it's easier to order that. tbhaws is prefinanced. what we would like to shift to to some degree someone else in

the marketplace saying i'm offering you a proposition to improve your health. i may not be a conventional health care treatment provider, here is some other things. just like we have people who for sometimes good reasons, sometimes bad reason explore alternative health or medicineman or whatever type of relief. we have not made that evolution to say what do you really want to think about for a long lifetime? not just tomorrow, not just another year. not just if someone happens will you fix me up in whatever sensitive way possible. how do keep it from happening. as we run out of money to pay for the expensive approach, people look for something else. but the menu of choices and the ability to find that as s a viable service with people who can make a profit out of doing it has been discouraged by the way in which we finance health care currently.

notwithstanding what i said earlier about hsa not being a magic solution to the problem. i think they can have potentially quite beneficial consequences. it's going depend, to some extend on the market structure on the demand side. so if you look at areas where people paying with their own money makes a difference, they have to be a reasonably appreciable share of the market. you can come up with some example even within the health care system where there's pretty good price transparency and price-based competition. and it doesn't just have to be individual consumers as long as large employers are willing to contract to send people to on a selective basis you start to see the emergence of fixed prices for bundles of service whether it's the right bundle as a second order question, but, you know, i'll do your bypass for this flat rate. it is a very different proposition than i have no idea what your bypass is going cost.

i'll only be able to figure it out maybe six or eight weeks after you've actually had the surgery. i don't think hsa are going drive much in the way of improvement on the pricing for some kinds of services. either because they can't be bundled north in a appreciable size. let me give you a concrete example dprawn a different domain. kidney die dialysis the federal government, basically, is effectively i the -- sole. the structure of that market tight reflect the way the federal government has chosen to pay for the services and the level it provides, the amount of information it demands or doesn't demand about the quality of those services. so the issue is you have to have purchasers spending their own money who care enough about those kinds of parameters for the market to respond by providing it.

>> so you can add on that and say, you know, here is an argument for employers to be involved. as large purchasers really who do care about the health and productivity of their work force they can affect change. day can help create the transformation by asking different questions than traditionally asked. what they traditionally is how cheap can the insurance be. they turn over the administration of the services to someone else and kind of stay away from it. instead they start saying, okay, let's look at how do we get really good outcomes? get people back to work really fast? and get people truly healthy then you get a different kind of involvement. there's one big firm we worked with that said that we gathered them together.

talk about care for people with diabetes, and the head of hr, the national head of hr leans on the table and said, look, i would be delighted to pay an order of magnitude more for primary care if you keep one of my employees from going through dial dialysis. it's considered a normal progression of diabetes to end up on dialysis. it's killing them financially. you know, at some point those patients then go on to medicare. the firm gets hit with a big chunk of money before they transition in to medicare. he's right. it's mostly medicare. you go on it when you're younger when you need die al sincerity. the point was they were really to totally restructure the payment as part of the restructuring the care delivery so they can get it on board. >> it's interesting to me. what a lot of people even on the right have said a virtue of obamacare is that in some ways it pushes people from the

employer-based system, which has -- which is all sort of way. you say it's not necessarily part of the -- it may be part of the current-based system, but my question is my employer might not want me missing a day of work or a week of work but doesn't care about my long-term health. it's not in japan where you're in the same company for 30 years. >> so with the argument that i was making whether you want employers in the system in or long run or not. there are a million arguments where doesn't make any sense. in the short run employers can probably create the transitions we need faster. they can probably help to hit the accelerators on the delivery care transformation we need. >> because they can be more informed and apply more market pressure? >> they with big buyers and care about your health and productivity. again, this is -- there are few things that happened in the course of working on this that i just found jaw dropping. one of them was when we work with employers on changing the

health of their employees, the financial return keeps coming in way faster than i thought. you go to people saying well, it's the right thing do. it will take five or ten years. you know, then nine months later, ten months later, the longest i've seen is 14 months later, the irr is significantly positive. because it costas lot to have people out of work. and distracted while they have family members who are sick. final comments from everybody here. go war with the army you have. and it looks like the employers are some of the few folks in the trenches fighting back for a private sector spin on health care. you can't invent an infrastructure overnight. your employer may not care about you. it is somewhat weather long-term or short term. we know you're a rental, tim.

that's okay. there's enough of a track record of the big employers trying to play a constructive role in the area. a lot more questions about smaller employer as to what their future is. but that is a distinction. you need some clout somewhere. i was going say thank you. it makes a huge amount of difference to have this kind of discussion and to get people thinking about different aspect of what do we mean by competition and how do you make it functional. i have gotten bored with the conversation about whether there's too much competition or tool. that's not what you asked. you asked how do we make it work. i applaud you for that. thank you. >> thank you as well. on the employer-based coverage. that's a dominant reality of the current system. whether it remains so is a very different question. some years ago i wrote an article called "two cheers for employment-based coverage" which

sort of -- i think i'm maybe down to one and a half tiers now. i think i persuaded tom to move from one and a half up to two not by doing anything by watching mow the market is developed. let me end with a quick ante-dote that illustrates to me a promise and peril of the issue. it could well be hip of -- my understanding is there's massive absenteeism on the first day of hunting season at the car companies in michigan. and ohio. the people who did sort of hr discovered there was immediately thereafter a spike in coronary events associated with dragging a deer from where you shot it, if you were lucky enough to do that to a car to drive it home. and so, you know, you can think about a variety of strategies. one is to prohibit people from taking the day off.

two, is to increase the copayments associated with coronary events immediately in the wake of hunting season, starting and three is what they did was to try and change the delivery system by doing it themselves. by bringing in-house people to say, you know, you might want to exercise a little bit before you go out hunting and not overstress yourself and take a break rather than -- you can think about all the delivery side innovations that might be associated with employers who interests are not perfectly ape lined to say the least. but they're not necessarily the worst the question you should ask is compared to what. if employers aren't doing it who else will do it. what is the agency mismatch they'll have with people getting coverage. thank you very much. >> thank you all for coming. let's thank the panel. [applause]

[inaudible conversations] government contractors hired to help with the health care.gov website dine and functionality testified on capitol hill today. saying that federal officials did not fully test the online insurance marketplace until two weeks before it opened on october 1st. you can see that hearing in the entirety tonight when it airs on c-span at 8:00 eastern. and at today's white house briefing, press secretary jay carney spoke about whether there

were request for more testing of the website. here's some of what he had to say. >> reporter: the administration -- the october 1st -- provide enough time for testing? it. >> it's not on monday morning quarterbacking but improving the access that americans had to the information they need. so they can shop for and purchase affordable health insurance. as i said yesterday, obviously test were done. and you know what we learned upon launch is that the problems with the site were greater than we expected and anticipated significantly. and that significant work needed to be done to fix those problems. that's what is happening. we are still only three and a half weeks to a six-month process. and the teams in place are making progress every day. and, you know, we're going, as i said yesterday, make sure that

information about the progress is being made, it's available to you through regular briefings at cms, and information that is be providing from the teams that are working on the improvement. so our focus is on getting it right. the end game here, this is a -- the fact there are problems with health care.gov is something that we acknowledge, and that's why we're addressing it dead on. the fact that, you know, some critics of the affordable care act who have worked studiously for years to try to do away with the repeal and defund it, sabotage it, are now expresses great concern about the fact that the website isn't functioning properly. should be taken with a grain of salt. we're focused on getting afford health insurance to the american people. some folks in washington,

especially republicans, of course, principally are entirely focused on preventing that from happening. -- [inaudible] >> what i said is there are regular briefings at cms where you can get your questions answered about the work being done to improve this. the basis of your question is the heart. should the website have been functioning more effectively own october first. the answer is yes. we acknowledge that. we're not satisfied. he's not satisfied. secretary sebelius is not satisfied. consumer experience is improving every day. what we're focused on and what the teams are focused on make the improvement so the goal here can be achieved which is the availability of a affordable health insurance to millions of americans.

>> announcing the launch date should have been pushed back knowing what -- >> what the president believes is the website should have been better functioning on october 19st. what you're asking me, and what, again, these questions stem from the general direction of people that wanted to either eliminate obamacare or delay it so they can eliminate it later get to the other heart of the matter. which is how much longer do you ask americans with preexisting conditions to go without health insurance? how much longer do you ask single mom with breast cancer on the day that we've -- light the white house in honor of breast cancer awareness month. how much longer do you ask her to go without health insurance? to go without coverage? and the answer is, you know, the time is now. it's available now. from day one. from october 19st americans have been able to shop for, apply for, and enroll in affordable health insurance plans. what is also true is that one

portal through which they can do that has been inadequate. it has functioned poorly. we are fixing that every day. that briefing with white house press secretary can be found in the entirety in our video library at c-span.org. this weekend booktv is live from austin for the texas book festival. coverage started saturday at 11 eastern and include two panels looking back at the november '63 assassination of jfk. sunday's coverage start at noon and includes alan weissman on our future on planet earth,. texas book festival live this weekend on booktv on c-span2. don't forget, you have a few more days to post your comments on the book club selection "walking with the wind."

congressman john lewis on the early years of the civil rights movement. on booktv.org/bookclub. now the russian ambassador discusses the current state of u.s.-russian relations on the center of global interest? -- this is a little less than two hours. [laughter] >> hi. i'm the president of the center of global interest. i welcome you here. i'm happy to be here with you

today. i hope we'll have a very interesting, nice, and deep discussion. on u.s. and russian relations. each is a rare institution because usually in washington usually i hear national position from american experts and -- to hear lately from the guy who know -- [inaudible] knows firsthand what the actual position. we can see and hear. the position on foreign policy. the united states from russian

ambassador himself. everybody knows ambassador pickering and ambassador -- and i hope we'll have an interesting -- an interesting discussion. so it makes sense of -- [inaudible] we'll have five to seven minute for each of you to speak. but still -- [inaudible] we have two microphones here in the room. we have c-span -- [inaudible] this will be be recorded by

c-span. if you would like to ask a question, i suggest you have -- [inaudible] so what is going on with the international issues? i know i will be quiet today. i think the you all enjoy always the drama the international relations. we need drama in the international relations. it's like aen interesting long time gain to -- [inaudible] enjoyed and u.s.-russian relations. if you look on the what is going on between two -- are they what are the con try dictions.

we have so many -- in which kind of -- [inaudible] how it will affect it. what the trade balance with the discussion. and so many stipulation and rumors. ..