in women's study. most departments include a fair share of nonideological academics who just offer straightforward courses, sometimes wonderful courses in women's psychology, women's history, women in literature, but ideologically fervent, statistically challenged hard liners set the tone in most women's studies department, all i've seen, and if there's a department that defies that, let me know, i'd love to visit them. by the way, conservative women, moderate women, libertarian

women, traditionally religious women left out. >> critiques of feminism and feminism in contemporary american culture led critics to label her anti-feminist. sunday, your questions live for three hours at noon eastern, and looking ahead to the new year on "in-depth," join mark levin january 5th. booktv's "in-depth," the first sunday of every month on c-span2. >> next, a hearing on a bill requiring greater disclosure of surveillance programs offered by the nsa. one of the witnesses from google said the bill is needed to restore global confidence in his firm and others which have been harmed by corporations that were with the nsa. this is a little more than an hour and a half.

[inaudible conversations] [inaudible conversations]

>> okay. you ready? >> yep. >> this hearing will come to order. welcome to the senate judiciary sub committee on privacy, technology, and the law. the subject of the hearing is the surveillance transparency act of 2013. i'm proud to say that two weeks ago i reintroduced this bill with the support of my friend and colleague senator dean heller of nevada who will be hearing from in just a moment. this bill is urgently necessary. americans understand that we need to give due wait to privacy on the one hand and national security on the other, but americans are also naturally suspicious of executive power, and when the government does things secretly, americans tend to think that that power is

being abused. this is the exactly the place where congressional oversight is useful and necessary. for months now, there have been a steady stream of news stories about the nsa surveillance programs, and yet right now, by law, americans cannot get really the most basic information about what's going on with these programs. consider this. it's been months since the prison program and tfn call records program were revealed to the public, and yet to this day, americans don't know the actual number of people whose information has been collected under those programs. they don't know how many of those people are american, and they have no way of knowing how many of these americans have had their information actually seen by government officials as opposed to just being held in a data base. the administration has taken

good steps in good faith to address this problem, but, and i'm afraid these steps are too little and they are not permanent, and so americans still have no way of knowing whether the government is striking the right balance between privacy and security or whether their privacy is being violated. i believe there needs to be more transparency. i've written a bipartisan bill to address this. it will require that the nsa disclose to the public how many people are having their data collected under each key foreign intelligence authority. it would make the nsa estimate how many of those people are american citizens or green card holders, and how many of those americans have had their information actually looked at by government agents. my bill would also lift the gag orders on internet and phone companies so that those

companies can tell americans general informs about the numbers of orders they get under each key authority and number of users whose information was produced in response to those orders. right now, as a result of those gags, many people think that american interpret companies are giving up far more information than they likely are. the information technology and innovation foundation estimates that american cloud computing companies could lose 22-$35 billion in the next three years because of concerns about their involvement with surveillance programs. the analytics firm, forester, puts potential losses much higher at around $180 billion. few companies litigated to publish limited status ticks about the requests they get,

but, again, this is too little, and it's not permanent. my bill would ensure the american people have information they need to reach an informed opinion about surveillance and protect american companies losing business from misconceptions about its role in these programs. i'm pleased to say this bill is the leading transparency bill in the senate provided by the strong coalition of company, civil liberty groups, and they gained the support of the chairman of the full judiciary committee, and i anticipate we'll soon be adding our original supporters on the to the new bipartisan bill. hopefully with some additional support as well.

i asked the director of intelligence and department of justice to provide comments 07 this bill. i added provisions in the bill, but i want to know further concerns if they have. i suspect that i'll agree with them in some cases and disagree with them in others, and in those cases, i want to have an open exchange about the disagreements. this said, i want to be clear at the outset that i have the utmost respect for the men and women of our intelligence community. they are patriotings, i think they have and do save lives. i look forward to the conversation, and with that, i turn to the ranking member, senator frank.

>> thank you. i appreciate those who will testify today. this is the first subcommittee hearing we had. i suppose given the rate of which technology develops, this will be an important subcommittee as we go along to try to strike the balance we talkedded about between privacy issues, between transparency, and national security. i look forward to this hearing to see if we have this legislation that this bill before us strikes that balance, and i come to the hearing with an open mind and realize this is really a struggle, and the congress goes through it continuously. there were issues with that, and when he authorized, but then there was a lot of the provisions that were needing to be dealt with later, and that we are continually, with

technology, trying to strike the right balance. the security leaks in the past couple years and months undermind the confidence that the public has in what we are doing here that i think is damaging, so i look forward to more transparency, whether in this legislation or some version of it or in some other way that some people are confident that their public officials have transparency in mind and the best interest of public in mind here, so with that, i look forward to hearing that testimony. >> thank you, senator flake. this is the first hearing of this subcommittee in this congress, and i'm happy to have you as the new ranking member of this subcommittee. it's now my pleasure to introduce my friend and colleague, the senator from nevada, senator heller.

we introduced and improved a version of this bill. i think that senator heller's support for the bill and his presence here speaks to the fact that transparency is a bipartisan issue. some of the best work in the judiciary committee on the issue of transparency has come from our chairman and others on our side working with folks like senator grassley and senator cornin and many others. this bill is an effort to continue that tradition. senator heller. >> thank you, mr. chairman and to senator flake. i'm real pleased to be here today. i'd like to thank you, also, for inviting me to testify. i want to thank you for holding this hearing, and, mr. chairman, i want to thank you for your leadership that you bring to the table on transparency, to the collection programs run by the nsa. this is a strong bill, rooted in the belief that nevada,

minnesota, and all americans should be provided access to reports that explain the personal communication records that the government is collecting and how many americans have had their information caught up in that collection. by now, people are aware of the collection practices by the government authorized by the patriot act and fisa amendments agent. i'm confident that the full judiciary committee will have a robust debate on the collection practices and whether or not this program should continue. i believe that the collection program mostly authorized in section 215 of the patriot act should come to an end. subsequently, i agreed to join with the judiciary chairman leahy as a principle sponsor with senator lee and senator durbin on the usa freedom act. whether there's disagreement it

should continue, i'm confident we can agree programs deserve more transparency. this is why i join senator franken to introduce the transparency act of 2013. this legislation would call for reports from the attorney general detailing the requests for information authorized under the patriot act and the fisa amendments act. the report would detail the total number of people whose information have been collected under the programs, how many americans have had their information collected, and also how many americans actually had their information looked at by the nsa. furthermore, this legislation would allow telephone and interpret companies to tell consumers basic information regarding the fisa court orders they receive and number of users whose information is turned over. the principles outlined in the bill to increase transparency for americans and private companies clear out tremendous confusion that exists with these programs.

that is why transparency reform is included in multiple nsa reform proposals including the intelligence oversight and surveillance reform agent introduced by senator wyden, the usa freedom act introduced by chairman leahy and myself, and the fisa improvement act introduced by senator feinstein. mr. chairman, while positions on the bulk collection program may differ, many of us agree on the need for more transparency. that is why i urge support before this subcommittee today. we're talking about millions of americans calls collected by the nsa. americans should have access to some basic information regarding the amount of data collected and what's analyzed so that my constituents, your constituents determine for themselves whether this program is worthy to continue or not, and with that, again, thank you for the opportunity to sl me -- have me testify.

mr. chairman, again, i repeat, thank you for your leadership on this issue. thank you. >> thank you for yours. senator heller, i'm looking forward to working together with you on this as we go through the process. you're excused, and your panel is adjourned. i'd like to introduce the second panel of witnesses, robert, the general council of the office of the director of national intelligence. he was confirmed by the senate by unanimous concept in 2009 before joining the odni, and he was a martier with the law firm of arnold and porter from 1994 to 1999 and worked in the department of justice where he served as deputy assistance attorney general in the criminal division, and then as principle associate deputy attorney general. brad wigman is at the department of justice, served as a career government attorney for the past

17 years including positions at the state department, department of defense, and national security counsel. they focus on national security and international law including terrorism, intelligence activity, and counter proliferation. welcome, gentlemen, odni, and doj submitted joint written testimony which will be made part of the record. you each have five minutes for any opening remarks you'd like to make. would you begin. >> thank you, mr. chairman, ranking member flake, thank you for the opportunity to appear before you today to discuss this important issue of how to inform this with intelligence activities consistent with the need of national security. i want to say that i appreciate the support you've shown for the intelligence community over the last two monthings in their

activities. these led to discussion on collection activities, particularly those conducted under the foreign intelligence surveillance act, but it is critical to ensure that that public dialogue is grounded in fact rather than in misconception, and, therefore, we agree it's important to help the public understand how the intelligence community uses legal authorities that congress provided, and the vigorous oversight of the activities to ensure they comply with the law. and as you know, they directed the intelligence community to make as much information as possible about certain intelligence programs that were the subject of those unauthorized disclosures. since then, the director of national intelligence declassified and released thousands of pages of documents about the programs, and we're continuing to review documents to release more of them.

needs demonstrate the programs are all authorized by law subject to oversight by all three branches of government, and it's important to emphasize this information was properly classified. it's being declassified now only because in the present circumstances, the public interest in declassification outweighs the national security concerns that require classification. but we have to take the national security concerns into account. in addition to declassifying documents, we've taken significant steps to allow the public to know the extent to which we use the authorities under fisa, and i gray with both of you and senator he'ller that it is appropriate to find ways to inform the public about this consistent with national security. specifically, as we set out in detail in the written statement for the record, the government releases on an annual basis the total number of issues under various authority and the total number of targets affected by the orders.

moreover, recognizing it's important for the companies to reassure their customers about how often or how rarely the companies provide information about their customers to the government. we've agreed to allow them to report the total number of law enforcement and legal demands received each year and the number of accounts affected by those orders. we strike the blns between providing information of the use of the legal authorities and protecting our important collection capabilities, and i'm glad to discuss that in more detail as we move ahead. turning to the transparency -- the surveillance transparency act of 201 which you and senator heller cosponsored, we reviewed the bill and share the goal of providing the public with greater insight into the use of fisa authorities, and we appreciate the effort that you made in this bill to try to accommodate transparency and national security. we've had good discussions with your staff about that bill. many of the bills are consistent -- many of the bill's

provision are consistent with the steps taken so far, and we support them, but we continue to have concerns that some of the provisions raise practical problems and concerns are set out in more detailed in the written statement for the record, and i'll summarize here and now they fall into two broad categories. first, while we believe it's possible and appropriate to reveal information about the number of targets of surveillance, counting the number of persons or u.s. persons whose communications are actually collected, even if they are not the target, is operationally very difficult, at least without not an extraordinary investment of resources, and maybe not even then. for example, it's not always possible to determine a person who receives an e-mail is a u.s. person. the e-mail address says nothing about the citizenship or nationality of the person, and even in cases where we would be able to get information, and doing the resource would require

a greater invasion of the person's privacy than would otherwise occur. it's for these reasons the inspector's general of the national security agency and intelligence community stated in letters to the congress that this kind of information can want be reasonably obtained. second, we have significant concerns with allowing individual companies to report information about the number of orders to produce the data they receive under particular provisions of the law. providing that information in that level of detail could provide our adversaries a detailed road map of which providers and what platforms to avoid in order to provide surveillance. we believe we have the right balance the transparency and national security. mr. chairman, i want to emphasize our intelligence to work with the congress and committee to ensure the maximum possible transparency about our intelligence activities consistent with national security.

the president is committed to this, the directer of national intelligence is committed to this, the attorney general's committed to this, and general alexander's committed to this, and we are open to any proposals so long as they do not compromise what we need to protect this nation and our allies. we look forward to working with you in these ways. thank you. >> thank you. >> thank you, mr. chairman. thank you for having me here today. i don't want to duplicate what bob just explained, so i don't want to waste the committee's time, but we, at the department of justice, very much agree with what bob just explained. we very much support transparency efforts that the intelligence community is engaged in now, and we also share the goals of the bill that you have prepared in terms of increasing transparency, but we have technical concerns about how those proposals are implemented that we're happy to discuss today, and i guess i would say a couple other things. one is that this is an area that

matters, and we support transparency, but we want to do so in a way that's consistent with the national security needs. you've seen a number of documents declassify over the last several months, and i'm sure from the outside, it's looking slow and ad hoc as you said earlier because these documents involve a lot of detailed classification, and it takes time to go through the documents to see what can be revealed and what cannot, and there's equities of the intelligence communities that have a stake in the information in play so our transparency efforts are a work in progress. we continue to work on them as we go forward, but we're trying to do so j a careful and deliberate way, but to the outsider, it looks as if it's slow and ad hoc because we're trying to protect national security while also promoting transparency goals. with that, i guess -- the other thing i say in addition, though, is to contrast the u.s. response to the disclosures to those of

foreign governments. we have, in response to these unauthorized disclosures, tried to be transparent, and that's not always the case with other governments that experienced this either in the past or more recently, so i do think we're working in good faith to try to be more honest with the collection activities and work with the committee to continue to promote that goal. that's all i have. >> thank you, and thank you, both. as i said, joint testimony is part of the record, so i appreciate you're not taking ever minute of your time here, and i will say about the disclose sures, and i said these have been, i think, in good faith, but it's just that there's nothing in the law about them. there's nothing permanent about what you are doing, and we are trying to create a frame work where people have a little bit more confidence and understanding or can decide for themselves whether they should

have confidence. you indicated that odni estimates the ability of u.s. citizens and permanent residents whose information has been collected under the different surveillance authorities. it's troubling. here's why. we give the intelligence community broad legal power to conduct surveillance precisely because that surveillance is to be targeted foreign adversaries and not at americans. many of the broadest laws we've written like section 702 of fisa explicitly say that you can only use the law only to target foreign people. you can want use it to target u.s. persons. suspect it a bad thing they don't have a rough sense of how many americans have had their

information collected under a law, section 702, that explicitly prohibits targeting americans? >> so i have to preface everything here by emphasizing i'm a lawyer, not an engineer or computer scientist, and so everything i say here gets filtered through that prism. >> engineer or computer scientist, we'd have you working on something else. [laughter] >> it's important to differentiate here between the concept of who is targeted for clek and whose collections are incidentally collected. nsa, because of the legal requirement, for example, under section 702 that nsa only targets non-u.s. persons, nsa does research necessary when they have a target to determine whether that person is or is not a u.s. person. they need to be able to make that determination. that's a very, very different process from saying we're going to look at all of the

communications collected, and we're going to evaluate every party of the communications to determine whether or not that's a u.s. person, so they do have the ability to make the determination as to whether somebody is or is not a u.s. person for the purpose of targeting that person. that's a different proposition. >> i think an estimate, though, can be made through statistical sampling, a method that's been used in comparable circumstances before the fisa court. we have to estimate how many americans had information collected under foreign intelligence authorities, first have general alexander who testified in september that the nsa employs over a thousand

mathematicians, more than any other employer in the united states, more than every university in mips, more than mit or cal tech. the second is a former technologist says, yes, the government has the ability to give a rough estimate of the number of american citizens and permanent residents who data and content has been collected, but let's move on to the disclosures by the companies. in your testimony, you warn that, quote, more detailed company-by-company disclosure is harm by providing a road map tort government's exairmts. this makes sense, but i have a difficulty reconciling your testimony with the government's action with respect to major companies like google. the government lets google

publish the number of national security letters received each year and number of users affected. two months ago michael hayden, foreigner director of nsa and head of cia gave a speech saying, quote, g-mail is the preferred interpret service provider of terrorists worldwide. that's a verbatim quote according to the "washington post," and it seems to me that if the former head of the cia and the nsa doesn't think it's a problem to let everyone know that terrorists just belove g mail, then why do you think a company-by-company disclosure threatens national security? he evidently doesn't. >> a couple of thoughts on that, to my knowledge, general hayden didn't talk to us before making those statements. i don't know that we would have authorized that statement to be

made. i don't know what was done there. the point is that if we allow the companies on an annual basis to publish these statistics, it's going to simply provide additional information out there as new companies come online and pop up, you may have a company that, for example, for a period of years shows no orders and then shows orders, and that conveys a message that says, oh, we've got the capability to collect this now. ..

from privacy people and from google talk about thatting a gracious. i don't think that aggregation is all that helpful because you are not giving people an idea of how much is -- you're mixing apples and oranges. you're having how many wiretaps on mobsters, i mean, to me it doesn't create the kind of transparency that creates the kind of knowledge the american people -- i have some time -- give the american people a way to judge the program. let me ask mr. wigman something. mr. i'm the chairman. i guess i can go over my own time. i have nine seconds here.

i understand you think my bill required too much detail -- i'm going weigh that feedback very carefully. i want to point out when i drafted the government reporting requirements in a bill i mongdzed them after the wiretap report that the department of justice releases every year. if you look at last year's report, it breaks down the number of wiretap not just nationally but specific jurisdiction and breaks down those numbers by the nature of the wiretap on mobile phone, home phone, business phone. last year's wiretap report shows that federal prosecutor in manhattan secured wiretap orders for mobile phones 48 times in 2012 while their colleagues in brooklyn only did it five times in the same period. the wiretap report contains a wealth of informing. nobody is arguing that crlts in manhattan are reading the wiretap report and fleeing to brooklyn because, you know, they

are less likely to get their phones tapped there. it my bill wouldn't require anything near this level of reporting. it would require national statistic and any time a number of americans effective lower than 500 the report would say fewer than 500. why would the reporting requirements in my bill raise national security concerns if the far more detailed requirements in doj's wiretap report don't raise public safety concerns? >> so. that's a good question. the regular wiretap in the wiretap act don't involve classified technique. so there are plat -- platform we use in the intelligence context. it's unknown to the outers or anyone outside the executive branch whether we can collect particular communications technology. so. >> having you -- >> what is that?

>> the disceo sure wouldn't be talking about a technology other than it's on the internet or phone. >> right. >> those technologies. >> we think that our adversary can surmise within let's say, for example in year one. we know there's a company that has a particular number of surveillance requests and that number is published. they then introduce a new capability. a new service they provide. then all the sudden the number goes up dramatically in the following year. that is something that our adversary could glean information from that and surmise whether we have the capability to collect on a new technology. that's the type of thing i'm talking about different in the wiretap con technical everyone knows a basic phone tap is something you can do. that's the difference there. i would like to address briefly your question about nsl. the reason why they are different than other collection methods.

it's collecting business report records. t not an interception capability. you're not intercepting communication in real time. you're collecting the collections the company have. >> thank you. i thank the ranking member for his indulgence. i have gone over my time. i thank you. >> if you could kind of drill down a bit in terms of increased manpower and what it would take to actually make some determination of the percentage of individuals who are u.s. citizens who are surveilled. what would that look like without revealing more than you need it reveal here? what would it take to actually go through and determine what

percentage? >> i can offer an example in the regard. the chairman made reference to the fisa court opinion we released from 2011 which involved a compliance violence under the collection under 702. in connection with that, nsa did do a statistical sample to try to determine how many wholly domestic communications may have been intercepted through one portion of this collection. they did a statistical sample where they reviewed, i think, approximately 50,000 communications which was a small% age of that. my understanding is it took a number of nsa analysts about two months to do that. and even in that regard, there were a number of instances where they couldn't come up with the necessary information that the actual information was in a wide

-- ended up with numbers in a wide range based on a lot of assumptions. and the last point i want to make on that. that was actually an easier task than the one being asked here. they were looking far wholly domestic communications. which means any time they found a communication where there was one non-u.s. person throw it out and never look any further. they never did go through and look at every single feater every single communication to determine whether or not it was a u.s. person. i think that example gives a sense of the resource intensiveness that would be required and the difficulty even if you apply all the resources in coming up with reliable number at the end of the process. >> you main it would probably lead lot of resources away from the main task just to comply with the provision? >> yeah, i think those thousand mathematicians have other thing

they can be doing in protecting the nation rather than trying to go through and count u.s. persons. >> in your testimony you mentioned it may have a greater impact on privacy to actually have to drill con and determine who is u.s. and who is not. what level of detail do you typically have to have? do you have to run, i guess, search what other communications come to the person or whatever else. can you kind of explain what you mean by saying you impact more on people's privacy by dpril -- drilling down and complying with this law that are currently out there? >> yeah. that is exactly right. nsa's mission is to collect foreign intelings. -- intelligence. they're looking for the foreign side. it's not what they ordinarily do to try to find u.s. persons. if you impose upon them some sort of obligation to identify u.s. persons they're going take an e-mail address that may be

john joe at hot mail.com and have to dig down and say what else can we find out? it's learning more than what nsa would learn. >> mr. wigman, we allowed companies out there, google and others to reveal more than they were able to reveal before. google has procedures they follow. what other companies have taken advantage of the opportunity they have to reveal more information about al-shabaab and al qaeda is surveilled and what is not? is it universal all of them are taking advantage or some or what ? >>. >> i would have to get back to you. i believe microsoft issued a transparent simplified report with certain data. facebook, i believe. i have to get you the complete

list. i can get you the information. >> i'm sure we'll learn more in the next panel. it's my understanding that how universal is the request for the ability to give broader information or more information about what is being surveilled and what is being collected and whatever else. >> i think it's fair to say a lot of major providers want to provide more information about their how the users are effected by government surveillance. in the initial stage of this in the initial snowden. we work them on the proposal that bob described which was we would release the number of law enforcement plus national security demands for the company. i think they found useful at the time. they put out press statements identifying those number and

showing it was a tiny fraction, i think in most cases less than one 10,000 of the user base was affected by not only the national security demand but the law enforcement commands together. whether you slice out the national security or include the -- it's a tiny fraction. that's what they want to be able to show senator franken saying to debunk we're getting access to all of their users. and in fact the opposite is true. it's a tiny number. and they were able to go that that we authorized at that time. >> thank you. getting back to what we're talking about before. in order to comply with visions of this legislation, would you sometimes require more of companies in terms of trying to follow down and drill down how many u.s. persons were effected here here. might there be additional concerns from the private providers that were i don't know

might they be more comfortable with additional request to try to determine -- we already have minimummization procedure that apply in order to exclude u.s. persons. but this would seem to be a lot more drilling down, as you mentioned before. what concerns do others have? should they be concerned about more intrusiveness just for the purpose of complying with the act? >> i'm not sure technically whether it require any more of the companies or not. i think that more likely nsa would simply rely on its own internal resources rather than -- they need some additional authority to go back to the companies to get subscriber information or whatever. i'm not sure that it would impose an additional burden on the company.

which does not any any way mitigate the intrusion on the individual. >> don't anticipate having to go back to company and say we need additional information in order to determine or comply with the law? >> i guess i wouldn't say i don't tapet. but i'm not sure it would happen or frankly there would be a way we can do it legally to get that information to company. >> thank you, mr. chairman. >> thank you. ly say we are going have testimony from google and they've signed on this it -- both company. >> thank you, mr. chairman. thank you for your leadership on this bill. thank you to our ranking member and senate heller. it i'm a cosponsor of the measure and want to express my gratitude to you, senator

franken, for spearheading this effort, we of course, it embodies the general truth that what you don't know can hurt you. what the american people don't know about much of what you do and it is important in the essential work to our national security can create misinformation and deception, and undermine the trust and credibility in the entire program of surveillance and intelligence by national secure ity. what the american people don't know can't hurt them if it becomes a sour of mistrust and loss of credibility here and around the world. so i think this bill is important i propose other measures such as constitutional advocate i think fits with the concept of this bill in term of preserving adversarial and

accountability measure as well as greater tran parent simplified and accountability in other ways. i would like to focus on the technical issues you have raised. don't these pale in comparison to the objective. aren't they surmountment with relatively few resources if we define narrowly what the technical problems are? >> well, take -- , i mean, i guess i would say no and no. taking your second point first, saints the judgment of people who looked at this not only within nsa but two inspector generals looked at it. it's not surmountmentble with a relatively modest allocation of resources. it would be resourcive

intendive, and as i said, particularly with respect to the u.s. persons, very require additional intrusions on privacies. our judgment is this is not the best way to troy to indian the view there's important information out there. but conducting not all the information that might be of us use to the public is going to come out. i adopt understand what resource. it's a code word. it's a term that term of art neighbor is used to say how

resourcive intensive it to accomplish the resource. i don't know we have done a cost estimate. the only yardstick i can give you. what was required to do the smaller and easier task that was done includes with the fisa court opinion that required, i believe, a half dozen analysts two months to do and still come up with a estimate that had wide ranges in it. and -- >> maybe you can give us some idea. >> this will not come out of the senator's time. >> it's a long opinion.

it's going take a minute to find the right place. >> i'm sorry, i should have marked this in advance. so, as i said the issue was to determine what were wholly domestic communications. as i said is a different task. and as a result of this review, they determined there were between 996 -- essentially between 1,000 and 5,000 communications that met that. you have a five fold range there. and there are other estimates that say, well, it wouldn't be any greater than this number. they are all based on assumption and estimates. and i don't know that there's any comfort that would establish there with any disagree of

reliability. >> you have given me a communication but not the dollars. >> oh. my understanding is that was, i believe, six analysts for two month period. you have to multiply that across a much larger sample more difficult task and additional -- vie is a authorities. so you're talking -- you know, some number of man years that would be required to do this. i don't know whether you a chance to review that

testimony. for example, a lot of it concerns the impact on communications internationally i wonder if you can comment in particular on the testimony very compelling testimony from about the need for transparency to enable the trust and credibility that is important for communication worldwide. i haven't had a chance throw view the other testimony. i'm general familiar with the company's position. i think we have at lough sympathy for their position. the unauthorized disclosure that have come out here put them in a difficult position to one of the many things that we were regret about these disclosure. having said that, as brad mentioned earlier, we're authorizing prepared to authorize companies to release the total number of orders they get to disclose customer information. and the total number of accounts

affected by the orders. that's going a minuscule number. as brad said. it's a fraction 1%. it covers all authorities. and seems to me that minuscule number is sufficient to meet the company's needs and really doesn't advance things anyway when they are allowed to disclose.001% of the customer accounts, are affected by orders to provide information to the government. it doesn't really advance their needs to say, well,.001% of those pursuant to this authority and.oo3 pursuant to that authority. the there's only is going to be asked for by the government. >> thank you. my time is expired. thank you very much. thank you, mr. chairman.

>> thank you, senate blumenthal. i'm cosponsor of your constitutional advocate. >> right. thank you. >> senator lee. >> thank you, mr. chairman. >> thanks to you being here with us today. much of the testimony that we've received today highlight the consequences of and interaction with -- senator franken bill take important step to increase the transparency for government ask for information. i applaud those efforts. in fact senator leahy and i incorporated the vast majority of senator franken's provisions in to our bill as s1215 the fisa accountability preace act. the governorring surveillance would increase oversight and accountability and ensure that

american's constitutional right under the fourth amendment are protected. it's time we start requiring a little more sunlight. is your support a direct result of formerly covert collection program having become public or do you think that nationwide aggregate disclosure are inherently beneficial and should be sought out? i think the answer to that is

are a good thing provide they'd don't comprise our ability to collect important information. thing the situation where we're in right now whatever the appropriate result might have been in six months ago. the situation right now where the director of national intelligence declassified the fact that certain program and how they operate that it's entirely appropriate to have the disclosure of the activity going forward. for other important activities i'm not sure we reach the same balance top. to the extent we are talking about the particular disclosure we think it's strike right plan. it's perhaps not considered discreet thing to do. i want to take issue with your suggestion we're talking about unchecked intrusions in to privacy of americans. in fact, they're very checked. we operate within the laws thoardzed by congress. we operate with extensive

oversight with all three branches of government and highly regulated and highly -- whether or not they are appropriate or not i think is a valid question. >> that's a fair point. as i understand your position there. one of the concern, of course, what might well be handled by responsible people might not be tomorrow. if sinned your answer my question correctly. prior to the declassification that occurred recently it might have run afoul triggered your

concerns. this kind of legislation might have triggered your concern in the sense it might have comprised ongoing activities. since those have now been declassified, there's no reason not to do this. am i understanding you correctly. >> yes, i think that's right. >> thank you, sir. thank you, mr. chairman. >> thank you, senator. and i want to thank gentlemen for not just for your testimony but for your service. you made a good point there about there are checks to what you do. this is part of it. you made the comment there are checks but what you do but that doesn't mean what you do is always appropriate. and that's what we're trying to get to here. you have made some disclosure that i think have been in good faith. but they aren't permanent.

they aren't a part of the law. that's what we're discussing here. i want to thank you both for your testimony. i want to call our third panel. thank you. >> thank you, mr. chairman. >> thank you. >> thank you. >> kevin is senior counsel and director of the free expression project at the center for democracy and technology. mr. bankson is a long time advocate and litigator on privacy, civil liberty, and internet policy matter. mr. bank stoun organized and lead the lo digs of companies and civil liberty group that call for greater tran parent simplified and now is advocating the passage of this bill. paul is the founder of red branch consulting. a national security consulting company.

and a senior adviser. in 2005 to 2009 he serve as deputy about it secretary for policy and department of homeland security teaches at george washington university law school. richard is google's director for information security and law enforcement matters. he served as where he's specialized in technology-related privacy crimes. he has taught at stanford law school, georgetown university law center, and george mason university law school. thank you all for joining us. your complete written testimony will be made part of the record. you each have five minutes. about five minute for any opening remarks you would like to make. >> chairman, ranking member,

thank you for the opportunity to testify on behalf of the center for democracy and technology. a non-profit public interest organization dedicated to keeping the internet open. innovative and free. i'm the broad coalition of internet companies and vod candidate that they brought together this summer to press for greater surveillance transparency are grateful to chairman for introducing the act. a bill that would allow companies to publish basic statistic. we believe this level of transparency about what companies do and don't do response is critically important for three reason. first, the american people and policy makers have a clear right and need to know the information. they may have a more informed public debate about the appropriateness of the government's use of the authority and a ensure they are not misused or abused.

second, the companies have a clear first amendment right to tell us this information. and the government's attempt to gag them from sharing this most basic data or even to admit they have received foreign intelligence at all is clearly unconstitutional. indeed you'll see this prior restraint at work today in the room. even though everyone in this room knows an understands that google has received foreign intelligence surveillance act process. google's representative is the one person in the room who cannot admit it. third, greater transparency is urgely necessary to restore the trust in the u.s. government and our u.s. internet industry which is projected to lose tens if not hundreds of billions of dollars in the base of wide spread concerns. we must take this opportunity to demonstrate that our practices are necessary and proportionate and respectful of constitutional and human rights. if the numbers show otherwise we must take this opportunity to reform our laws to better protect our right as well as

national security. reveal which are not been targeted by the u.s. government. such that the enemy seek them out. however, it has always been the case the companies that haven't yet received the national security demands can say they are not received the demands as most recently just l.a. week when such that the enemies avoid them. this concern rings somewhat hallow when top intelligence officials current nsa director keith alexander have repeatedly and public announced the name of various services such as google, facebook, twitter, and yahoo! they believe they are using. senator franken mentioned a comment by formers nsa

director. saying that someone on a service is being surveilled is different from identifying who is being surveilled and only the latter is dangerous to national security. therefore the less transparent alternative to the bill that the government suggested are unnecessary to protect national security. more than that they would be worst than the current transparency status quo. on the government reporting side, the dni announced he will voluntarily publish new statistics reflecting how many people have been, quote, targeted, unquote under various surveillance authorities. such limited reporting would be misleading. for example, the ndni reporting for 2012 would only indicated around 300 people had the meta data targeted. ..

>> that kind of lumping would be step back for this, especially considering the companies are engaged in detailed reporting and the law-enforcement process that they received and have also been allowed to publish separate numbers as well. no one has ever suggested that either that reporting where the detailed reporting of what the government has done for decades about its law enforcement has ever disrupted an investigation. neither would the but the reporting require and allow for under the spell or that bill

provided by the transparency provision by the usa freedom act and greater transparency is no replacement for such a performance of our surveillance laws, but it can serve as a key stepping stone towards but reform to better understand how the government is using its powers. i look forward to your questions >> you for the invitation to be here. i am so grateful to be able to provide this to the senators of the united states and i thank you for affording me this opportunity. i should begin by saying that as a current holder of a top-secret clearance group, some of the work i continue to do for dhs, i have limited what i have read to be declassified as of most of the people in my position.

especially as to how i can speak to the issues today. that having been said, i will make four basic points, the first is that transparency is a good thing. >> everything ranging from the attorney client privilege and to any number of reasons why either through the oversight of the executive branch or the legislative branch or sometimes the judicial branch. and i'm sure that it will

increase so that we can do so in a calibrated way in the end goal here is greater oversight and greater assurance that the nsa and other intelligence community activities are acting in conforming with allies and to my mind, the right answer to many of the questions is how can we advocate that goal? my second point is that, we have a lot of disclosure with respect

to existing programs, but we should take very seriously the protestations of government officials who are in a better position to know than i am, at least, given what little i know about the classified nature of these programs and end this includes things that cannot be disclosed. my single greatest constructive criticism but i would offer to the bill before you is the idea that the disclosure requirements are keyed up to these statutory requirements unlike section 215 and section 702, it seems to operate on the assumption that we are in the operating under those statutes. and if that is the case, it is key to be welcomed, indeed.

and either life in tremont fleer homophily commented is it is at least plausible to me that further disclosure of particular lice numbers would lead to the disclosure of those who have not yet made it into the public record and if that were the case, i would think that that would be an unfortunate result in my third point would simply be that the most effective reform is not just enhanced transparency for the american public, the more structural reforms that you can do in those sorts of things don't sound as lovely, but they can be

effective even within the various programs. and with that, i will conclude and i look forward to all of your questions. >> thank you mr. president. >> thank you. chairman franken, breaking member, senator blumenthal, thank you for the opportunity to appear before you this morning to talk about the surveillance transparency act and oversee the company's response to government requests for user information under various authorities and i'm also working to protect the security of our networks and user data. we have introduced to this at this in 2013, simply said stating that service providers should be able to disclose asic statistics about national security demands that we may

receive. and the revelations about u.s. government and other governments surveillance practices over the past few months have sparked a serious debate about the laws governing surveillance of private education by the intelligence community. the democratic countries undermine the freedom and the trust votes on 10 of citizens cherish for a and it has an impact on her economic growth and security in government have been considering proposals that can limit the free flow of information and this could have severe unintended consequences, such as a reduction in data security and increased costs and decreased competitiveness and

this poses a significant threat to the internet and what we will face is the effect of creation of this and this would allow the u.s. to take a first step towards rebuilding the trust that is necessary. transparent transparency and national security are not always exclusive. we have published a report where we share information about the law enforcement of user data from governments around the world in the publish statistics concerning this has damaged national security is.

and this includes the pfizer request that we may receive. we were disappointed that the justice department refused and in june we filed a motion before the foreign intelligence surveillance court's serving a first amendment right to publish this type of information and reported as falling within some broad range. this would be a significant step backward rather than promote transparency and this would actually obscure important information about all types of government demands that google may receive and not just national security demands. as i mentioned temerity disclose disclosed domestic law enforcement demands and have done so since 2000 and. publishing future reports where we could only release this type

of information in ranges rather than actual numbers to provide less transparency than we have now. and indeed, google would continue to acknowledge this the range that we are able to report in and we would also lose the benefit of providing information about national security letters. and this includes the transparency surveillance act of 2013. the transparency is critical and informing the debate on these issues, but it's only one step among many that are needed and two weeks ago google along with aol and apple and facebook and microsoft yahoo included substantial enhancements to privacy protections and appropriate oversight and accountability mechanisms.

and we stronger believe that we must visit state surveillance and access to private vacations and this activity must be narrowly tailored and transparent to oversight. we look forward to working with the congress on the surveillance transparency act of 2013 and other reform measures and we thank you for your time and consideration. >> thank you, gentlemen, thank you for your testimony. gentlemen, you heard the witnesses from doj say the number of u.s. persons caught up in the surveillance and do you agree with them? >> be a realities are discussing

the predominantly intended and sometimes limited acquiring of the communications and therefore knowing have been swept up intentionally or unintentionally, it is critical to understanding whether we understand this in line with these limits. and the fact that the nsa is claiming that doesn't have the ability to provide even a rough estimate as to how many persons have been swept up in this surveillance is frankly shocking and quite rightly appoints two a need to recalibrate what we are authorizing them to do and they cannot judge other activities are impacting the american people. more importantly i am also disappointed to hear the implication that the nsa has more important things to do than to ensure that it is not an appropriately impacting the privacy of the u.s. individuals

and that should be a core priority of the nsa and one that i should dedicate reasonable resources to and it can as demonstrated in 2011, take measures to make reasonable estimate about how the authorities are impacted. >> in 2011 and if they have been violating its authority. they were able to discover that by doing that kind of estimation that they did. >> yes, they did. and if those had been required earlier, we would've found out three years earlier than americans have put a stop to it. >> it certainly makes sense to explore all the various ways we can increase transparency around these programs and what data is being collected and we want to be able to do that in a way that

is practical and reliable and so i think it makes good perfect sense to explore that and that sort of detail is significant. all of these groups are calling for greater transparency. in this includes internet companies including google and apple and microsoft and facebook, as well as other leading civil liberties groups. but, sir, could you to speak as to why google and apple and microsoft and companies that

normally compete with each other, how they are working together on this and what this means in terms of your business. >> there is a potential for great damage to the internet as a whole, but certainly these companies that google recognizes is the trust that is threatened is essential to these businesses and it's important that we understand that we are stewards of the day then we hold them responsibly and we treat it with respect and that there is not any confusion around where we could be disclosed to compel the

dissemination of the data and the interaction between the government and google and the other companies as well. the is essential to make sure that we have the ability to place the data with us and the impact of the disclosures are manifest in we can see exactly whether it is an anecdotal manner that customers considering using the services available as a result of the disclosures. and all of the other developments as of the cloud. transparency is one thing and worrying about the cloud is another thing. >> thank you. >> or the number. >> please go had.

>> thank you, we appreciate your testimony and some companies would be concerned where there is additional information to be gathered. can you tell me why you disagree? >> i assume that you are referring to the u.s. persons that within the disclosure portion and i think it's unlikely that this would result in anymore disclosures to be able to make this be evaluated. >> they should certainly drill down on us. and we need to reveal more about

killing down. but that doesn't reserve you have additional information out there as required and as you look at the methods and do they in fact require intrusions. >> that is something to determine, whether or not there were intrusions. >> you have any thoughts on that? >> overall, the general privacy concerns they raised. >> to some extent, it's important to know the privacy has been invaded when the government collects us.

some estimates don't make sense that we can harm the privacy. the privacy to some extent has already been violated and we have engaged. >> you mentioned the props that of countries making this a timely concern. how timely of a concern is that in have we seen the moves being taken by these countries and can you explain about that? >> yes, we have, it's a very real threat. we have seen the legislation and the jurisdictions doing just this. we have seen in several flavors. there's the possibility of acquiring data location and companies store this within a jurisdiction nbc government of laws that are referred to as blocking statutes.

and you see different flavors of these things. they all tend to start to create a network structure and an internet structure that is based on political boundaries and the idea of a global internet breaks down quickly. >> thank you, that is a concern that i think a lot of us have. this free flow across has been part of this kind of communication. >> let me just get a general answer from you on this. if the value of legislation like this -- i can see the value and allow companies to be able to explain, as there is much value in this being an additional check on government not to go too far, because they have to

reveal this information? what is a great old evaluation this way? >> i think the first value is the legislation and the one that senator franken expects, which would be statutorily to mandate that which is now voluntary and an act of grace. so i think that that is the regular institution that is a positive value and i think that in general the legislation that requires the government to explain itself is a positive value as well, everything from the inspectors general statutes and my concern in particular would be to ensure that the disclosure requirements in this includes the things that are of value to us. i think it is a very case-by-case specific matter.

and it's not a decision best left to the executive branch alone, but the executive branch in a classified discussion with the house of representatives and by its nature cannot be a discussion that -- at least at the first instance, involves the american people. and it terminates the discussion itself. >> the chairman has arrived and i would like to have this statement from the chairman to the record and i would like to ask him to ask the questions. >> thank you. i would like to thank my friend from connecticut. mr. blumenthal.

i think that more and more people agree or should agree that we need additional transparency about our government surveillance activities and i think that we need to restore public confidence and senator franken has worked transparency legislation and this includes google and other tech companies are willing to support the bill and i think the tech industry realizes that we need something more than transparency but we need some substantive reform to make sure that we have it all right, facebook, aol, linked in, supporting greater transparency and they want the enhancement of privacy protection and accountability. and i know that the gentleman

knows the letter. i recently introduced the surveillance reform bill that is a partisan and part of the freedom act and i supported and appreciate these companies supporting stronger fisa work. so let me ask you, just enhancing transparency, will that be enough to bring back global confidence in american technology and companies and we need to do more? and if we don't do more, this could affect the u.s. businesses? >> thank you, mr. chairman. it's important to increase transparency, but i do agree that more is needed. as you have noted, we have expressed our support for the legislation that you have offered and i think that we need some reform that allows users and others to know that the intelligence community and its

collection of data is done under the law and it is bound and tailored, narrowly tailored, there's oversight and accountability for it and as we have been discussing today, that there is transparency that can bring similar trust that this is happening. >> outside the reputation for the united states, it affects businesses as well, does not? >> absolutely. and we have seen impact on the businesses. and we have -- i think that the chairman cited a couple of studies that reflected some financial consequences and i think that there our concerns around the entire structure of the internet over these revelations this is not addressed correctly. >> let me go over on that, one of my biggest concerns about the section with the phone records is the legal rationale that has no limiting principle. and if all of our phone records

are relevant, why wouldn't everything be considered relevant area and if that is the case, companies like yours may not trust that the data is saved and does google think about that as far as the technology is concerned? >> that's right, the confusion they came out as a result of the gene isolation and additional stories have led to a concern inside and outside the united states about what it is that it's happening and what are the rules of government and what is the role of the pfizer court ordered the decisions that are coming out of that corner, all of those things have played a role in the need for clarity. >> especially when we have those things so carelessly and we had

a subcontractor and so far as we know, no one has been able to reprimand them for that. what do you think? >> well, we think that the transparency is critical to restoring trust in u.s. government itself, but that alone is not sufficient and the reform is necessary in this includes the usa freedom act and we thank you for and we look forward to working with you and the committee is the moves forward. >> i'm worried about overclassification and i find every administration has been speaking about classifying things as a mistake rather than trying to explain it and let me ask, are you permitted to tell us whether google has received any court orders? >> i'm sorry, mr. chairman, i would have to decline that until

the bill we are discussing was passed. >> is our country safer because you can't answer that you can't imagine so. >> okay, thank you. this raises concerns about those that may be tipped off that we are trying to track, but there's a lot of reporting done criminal surveillance and his national security related investigations that we have to have this kind of secrecy? >> i do not believe so. in the criminal context we are often investigating sophisticated organized criminals and investigating terrorist and have been able to publish in the u.s. government has published statistics about how the government is using its authorities, both the government as a whole and company by company without any suggestion

that that it has harmed national security and i want to take a moment to address this issue lumping all that together. and i think that combining numbers for targeted intercepts and wines and communications and all of the range have been combined with federal state and local law enforcement leads to such a useless number and it's like asking a doctor to diagnose a patient by looking at his shadow. only the grossest were more obvious abuse would be a part of that. >> i apologize to the professor. i haven't had time, but i will submit for the record about this in the companies first amendment rights that have been violated. please take a look at the

question and i would really like your answer for the record, it is important to me. >> thank you, sir. >> thank you, mr. chairman. >> thank you both. thank you all for being here today. i was interested in a number of your points, particularly that the additional measures are needed especially with the chairman's additional transparency provided the season that individual rights are protected. and this includes in effect providing adversarial processes within the pfizer court and the courts make different decisions and usually better when few judges permit a proceeding

before them. in which only one side is presented because they know that the core principle of our judicial system is that it is adversarial and the truth emerges is different points of view and factual perspectives are presented and that is one area where i think that the system can be made more accountable if not more transparent and as well, disclosure of some of the rulings and opinions. right now it is a secret court that operates in secret, making secret decisions in secret law. and one of the few courts in the united states where there is any secret proceedings of this kind

occur. so let me elicit your comments on those kinds of additional protections for constitutional rights from the perspective that you all have raised about our need for credibility and trust internationally in the system and after all, the means of communication and the internet depend upon international trust and credibility, otherwise it falls apart. so let me ask that open-ended question. >> thank you. i'm happy to take a first look at that. there are a number of proposals that are being considered right now and that is a very good thing and the general principles that there needs to be accountability and transparency with some oversight and the

rules are clear are addressed by the various bills and this includes reviewing applications for surveillance and has an opportunity to hear different ideas and that makes sense and is at the heart of the proceedings that we have and that is something that i think makes a good deal of sense as far as a structural change to the current arrangement under fisa and the fisa authorities. the same is true understanding the interpretations of the law is applied to the different applications and this can help restore confidence that the system works. >> i am a fan of being an advocate, but for slightly different reasons and i think that you just said.

the reason that we don't have an advocate in the search warrant application which is a grand jury situation is because those are ultimately subject to the review in a criminal proceeding where there is a different attorney represents this adversarial view on whether or not the issuance of the warrant was with probable cause or things like that exists. we lack that systematic check in the intelligence contacts because the surveillance rarely if ever results in a criminal prosecution in which that kind of process comes forward. to my mind i would want to distinguish and allowing an advocate. between the pfizer court making a new systematic determination

and interpretation they gave us the relevant position in the section 215 law and i would like to distinguish that from what i would characterize and i admit that the line is hard to draw of the applications of a settled law where the value of an advocate would be much diminished in the procedural difficulties that could arrive from the costs involved and being adverse to this. i think that that would be a perfectly fine idea. and i would go for the exact same answer that i gave the senator and the other context, which is provided that we make sure that it doesn't wind up with the adverse effect that are properly classified and that would be as well. an advancement and that is a

hard line to draw and i'm probably in both instances, the answer is to let the cord make that decision and authorize this in a situation where once too and to authorize it affirmatively to make public disclosures when they think that this would not adversely affect national security interests. >> thank you. punjabis to be pretty straightforward. it was a pretty straightforward statute based on the fourth amendment jurisprudence addressing some straightforward technologies and now we have the court addressing an incredibly broad statute in the form of the amendments act and we have a rapid landscape and we have the court rather than making that decision creating a body of common law on some of the

hardest and most important amendments of our time, sometimes with what the court has described this misleading conduct by the lawyers in nevada. the contracts i do believe that it is critically important not only to have greater transparency but also to have an advocate in front of the court who is there to protect the people and as such, supporting the legislation and we are working with your staff and the staff of chairman leahy that that might bring to bear. >> thank you all. thank you, mr. chairman. >> thank you, senator. not to speak for you, but i think that the way that the world was described as a constitutional advocate is in line with what you envisioned. >> very much so, and i think you. >> thank you, and i want to thank all three of you for your

testimony and in closing i would like to thank the ranking member and senator heller and the chairman and of course, i want to thank all of the witnesses as well, each of them who appeared today. the testimony was a lot that i agreed with there some things that i didn't agree with. but i want to leave everyone with this thought that there is no question that the american people need more information about these programs. there is no question about that. we do have a basic amount of information about the surveillance that the own government conducts over our affairs and i think that that will give the american people the transparency and i'm looking forward to continuing to work with the administration and my

colleagues to make sure that we are getting it right. we will hold the record open for one week for the submission of questions in the witnesses and of the materials and this hearing is adjourned. [inaudible conversations] >> in a few moments, a discussion of health insurance costs posted by valence of health care reform. in a less than two hours, part of our coverage of the washington ideas forum, including comments from ms. landrieu and david brooks of "the new york times." and we have several live events to tell you about tomorrow on our companion network, c-span3, beginning with a

hearing on the response to the typhoon in the philippines. that is at 10:30 a.m. eastern. at 3:30 p.m. eastern, a senate banking subcommittee examines the viability of digital currencies and also outgoing federal reserve chairman ben bernanke speaks at the national economist club. live coverage on c-span3 is at 7:00 p.m. eastern. >> if you are in middle or high school student, the studentcam video competition wants and what is the most important issue that congress should address next year. making five to seven minute video and be sure to include us in your programming. with $100,000, the deadline is january 20. give more information on student cam.org. >> next, an alliance for health reform discussion analyzing health care costs and the use of what is called referenced-based

pricing. this is a less than two hours. >> all right. why don't we try to get started. my name is ed howard and i am with the alliance for health care reform and on behalf of the senator, i would like to welcome you to the program and we are looking at what public programs in the health care sector can learn from some private sector stakeholders who are using a strategy called reference pricing to restrain health care costs while maintaining quality. and here is the 452nd nonexpert version. under this practice, the payer

or employer of the health care plan sets the reference price for a particular drug or device or procedure and the individual is then responsible for charges above that price and there are important nuances to this concept that i am ignoring the will be hearing a lot about in just a few minutes and the idea is to address the sometimes while differences in price for the same service or product. i apologize to those of you who are here on friday because i have encountered the same anecdote and several years ago one of our board members noted that the cost of a specific surgery and one of the 50 best hospitals have doubled what it was for another of the 50 best hospitals a few miles away and he asked how can the best health care in the world cost twice as much as the best health care on the web? the same question has occurred

to a lot of smart people in bars in turn involved in paying for health care in the private sector. they came up with reference pricing is a partial response and we have assembled several of those individuals to explain how this mechanism works and what the challenges are in and putting it into place and whether plans like medicare and medicaid to draw lessons from this experience. we are pleased to have today as our partner well point inc., operator of blue cross blue shield in more than a dozen states, which collectively cover about one in nine americans and you're going to be hearing from michael dallman from the anthem health plan in a few minutes and let me take a couple of moments to cover some of the logistics. there's a lot of background information including about our speakers in your packet and you will also find in hard copy at

power point presentations of our speakers and those slides and all of the material that those of you have are available on the alliance website, www.all health.work. also on a website, you can view a webcast of our briefing a couple of days in the transcript as well of today's discussion. if you're watching us on c-span, you have the video. you also have access to all of the materials if you have a computer as well and can go on our website all health.org and you can follow along with the slides among other things and we would ask you at the appropriate time to fill out an evaluation form to help us improve the speaker topics that you'd like to hear from and about.

there is also a green question card and there are microphones that you can go to to write it on the card and write it and pass it forward. if you are part of this, you can make use of this hash tag ncc up on the slide and that is enough of the preliminaries. we have, i believe, just a marvelous assemblage of folks with knowledge and insight into today's topic and you will hear their presentations and we'll get into the discussion and q&a as well. we will start with the program director at catalyst for payment of form and if you're not familiar with it, as it is abbreviated, it's a nonprofit

working with large employers and others to improve how we pay for health services and promote high-value care. we had a decade and a half experience with a focus on benefits and payment policy in this includes an overview of reference pricing today and how it works and what is part of the challenge. thank you for being with us, andrea. >> thank you. thank you to the alliance and for well point for having this important meeting today. i believe you will hear some case studies that are really great from the folks on the panel and i will be giving a background and i think that ed gave a good definition on it. and i think that as it was mentioned, it's a nonprofit national organization works on behalf of national large purchasers and we have about 31 purchasers that work with our

group and they include eight state agencies and of those we do have for medicaid plans and to the previous point about the state agencies and medicaid programs, learning from some of this, i would say the least in the work we work we are doing there is sure going that is occurring. one thing they agreed to do is work on a shared agenda and i won't get into all the details of it, but the middle section there on the right-hand side, we will talk about our innovation and i will talk about three of those. the first is the reference pricing and value pricing in the second is price transparency in the '30s market power and all three of those items are really closely related and you can't really talk about the reference pricing with without talking about market power and the need for price quality transparency.

at its core, our strategies fall into two categories, it sounds simple, but it actually can be complicated. but basically that basically we are trying to create a critical mass of purchasers to send the same messages into the marketplace at the same time and that is how we think that we will really be able to change the market. we have people asking for benefits, payments, ways of doing things that are different, things that are very easily exacerbating confusion. we are trying to use common tools and language and priorities to send messages into the marketplace about what is important and of course the second is to shine the light on the urgency for payment of form is that as part of her name after all. so this might be a little bit difficult for you to see in the orange text, but if you look at the printed version, it might be easier. as was mentioned, reference pricing is really just setting a

standard price for a drug in a procedure and a service. once you have set that up, that is the amount, the allowed amount that a health plan or an insured employer will pay and above that amount, the consumer is likely to have additional out-of-pocket financial liability. if you look at the graph there, you can see the price variation and this is really just for illustration purposes and you will see different variations in prices ranging from a thousand dollars up to $20,000 in them then along the bottom you see the frequency of the services and the blue i'm kind of shows how often are these procedures taking place and at what price and where did they go up and this is the kind of reference price in doing that and now this has to go into doing that and i will give you an example other than and safely as is an example

where they did this analysis of how much they're paying for colonoscopies in the san francisco bay area and the prices range from $900 to $7200 with no correlation quality. so that is an extreme variation in price and since they did this analysis on the price i saw the frequency, they paid the reference price at $1250 and the benefit was designed but if you are a consumer nbc care from a provider that is at or below the reference price, then you either have no cost sharing or no out of pocket or your regular cost sharing and if you see provider at that 7500 at the top of the list and you are going to be responsible for the difference between the 1250 and that is the

mechanism of how the reference pricing works. and some of it considers to be a blunt force in the market place. but it really is intended to shine the light on not only how things are being paid for but what are the prices and how there is a correlation to quality. i'm sure that you will hear from my colleagues that there are four key elements and they will probably go into more detail about these different elements. that basically there are benefit designs that are part of reference pricing and you really want to only implement it when it selected and when you have a wide availability of providers. honestly this is going to work if you have one or two providers providing a service in area that will not create a level of competition that you need. so the procedure needs to be

elected and there's time to shop and there is an availability from multiple providers in the next two are interrelated and i think that they are very on topic for conversations in this room, which is price quality transparency and you can't implement a reference price about getting consumers adequate information about the prices or the quality that they are receiving. most consumers still quite higher prices with high quality and we know that not to be true. so we really need to arm consumers with plenty of the price information so they know which providers are at or below the reference price and you also need to arm them with the quality information, how often are these providers performing these procedures and what is their volume and what is their outcome and you have that information than consumers are better off. it would be really unfair to

implement a price if you don't arm them with that information and backers into the next one, which is consumer information. and i think that there would be case study examples of how conforming your employee population and educating consumers about the price and the quality and the correlation between the two would be very important. because you don't want consumers to get into a got you situation where they didn't know that someone was above the reference price and now they have an extreme financial out-of-pocket liability. the last one is adequate networks and a network might not be an appropriate term here because usually these are providers within an established network. to use the term network loosely. but you want to be able to make sure that you have plenty of providers who can offer these services at the reference price that consumers have the ability to choose and they don't feel overly limited and they have plenty of options, including the

option seek care from providers and that is their choice. and i will go through the details of all of this, but this is just a schematic of the range of reference pricing and you can have this all the way to a mature and sophisticated situation and we also like to talk about reference pricing that refers to commodity type services like lab and imaging and value pricing -- excuse me, commodity services is thought not to bury at times and when we move into value pricing, you're actually adding a quality component and as you get to the higher end of the spectrum, that is one quality gets inserted. then they applied the reference

pricing and they have applied to other procedures, they were able to hold their per capita health care spending flat and i heard from calpers about the savings they could achieve and i think as we go into what is next for reference pricing, you will find that that pricing will gain popularity only about 5% employ this strategy in 2013. but we expect closer to 15% and that is from a recent study. going back to the issue of price variation. because one of the things that it does is, okay, why implement a? one of the main reasons is to really bring a huge spotlight on the price variation and how it is unwarranted. market power will drive the price and that is leading cost of health care today and it is a way for employers and those we

work with to really say that that variation is no longer tolerable. so what is next for the pricing, just a couple of things, price transparency and as reference pricing grows, this will grow and they will have to keep pace and we have to expect the reference pricing to be paired with bundled payment. this is important because they partnered you actually can move the market and educate consumers along the way and it's actually a natural fit that is bundled and it's a package price for lots of procedures within a

particular service. you see multiple providers in multiple settings and a bundled payment on that and then if you set a reference price at that, you really are making it very clear just exactly what is included in this price but providers are clear about what is in a bundled payment and we see that as the next-generation once we get a little bit more experience with it in his providers get more experienced taking the bundled payment and we will see appearing events as well. so with that, turning it back to you. >> thank you very much. we are next going to hear from david, who is the chief of the center for innovation at the california public employees retirement system. you may know that they do a lot more than you might think or