am particularly concerned and sensitive to the complex care needs of alzheimer's patients and their caregivers. i, therefore, particularly look forward to discussing ways to provide more support to the 62 million family caregivers who, in 2009, provided an estimated $450 billion in uncompensated long-term care, more than double the value of all paid long-term care. long-term care is the major catastrophic health expense faced by older americans today, and these costs will only increase as our nation ages. it is not just that there will soon be a greater number of older americans. it is also that older americans are living longer.

americans 85 and older, our oldest old, are the fastest growing segment of our population. and this is the very population that is most at risk of the multiple and interacting health problems that can lead to disability and a need for long-term care. at the same time, declining birthrates mean that there will be fewer family members and paid caregivers to care for our nation's growing aging population. today, there are approximately seven potential caregivers for each person over 80, as this chart indicates. by the year 2030, there will be only for. and by 2050, the number drops to

fewer than one in three. fewer than three. as a consequence, more people will have to rely on fewer caregivers. what does that mean? what are the implications for the quality of care that will be given? it is clear that we have to do more to support family caregivers and to recruit and retain a robust and competent long-term care workforce. while there is a need for both public and private financing of long-term services and supports, i do believe that we must do more to encourage more americans to provide for their long-term care needs. many mistakenly believe that medicare on their private medical insurance policies will cover the cost of long-term care, should be developed a

chronic illness or cognitive impairment like alzheimer's. unfortunately, far too many do not discover that they simply don't have coverage until they are confronted with the difficult decision of placing a frail parent or loved one in a long-term care facility and face the shocking realization that they will have to bear the costs themselves. americans should consider their future long-term care needs just as they plan for their retirement or purchase life insurance to protect their families. private planning for long-term care will not only provide families with greater financial security, but it will also ease the growing financial burden on the medicaid program, and strengthen the ability of that program to serve as a long-term

care safety net for those americans most in need. again, mr. chairman, thank you for calling this hearing, and i look forward to hearing from our witnesses. >> out of spirit of magnificence and solicited, i would in the spirit of the season expand to our two most distinguished committee members the opportunity say a word or two before we turn to our witnesses. >> let me just say that first of all i appreciate, mr. chairman, you holding this committee and transit because it's such an important issue. i come to you, come before you as a son, grandson and former governor that dealt with these matters very personally. i can tell you there's no greater thing we can do to at dignity and respect to persons life as they grew older and to try to have them leading independent lifestyle. i'll give you one story. my grandmother was 85. i used to stop and see her all

the time. one time i stopped and she was very, very lethargic and just kind of sitting there and i said grandma, she said everything is okay, honey. i could tell something was wrong so i told my mother. i said go see grandma because my mother always wanted her to live with us. joyce wanted to be independent. this one time my mother went to visit her and she said okay, i'll come down and visit the kids. then she stayed for 15 more years to the 100 years of age. could think about was she was lonely. she was poor in nutrition, trying to trick us up and she wasn't working properly. all of these things and we just -- it's right before your eyes and you don't see. when you do you see the difference in life it makes. i took it with me as governor and the main thing i want to do was create programs that really true attention to how people live independently. we started some programs in west virginia, i'm not sure if other states have ever started and before. i used my lottery fund and table

games, licensing fees. 100% winning to long-term care. or independent living. we called it there. that their program basically all it said was whatever you could do it, you paid. we helped you. we sent people and to let you live independently. a lot of people didn't have family support. there's so much we can do and government doesn't have to do it all but we have to do the best part the have. that starts at the federal and local levels but we had a program to allow people to remain in their home as long as the health of out. them had their program with families with alzheimer's and home respite, you just need a break every now and then. just a break. so there's some compassionate things we can do and doesn't break the bank to do it. i'm just so thankful there's those of you have dedicated your lives to helping those of us -- my mother is 91. it wasn't my sisters and my nieces who take care of my mother around the clock we would never put her in a nursing home.

that's not pushing to get to be or where she wants to be. most people don't. they don't have the support. we have to give them that support. you will help us do that and we look forward again to your testimony. thank you. >> senator scott. >> thank you, mr. chairman. i could tell that it's a holiday season as again can we are sitting democrat, republican, democrat, republican. this is an odd thing for us in the senate. >> i'm feeling lonely over here last night spent i did want to get to your left. >> your are welcome. anywhere anytime, senator scott. >> will figure it out in the second half. i'll say that for me, as senator manchin talked about, the issue of long-term care is something an issue that i take seriously and have had to experience it personally. my grandmother at 77 when she passed on april 29, 2001, get parkinson's and alzheimer's and the last seven years of her life, my family, thank god for

my grandfather and my mother and my aunt who spent an inordinate amount of time taking care of her at their home. fortunately, we have the resources to do so. unfortunately, there's a lot of folks we look at the demographic breakdown, unfortunate minority's pay a heavy price for not having the resources and the adequate time to care for their loved ones. we had the unique experience in a very special way. i think it's a wonderful opportunity to care for those who took care of you. there's an old saying your twice a child. unfortunately, i thin fixed this that and it's a very powerful picture, for those of us have had the opportunity to care for our loved ones. that's why this is important for our country. my second experience has been as a guy in the pensions industry for the last 24 years whether i sold long-term care policies and understand the adls and activities of daily living and how many people have not been

properly educated on the opportunities to make a decision when you're young enough to make a decision so that the payoff is you don't exhaust all your resources to get them to the two or $3000 level or medicaid kicks in. in south carolina that is $1.2 billion medicaid has put out trying to help folks who have exhausted all the resources. to have a conversation about where we're going as a nation and our government can play an important role i think is a very important decision. thank god for the chairman and ranking member who have the foresight to put us in this position but i look forward to having a robust discussion about the future opportunities and creativity in the marketplace that will provide the type of resources and future planning that gives us real hope that more americans will retire and live for the rest of their time of their retirement with dignity to include the last years of their life. thank you. >> thank you. we are going to start with

ms. anne tumlinson. she is a senior vice president at out their health. -- avalere health. she will set the stage over the current landscape is like. and then we're going to hear from members of the long-term care commission. they are going to share -- bruce chernof, dr. bruce chernof, the president and ceo of the scan foundation. doctor chernoff serves as the chairman of the long-term care commission. doctor mark warshawsky, we're going to hear from dr. warshawsky, adjunct scholar at the american enterprise institute. he is the commission's vice

chairman. and then doctor judy feder, one of the commissioners of the long-term care commission. dr. feder is a professor at georgetown with policy institute and they fell as the urban institute. and also served at the commission staff director under my former colleague, of which i was the president of the claude pepper fan club, and she served for claude pepper. and by the way, i mean, there was an example. for those of you who were not here in washington in that era, claude pepper and ronald reagan would go to it. but at the end of the day they were personal friends where they then could work it out together. and one of the great examples of that, also with the leadership of the speaker, tip o'neill, was

when social security was within six months of becoming bankrupt in 1983. they said, we're going to take it off the table so that you can't get your opponent over the head with it. they appointed a blue-ribbon panel. they made the recommendations on what to do, send it to the congress. we passed it overwhelmingly. and it made social security action rarely sound for the next half-century. that was 1983. so those folks knew how to get along. ms. tumlinson. >> thank you. chairman nelson, ranking member collins and members of the committee, thank you very much for holding this hearing, and especially with the opportunity to testify today about the future of long-term care policy. the perspective that i'm about to share comes from my work over the past 20 years first as

office of management and budget as a person responsible for the medicaid budget. and also the last 10 or 15 years consulting to nursing home provided, assisted living providers, and working with a number of my colleagues here on the panel analyzing the budgetary impacts of a whole variety of ideas for reform including the class act. so i just want to start by saying as many of you of a read noted, we spent well over 200 billion, but we pay for very little care. we depend on over 60 million americans to provide most of the care, and they provided unpaid. they do this because most americans are not insured against the financial risk of long-term care and they really want to avoid unmedicated nursing home bed. so the long-term care system is woefully under finance for the job it has to do nothing for the job especially that has to be in the future. all of the other problems that we talk about, the delivery

system, workforce, quality of care, all of these stems from the fundamental fact that under financing. i'm going to make three points to frame our discussion today. that i hope will help you all in the work that you're doing in the future, and that will make our discussion a very interesting one. i'm going to start with something a little bit controversial and hopefully a former governor will not come across the table at me. the problems that we have to solve in my opinion most partner is actually not one that is a medicaid budget problem. i worked on the medicaid budget for many years and i go see this as primarily action and medicaid budget problem. it is an issue of course. states have to pay for -- had to find a medicaid programs and our people entitled to services under those programs. governors and state governments are going to face huge challenges as the population ages. but the real issues that in managing these challenges, even more of a financing gap is going to be created. that gap will have to be filled

as it currently stands by families through their own personal finances after unpaid caregiving. long-term care is shrinking as a percentage of the medicaid budget. at its lowest percentage in two decades. over the last 10 years medicaid launch -- has grown at an annual rate of less than 5% a year. it's true we will have many more older americans as i said that the larger concern is that in preparing for these demographics, states are doing very smart and logical things on a budget perspective and they're demonstrating they can and they will exercise the budgetary levers that they had to both reduce the number of people who receive medicaid long-term care services and the amount they spent per person and do it in all settings, not just nursing home. we see that reflected already in the growing interest among states and moving people into managed care for the long-term care services and out of fee-for-service. in other words, relative to the number of people who need long-term care in the future, there will be a lot less of medd to be spread around among those people. secondly, my second point is the

inability of medicaid to keep up with growing demand points in my opinion to the real problem. the under financing of long-term care creates and contributes to enormous economic insecurity, which is already a major problem in this country. this is a big part of it. it's indicative of majority of american families and they think about what they might be facing in the future. so when they are faced with this crisis most americans, they kabul together a private resource to provide what they can. less than 2 million of the 12 that we've talked about today the need long-term care are living in a nursing home. that's because the rest live in the committee where medicaid dollars are the scarcest and for a third of all american families report providing some type of caregiving. a third of all american families are now providing some level of caregiving. when you provide this care they do it at a rate of 20 hours per week. that time is spent doing a really hard physically and emotionally challenging work of

caregiving. they do it while 75% of them are holding down another job. we know from into she dated that over a million people are paying privately for a city living or other type of senior housing and it costs $42,000 per year on average. this isn't just for rich people. these services are being financed through the sale of homes, through cogitations from a dolt children and provided to me better pashtun presence exhaust the resources into assisted living. very little of this by the way is captured in our national data. we don't have a good way of getting a handle on these expenditures. after years of working directly with providers and analyzing data, my conclusion is it's much more likely medicaid is viewed as something to be avoided rather than as a mechanism to exploit the wealth protection, and as someone whose job was to work on improving medicaid savings and he wasn't shy about it i might add, i'm telling you that there's not much here to

suggest that we have enormous opportunity to further tighten medicaid. in fact, it's quite the opposite. my final point and this is probably the most least popular point it would be made here today, is the evil people are educated about the risk of long-term care and even when they are presented with long-term care insurance policies, they managed to do that for many americans, we will not to address under financing without requiring everyone to participate in the risk pool. i say this after by the way being a proponent of expanded havcoverage through volunteer private approaches and analyzing the budgetary impacts of these. i learned from that experience at an outcome of the few that in order to adequate protect americans against the risk of long-term care need in order to correct for the under financing problems that we currently deal with, some part of the solution for the future must be mandatory participation. we have is vigorous debate over private versus public insurance options but it doesn't mean anything because neither works very well.

cover enough people when the participation is optional. it's an important debate, the debate between public and private pressure, i'm not one we should be had without facing the reality of what it will take to protect americans. and in doing so we will address the medicaid budget issue in the process. i look forward to your questions. thank you. >> thank you. dr. chernof. >> thank you, mr. chairman, ranking member collins, and members of the committee. dr. warshawsky and i are pleased to be here today to present recommendations of the long-term care commission. i want to begin by saying i'm going to walk us through the highlights of the report but this is work that mark and i get together. it comes with a spirit of fundamental bipartisanship which we think is the way forward. so again i'm going to make some opening comments on half of the whole report and marvel make some specific comments to follow. the commission had a very compressed timeline. we've said that with a six-month schedule, and have to go to the this process we roughly somewhere between 90-100 days do

our work. we had four public hearings with 34 witnesses, over 100 submissions a public testimony and nine working sessions. on september 12 as required by the law the commission voted by a bipartisan majority to issue final report as the broad agreement of the commission. want to provide you with an overview of the commission's work process and the development of the final recommendations. want to begin by saying the commissioners were a talented, knowledgeable and really diverse group of people. our expectations were that we would identify as much common ground as possible and the savage that as the foundation for moving forward on long-term services and supports issues. the discussion in areas of agreement and disagreement would be evidence-based and we would be open and willing to challenge the accepted thinking where we couldn't find substantial evidence. we were pleased with the collegiality and the about of common ground reached. this makes the point that addressing long-term services

and support issues is not an attractive a problem. this is something we can work on in a bipartisan way. each commission was asked to submit proposals. all proposals for discussion are included in appendix a of the report. commissioners been selected the ideas they felt merited the most attention, and this subset was discussed and developed as potential recommendations. proposals that could not achieve broad agreement were not included as final formal recommendations. let me state clearly that developing a thoughtful, comprehensive report in 100 days is an important success in and of itself, and a direct result of the commissioners dedication to let me provide you an overview. the report itself is written by a clear call to action. it's important for the general public to understand this need. that broad agreement provide a vision for the problem we're trying to sel solve to give. the shared vision serves as a framework that supports 28 specific recommendations. let me touch on a few key points

of the vision to get started with the notion that we must have a fully sustainable and effective long-term service and supports delivery system. it's built on concepts of personal and family centered care. it provides individuals with supports and services in the least restrictive environment appropriate for their needs. is delivered by well-trained and adequately support of a family caregivers and paid workers. finally, the competence of financing cars and approach with three prongs. a balance of public and private financing, encouraging savings and insurance for more immediate long-term services and support costs, and providin provide a sg safety net for those without resources. the 28 recommendations i could do to alter them and we don't have the time for that but what i do is boxed them up and highlight them for you. the three key areas our service delivery workforce and financing. with respect to service

delivery, i think it hinges on recommendations and you start with a better balance of community based and institutional care choices but finding the right balance is important since most folks want to be and should be in the community. other recommendations include a single point of contact, a uniform and standardized assessment used by all providers that engages the family and the individuals themselves. accelerating the development of a new generation of quality measures that includes home and community based services and experience of individuals receiving care. finally, promoting it reforms the folks on outcomes rather than settings. central to the set of recommendations was a variety of recommendations focus on improving training and support for family caregivers. including identifying the family caregiver in the chart and assessing the family caregiver as part of that airplane and kicking. other important workforce recommendations included taking

on the scope of practice and delegation interim director workers more effectively and encouraging states to improve standards for home care workers. finally, in financing given to wonder days the commission did not have a single recommendation on financing but did outlined a common vision, and then identified two different approaches that could be the basis for a broader discussion. one, focus more on public social insurance solutions him and the other based in more private market solutions. i will say when you look at both of those approaches, there are some really interesting commonalities that sort of bring them together and are rife for further work. i will say the public policy details, the cost and funding mechanisms for both approaches remain to be specified and many commissioners felt they would require principle new data, design work and careful analysis of costs and consequences before a fiscally responsible proposal could be put forward. there were five specific recommendations relative to

medicare and medicaid. next steps which one of the things that brings us here today, the commission felt strongly that it's critical to have a follow on body for the commission to pass along the baton for critical economic modeling work that is still needed and not complete. we called for a 2015 white house conference on aging in partnership with the national council on disability to focus on long-term services to support issues. with that i would want to thank the commissioners for all their hard work, our staff who really gave their summer to get us a product done on time. i want to thank mark one more time because his knowledge, leadership and engagement for this process which will import. we worked as a team from day one and i think it would be critical to get this job done. phyla of want to thank you for the opportunity to testify today. >> thank you. dr. warshawsky. >> thank you, chairman nelson, senator collins, and members of the committee. my name is mark warshawsky and i

would like to add to bruce's discussion my own views on financing issues in more detail. the commission did it reached a consensus at a high level of the need for personal savings and insurance coverage and significant government support for the lower income population. but we did not agree on structures of proportion. some of the diversions arose from a lack of empirical clarity on several aspects of the problem, which we tried to address into commission but we didn't have enough time and resources to resolve them. i'm referring to our debates on whether medicaid is now and ltc insurance program for the middle income for even higher income households, whether there is significant capacity of working age adults with severe functional limitations to purchase it in the labor force and how to improve the private insurance market. focusing on the older population, some have expressed the view that medicaid is the program just for the poor. i see there's significant extent of medicaid coverage for those

were standing in the middle income and above groups in the working years and through retirement. evidence presented to commissioners was our understanding of the medicaid eligibility rules indicate that in many states significant housing, retirement and life insurance are set aside in considering medicaid eligibility. many people who are in the middle income group and above do in fact get medicaid benefits. still there's much to learn about how significant. what is the true extent engagement in medicaid medicaid eligibility. but what additional efforts by the states bring in through estate recovery? how much do the elderly care about leaving because i haven't expand care coverage, care option b. on what medicaid currently provides? some of us believe one way to find out, these pashtuns on this question come to set up an option for a medicaid card out whereby upon retirement individuals would have the choice of receiving a lump-sum payment or the government for significant portion of their expected of the medicaid

benefits. this would be most for the poor, little or nothing for the best off. retirees would use the payment to purchase private permit long-term care insurance under desire to benefit design in the place of medicaid coverage. turning to the working age population with functional limitations, what little we heard and discussed indicated conflicting views about the extent of the capacity of return or continuing to work if significant supports were to be provided without the intended medicaid requirement for impoverished and. my interest in, past experience and david does not encourage that capacity. we all support the commission's recommendations and to assist states to achieve greater uniformity and state medicaid volume programs for lps as. hopefully we can learn much from these projects and changes. that even assuming the results are positive it is likely to indicate a policy change will be costly. in light of the severe fiscal condition of the nation we must

be willing to prioritize needs such as by tightening the currently lose eligibility standards for workers above age 50 to qualify for disability insurance and medicare. finally there was a disagreement about the possibility to improve the functioning of the private long-term care insurance market. we all agree that come it is a mess. there was less consensus on the wise, of which leads -- in my view the problem is mainly one of inadequate demand arising from the effect of the medicare program and also a lack of public understanding. at the same time there are problems on the supply-side partly stemming from the restrictive state rules on interest policy design and federal tax law. so some of us propose the following, first, provided tax preference for long-term care insurance policies for retirement and health accounts. and we feel that in terms of the savings that would arise from medicaid, this would cover the

costs in terms of lower tax revenue. second, we wanted to support combination policies such as a lifecare annuity. .. especially given recent tax increases the closings have i want to egoi stevan appreciation for the tremendous effort of a fellow commissioners shall. they did the impossible to

produce a product of three tight schedule of to i also want to think troops for his leadership. he's a great partner support to ansel trust to create theater, to the collaboration of the dialogue. >> five dr. feder. term on your microphone, please. >> i will begin again. thank you mr. chairman and ranking member and members of the committee for the opportunity to testify before you today on the path for word for long-term services and support. i appreciate the outset your mentioning of my services of staff director and the administration that began about 25 years ago. as you can see i have been at this a long time and hope to make some progress before on need long-term care so we definitely need to get on with it. but the experience most recently as a member of the congressional

commission on long-term care is what i'm testifying before you today on as well as my experience and i can tell you there is a lot of work to be done. although policy makers aren't grappling with the challenges of assuring americans affordable access to quality health care, of we have yet to tackle the equally important issue of long-term services and support. despite the political battle even critics of the affordable care act recognizes the need for insurance to assure access to health care and protection against financial catastrophe that there is much less acceptance of the need for insurance when it comes to another health-related risk one for which virtually all americans are uninsured. the risk of meeting extensive health would tax a daily living like eating in the generally referred to as long term services and support for long-term care. on the financing that is critical to the building and

effective long-term care system the recently concluded a commission stops short of recommendations. but the commissioners felt compelled to step up and did not support the commission report and offered an alternative report explaining as charged body and how congress should accomplish this goal and i would express that we include that alternative support that i have submitted with my testimony in the record. as you said about 12 million people have the need for health care today and i would remind us while it is a special committee on aging that 5 million of these individuals are under the age of 65. as you said the vast majority of the families that the families can only do so much and when people need care whether it is home or an assisted living facilities or nursing home and will exceed most families ability to pay. that's where insurance ought to kick in. as private health insurance

doesn't cover long-term services support and few americans have private long-term care insurance which typically costs a lot and offers limited value and is subject to premium increases that can cause purchasers to lose coverage that they've paid into for years. on the public side, medicare that older people and younger people with disabilities rely on for health insurance does not cover long-term care. the federal state medicaid program does serve as a valuable last resort for people who need long-term services and support, but it's protection's especially on home care very considerably from state to state and become a field will only let people are or have become impoverished taking care of themselves and i would have to take issue with the comment because the evidence was presented to us is that medicaid is not a program for the rich and the benefits are overwhelmingly going to the low

and modest income people. the need for expensive long-term services and support is precisely the kind of catastrophic, and predictable risk for which we typically you rely on insurance to spread costs. these costs are obviously unpredictable for people under the age of 65 and i think we all get to that. only 2% of the population needs services. almost half of the long term care population because it is a small percentage of a very large number of people. but the likelihood of needing long-term care and expensive long-term care is also unpredictable for people when they turned age 65. an estimated three out of ten people age 65 today are likely to die without meeting any of these services while two out of ten would need more than five or more years of service. and when we think about the risks and financial terms, half of the people turning the age 65

today will spend nothing on long-term care depending on their families when the need it finally very small percentage will spend hundreds of dozens of dollars. if as you have indicated we want people to be prepared to manage this unpredictable catastrophic rest, we need to establish a reliable insurance mechanism whether public or private or some combination to which they can contribute. it's easy for experts to agree we need a public-private partnership that the challenge is what role is each sector going to play? to spread risk and reach the broadest population, the insurance that really spreads the risk and everybody participated in as emphasized must be at the core of the future policy. private insurance can play a complementary role, but even its proponents recognize that those

and future policy around a private market will at best to leave eight in ten americans uninsured to be a public insurance can be designed in different ways. it can offer relatively comprehensive and defined benefits like or through medicare and it can offer basic benefits in the new program and it can be funded in different ways in part through taxes like a surcharge on the income tax and the savings that medicaid would often have to spend to the although i would emphasize what and set up the odd onset that medicaid is woefully underfunded and that we need new financing to support a decent system in the future. regardless of the specifics of public or social and insurance programs, they will protect all of us at risk and require all of us to contribute. in closing, i want to emphasize that public insurance will not

eliminate personal or family responsibilities. rather, it will make shouldering manageable and affordable. through a private insurance, private resources and family care and no social and insurance mechanism is likely to eliminate the need for an addict public safety net whether within or through continued albeit smaller medicaid program. the enactment and implementation demonstrates it will not be easy to enact the public long-term care insurance program but we shouldn't kid ourselves. without as our policies will continue to fail people young and old now and in the future who need care. building an effective long-term care insurance system of public protection at the core is the only way to enable americans to prepare for the risks that we all face and building it is our

responsibility. thank you. >> thank you triet i'm going to withhold my questions and i will delay cleanup so that we can get to the members. senator collins. >> thank you very much mr. chairman. about a decade ago i offered legislation that became law to allow the federal government to provide a long-term care insurance program bhatia for federal employees. it was not a subsidized program, but at least federal employees could be offered the benefit and the advantage of a group program that they could buy into. and there had been some issues in the program, but one of them is that not a very many federal employees signed up for the program which really shocked me because if you look at the demographics of this country,

one what think that at a young age one could buy affordable long-term care insurance and be protected. i'm curious, and dr. warshawsky come i will start with you on this issue because you talked about one of the reasons that the long-term care private insurance market is a mess is a in inadequate demand. i wonder if most large employers offered this as a benefit like fortune 500 companies. >> my understanding is that about half of the large employers offer it as an optional benefit. very few will contribute to its so it is an employee pay all benefits, but i think the experience is similar to what you indicated in the federal government that many should not use it.

i feel even very large well-paid organizations about 46% have purchased long-term care insurance and there are a couple of reasons for that as i indicated in and the testimony and as we have heard, by an eminent economist at medicaid does represent a type of social lanterns and it is a crowd out of private insurance that is a significant factor. most of their benefits, retirement benefits or health benefits that are given by employers are tax advantaged. this certainly provides an enormous incentive to get the benefit. clearly long-term care insurance isn't a tax advantage benefit. and i would say it is a difficult subject to the french. although it has its downside, it has its upside retirement is usually something people look forward to. long-term care unfortunately is a difficult subject. in my opinion i think it is a subject which is best handled at

the point of retirement which is why i've proposed and the senate commissioner supported this in creating a combination of policies which would be at the point of retirement such as the life care. >> i'm very intrigued by that idea, and certainly if we need long-term care insurance tax preferred the way that health insurance is it seems to me that we would see a larger of take by employers and employees. on the other hand we are aware that is the largest tax expenditure if you will about we have with employer provided health insurance. so there is a cost of doing that as well. i continue to believe though that another issue is that people are under the misimpression that somehow the medicare program is going to

cover them or their normal health insurance for their supplemental insurance program is going to cover them and as people are living longer and if you look at the statistics on alzheimer's disease which are truly frightening, the need for long-term care is only going to grow so i think that we need to do a better job and making private long-term care insurance available and attractive to people. dr. chernof, let me ask one more question, my time is rapidly running out, and it has to do with home care. most people i know would much prefer to receive home care rather than going to a nursing home and yet we have a very outmoded definition for

qualifying for home health care that has a homebound requirement, and that requirement ignores the fact that we have made technological advantages that allow people who have disabilities to leave their homes at times, and i'm wondering what you think of changing the definition or qualification for the home benefit so that it's based on the functional limitations and clinical condition rather than on some arbitrary limitation on the absences from home. we were unable to get much attraction for that but it's my

understanding that the commission did address this issue and you can tell us what the commission decided. >> thank you for the question senator collins. let me start as a physician for a second and a general internist. in my years in practice it is all about function. we need to start their because function in a functioning combination with serious clinical illness is what drives the cost and actually what really puts pressure on families and systems so by sort of starting their i think that you get to the right answer which is a slightly different answer than the one we have today and you are correct as the commission as a whole delivery did it was one of those areas that we fought really need to be revisited. now let me say on behalf of the kashechkin people understand the risk that you don't want to create something that radically grows a program and increases

the cost so this is something the would need to be done thoughtfully and it's about finding the right definition that helps the right people get the right services in the right place but the commission as a whole, republican appointees and democratic appointees came to see this as a real place where there is a need for the new definition and one that is frankly more efficient and effective and person centered. >> thank you. >> senator scott? >> thank you, mr. chairman. interesting panel as it relates to the topic. you are well educated on the topic and very passionate eye can see it in your eyes and here frustration as a number of you work on the project without any actual progress. i certainly appreciate that. and you go from the mandatory let's all get in the vote together to let's find free-market solutions. certainly i'm going to follow more on the free-market side but

i realize even in the best case scenario we can take it from dr. feder's we can improve drastically the results and having called a couple of these policies out i will tell you part of the challenge we face it seems to me when you go into a large group whether it is the united states government or some of the larger groups i dealt with in forming the individual that works for the company that the available benefit is there, totally different conversation than getting them to sign up for that benefit. so the challenge is when you have large employers unless you have enough agents or folks to help sell the market and motivate to take a second look at what the actual benefits package includes, it's very difficult to get people to sign up for something that they are not informed about as a part of the process and that is one of the challenges i would love to have dr. warshawsky -- i might call you mark because i'm going to butcher your name the second

time i say it. so this is the misinformation that really takes away the motivation. the misinformation somehow, someway your health insurance policy is going to cover this one day and if it doesn't then you are on medicare and that will cover it. they don't understand you have to exhaust all the resources. so there is a misinformation that has to be addressed and number one there is a marketing opportunity as well and when you look at the hybrid combination of the policies of the annuity is merging with home time care are we looking for an opportunity to have that balance create a different actuarial basis to then reduce the actual rate for the long-term care insurance to make it more accessible to those in the public and then adding a tax preference to that in an attempt to create more affordability and more access where we are going with it is it to insight and the longest run off in american history right now. is that similar to what the life

insurance companies have started to doing with the ability to get some of your life insurance benefits before you expire the last 25 to 50% of your life if you know what i'm talking about? >> i'm familiar with those. >> senator scott, you have adapted to the senate very well. [laughter] >> i would like to hear myself talk -- [laughter] >> i will try to address many of those. i think also as part of what senator collins indicated, there is ample evidence there is a confusion about what the government covers and what insurance covers and what it doesn't. there were surveys done by the professor jackson at the harvard law school and jeff brown at the university of illinois and it's really quite pervasive with a lack of understanding and i think a part of that is there isn't really a good structure right now. and in this we all agree on the panel regardless of the

viewpoints on other issues of public and private emphasis there isn't a good structure and i think part of that, part of the responsibility of the government is to create that structure in terms of our viewpoint and in terms of emphasizing the private sector and private resources that would include the tax incentive and also include as you indicated the life care annuity. it isn't as if the motivation is a little bit -- the insurance product that you've indicated basically in brief the advantage that you created a pooling of the population that currently are excluded from purchasing long-term care insurance because they are in poor health or insurance companies think they might be likely to become disabled and therefore they cannot purchase the long-term

care insurance but it's precisely those people the would be attracted to the insurance companies in terms of the life annuity segment of the combined policy. if you combine the two, u trap with populations and it's fair to both populations because they are both getting a benefit that they wouldn't otherwise and they could be offered at a reduced cost. and most significantly it could be offered to pretty much everybody with a very minimal underwriting which is a great advantage in terms of creating the opportunity for more private and long-term care coverage. >> to that end with a life annuity hybrid that would work pretty well for those folks typically in the moderate income level and higher perhaps than those folks struggling to make ends meet on the life annuity premium would probably be still significant. >> it would be -- it's for people that have some retirement

>> one final question. on the mandatory five now written it on too many pieces of paper. >> on the idea that we need some type of mandatory enrollment into an insurance to actually create economic security for most americans. >> from my perspective i wish we had more time that my time is about up -- you get five minutes on this committee? >> well, given the nature of this -- [laughter] -- pre-christmas meeting, please continue. >> thank you. nutter chairman on the other committees will do that, so that's why i have that incredibly long compound sentence unfortunately. help me understand because my perspective on the entitlement today is we can't afford the ones that we have to be any construct that we work with,

forget the trillion dollars of debt that isn't comparatively speaking but the challenge we have with the pension plans are underfunded, the health care that we are already exposed to, talking about a couple hundred trillion dollars of unfunded liabilities. we had a new component i just don't know -- >> that is a great question and i'm glad you asked because i will tell you again because of my professional background, suggesting to anybody that we need a new government program trying in to control the ones that we already have. we've been a pretty good fan of there's got to be a way that we can actually work with a private market insurance markets on the supply side of an fact giving americans an opportunity to ensure because right now it is

my view we say people are unprepared. how can they be prepared it's not their fault they are not prepared. i don't have long-term care insurance. i know a lot about it. my parents -- [laughter] i should point out my parents are signed up under the federal long-term care insurance program so thank you to rely really appreciate this especially. but i think that there are ways in which we can work with an insurance programs of its finance any way that it is self funded and we were promised a lot. in my company when we were modeling the act just a year ago we were dealing with a situation under a voluntary approach and a big problem that we ran into

over and over again use at a premium low enough you're not krin to get enough people to enroll. the fact of the matter is i haven't been able to figure out a way to come up with a public policy that what do what we need without going in that direction and i really do think that we know enough now to set it up in a way that the premiums would cover or the tax base or however it is you choose to finance its and there are so many different ways the benefit we would expect to pay out but it's a risk. i completely understand and agree with that. >> my dear in the headlights look israel. my office will call your office. thank you ma'am.

>> senate herd. >> i want to again welcome our witnesses today and also offer my gratitude to the chairman and the ranking member for bringing us together today. not only do you recognize the current system of long-term care, financing etc. is unsustainable, looked at you have a result to continue to convene the committee to focus and i appreciate that very much. i am hoping to maybe sneak into questions for the whole panel if i don't have too long of a runoff. the first focus i would like to have is the role and the value of the state innovation looking at this at the national level. obviously we have to tackle and the date long-term care financing at the national level.

but i know lots of things are going on in this case. in wisconsin we have a program called family care. it currently operates in 57 of the 72 counties with plans to expand to all, and the gist of it is that it improves the cost effective coordination of long-term care services by creating a single flexible benefit that includes a large number and long range of health care services that otherwise would be available in a separate programs. so just as one example of what a state is doing, i wonder what we can learn from innovation to that's going on in the states on how to address our long term care crisis. i didn't know if you'll want to take a stab at that. >> maybe i will start on the behalf of the commission as a whole. when it comes to the delivery system work force, the answer is

absolutely while something can be done at the national level the care is delivered locally and they are delivered based on the kind of providers and the range of services you have in a community come in the city and in the state and is based on the kind of needs and desires of the specific communities and there is a wide variation among the states. so we are in conjunction with the commonwealth fund produced a report card the aarp policy institute put out looking at the performance of the various states across the country and wisconsin was one of the top performers was number five in the country. and it is the robustness and the creativity and of the personal center furnace of the programs that really drive wisconsin's results. are there opportunities for the innovation particularly when it comes to how we deliver services and support families and how we address some of the operational work force questions absolutely.

the single biggest challenge in building the teams for example the ability to delegate functions from doctors and nurses to other members of the caregiving team is all state based and all professionally driven within the state law so there are many opportunities and wisconsin is a leader in that i do think the financing question quite honestly is one that comes back to a federal level and the notion of a broad framework which is part of with the discussion is today the role of the federal government providing leadership and thinking about that would be important. the states where that care is delivered and i think there is a lot we can learn from it and a lot of success out there. >> senator bald and, i take on what bruce said about financing because i think that is in many respects. we have seen a lot of innovation in some states move in many states towards much greater reliance on the home and community-based care.

that is encouraged through the affordable care act but needs more encouragement in terms of incentives to the states to support that. but as noted at the outset, states are already facing enormous pressure on their medicaid programs and are not -- you can't innovate your way out of the budget tightness. there is even as we've seen improvements in innovation in some states we see tremendous variation across the states and that means that there is home and community-based care available to some population and very little to the elderly and others the states and while bruce said the care is delivered a local level it is the care delivered a local level. we can ask the delivery is between the person and the care giver. but the finance is critical to making the service available. what we see at the state level

and we emphasized at the outset is that the states in order to control their obligations create waiting lists and it is not about state innovation and delivery. they farmed out to the managed plans that may or may not have any capacity and too often do not have the capacity or experience to deliver care so what it becomes a shift of the risk and a decline in insurance protection rather than any sign of protection. and finally i would say as we go forward and i am happy to provide you we did some analysis on the foundation to look at the future demands and the importance of the federal financing as a was said for long-term care that if you look at the aging population, in every state the numbers of elderly and the share of elderly grow substantially that we continue to see enormous variations across the states.

all states having fewer young people to support. but again, a tremendous variation and i can say i endorse what was said at the outset that if we continue the financing that we've got, we already have tremendous variation and tremendous inadequacy in many places. that inequity and inadequacy is only going to grow if we do not create a federal financing support. >> i would agree with everything that bruce said. >> i will quickly noted that the commissioner did hear from the state programs. rhode island came in. they have a medicaid waiver and many of us were very impressed by that to improve care and to save and they gave an excellent presentation and that is on the web site.

>> when they talked about what they had it actually gave them more money, not less as we are seeing in the federal policy to change medicaid we are seeing a proposal to take a whole lot of money out. >> mr. chairman, we basically got paid to have a waiver because the administration at that time wanted to grant waivers to get rhode island in, but i don't think that's going to be the common outcome. >> you all are very progressive. >> in so many ways. >> senate terse ayotte? >> thank you mr. chairman and as the ranking member and i also want to thank paul who is here

from portsmouth hampshire who is someone who works in this area, and i appreciate him being here today on this important issue. i wanted to follow-up on this issue of waivers because i think it's related certainly to the important issue senator collins raised which is how we make sure that the definition fits to allow more community-based and home-based treatment so that we are allowing obviously people to have to stay in their homes longer because the average cost of care in nursing home is approximately $80,000 a year so i can see this being important in terms of cost the also in terms of people having a better quality-of-life. so with regards to the issue, is it based on what the commission found should we give states greater flexibility particularly in this area for innovative

programs that are going to allow more flexibility on the community-based care? because i think that also fits in with this obviously with being defined by the overall federal definition that we would come up with, but i see this as an area where the states are going to come up with a better idea than we would come up with in washington. >> mia lee will start on behalf of the commission and the fellow participants can weigh in as well. this was a place they gave a lot of thought to and i think as we listened to the states it was an area of interest. and i think the take-home message was two things, there's a recommendation that talks about simplifying the process. there are so many different kinds. the weavers often work in conflict with one another. sometimes they are just that far apart that the problem is your the person caring for a family member that is in that little space between the two waivers. door in trouble. you're not sick enough for this

or to wealthy for that. so this notion of a much simpler approach to the waivers is one that was endorsed by the commission. the other concern was raised on that obviously is the issue of individual protections, beneficiary protections that the waivers deliver on the services that need to be provided. so in that balancing test is how do you create the kind of flexibility is that you get programs like some of the ones we have heard from the also make sure that in the process of providing more flexibility that we are not actually losing services for those who need them and that there is adequate oversight. >> just to follow on that point, my experience in reviewing waivers and thinking about ways in which the federal government could do a better job of the flexibility has been that over the years over the last me five to six years we've seen a lot of loosening of those restrictions to the point where the states in

fact have a tremendous amount of leeway and the degree to which people do not have access to the home and community-based services has a lot to do with budgetary issues and the need to keep the program is limited to the sort of numbers of people and spending per person than to do with flexibility around the federal requirements about what the states can do. >> senator, with regards to the cost, a lot of the process on moving people from nursing homes to home care would save money or cost money was debated and we heard evidence on both sides both from witnesses that came in and said we would in fact save cost some of the commission members themselves who were providers of long-term care services were skeptical of that and said that the system pretty much puts people in the right space is already.

so we did not hear a consensus in terms of whether that would be a cost saver or spender. >> to build on that i think that we have got a lot of experience in the community-based care over the many years we have been trying to expand it and i think there is a general agreement that we get better value for the dollar when we are able to serve people at home and not institutions when they don't need them, but we have so many people in need that we need the system and under serving today so we are offering more services at home we actually serve more people which is a good thing but it costs but with respect to the issue of flexibility and savings i have heard representatives of the governors and medicaid directors say that flexibility is not enough and they've got flexibility to get what they don't have are the dollars and for many years until recently i

think that is a function of politics, governors in both parties have joined together to call on the federal government to take over the long term care responsibility for the dual eligible for the medicaid beneficiaries who are also medicare beneficiaries recognizing that they are lacking in our resources to do that job. it doesn't mean they can't be involved as we said in the delivery and that there can't be innovative delivery on the ground but they are looking for the dollar's. >> i appreciate all of your answers and i will submit questions for the record and some of the follow-up on the things i appreciate all of you being here. thank you. >> senator warren. >> into mr. chairman and ranking member for holding this hearing. it just seems like to me this is another example of how middle class families are getting

squeezed. it's hard enough for any family to put aside anything for savings today given the squeeze on families, and now we expect families to save for retirement and long-term care at the same time that many are absorbing the costs of caring for an elderly family member, so just we have doubled up here to read there is a growing conversation about the retirement crisis in america, and in the face of this, the lack of the basic safety net on the long-term care is just more fuel to the fire on the kind of programs we are going to face. and as you have made clear, the retiring baby boomers are ill equipped to cover the full cost of their long-term care needs. we've got fewer people, they've got lower savings since the it retirement than their parents did. only 18% of retired benefit

plans. one-third of all seniors have approached the senior years have less than a year's worth of incoming and one-third have no savings at all. so that leaves us with medicaid as the sort of backup program here, which can cover some of the cost. but the current system forces seniors to spend most of their assets in order to qualify. every bit helps, but to qualify when the kafta sell-off all of their assets has other economic implications. so where i wanted to start is asking dr. feder, can you tell us about the financial instability that selling off assets causes our seniors? >> thank you, senator warren. when people talk about seniors relying on savings, i think that day to finance long-term care i

think that they are insensitive to the variety of risks that come with getting older. there is the risk of concern about having adequate resources to cover your needs. you don't know how long you're going to live so you've got to plan for that. there are ups and downs and what happens to your assets as we have seen painfully with our recent economy what's happened to the resources in that period. there is the ability to be able to assist your children in taking on their new lives and enabling them to do what their parents did, grandparents did for them now parents and dealing with the fact that we've got many young people even those with an education not able to get jobs not needing assistance from the parents as they age and i am a grandmother and looking forward to supporting my grandchildren and encouraging

them and their education and building of their independent lives and there is uncertainty all the way around. when people talk about relying on the assets in order to take care of those needs what you are saying is that is one lump and when you use them, they are gone. you have so many risks i didn't even mention the health care risks and the uncovered the health care costs seniors face so you are using your assets and that's when you've got to protect you against the whole a ray of risks. and the catastrophic risk like the serious need for the intensive long-term care is just beyond the capacity of this little nest egg or moderate three sometimes larger that's why it's so important that we need some kind of insurance mechanism to which people can contribute in order to give everybody security. >> let me just build on that and

frame the question a little bit differently and ask if i can, ms. tomlinson, if you could explain why medicaid is not a very good substitute for a pre-designed, well functioning long term care system if you could just summarize that for us to read >> i will be thoughtful in this response. so, i think the primary -- when you think about what medicaid was designed to do, it wasn't designed -- it isn't designed to protect individuals against risk. it's really designed to be there when everything else has failed which is the opposite of insurance. >> it is a very good point and i think it is critical to understand a lot of people think we've got medicaid so i will be okay if there is a problem out

there. and maybe another way to say it is to ask is this a sustainable path that is counting on medicaid to be the safety net and at best only modest savings people are putting aside during their working. >> when i think about also from the perspective of what i see people doing in the marketplace right now which is essentially using their savings to purchase something that will keep them from being on the medicaid program eventually. in other words, it's not in a fury when he would want an entrance to do to enable you to purchase the services that you need in this setting that is actually most appropriate for your needs where as a safety net program is really again kind of the signed simply to absorb sort of and the most kind of custodial and warehousing situation that their bones funded. it's really again kind of the

opposite of what he would expect an insurance product, a good insurance product to do and when my own parents, when i encourage them to buy insurance my dad said by federal pension will cover the cost of a nursing home and i said well with you like to stay at home? let's talk about and ensure against being in a nursing home. >> mr. chairman, could i ask dr. chernof also to respond, dr. chernof? >> there we go. thank you. yes. i agree. we have public policy -- i said this before and i will say at the public policy is perfectly built for 1972 and the reality is that medicaid is a program in its inception was predominantly focused on women of child-bearing age and their children. that was really the constitutional court way back when and if the average life

expectancy was 1969 and as a physician if i was in practice than you would have just seen the first. the likelihood of surviving a fairly morbid or a moral defense like a serious stroke or heart attack was a very different time and place. people are living much longer and will live with a more serious chronicle el nussle mahtesian. the public policy hasn't kept up with that and the reality is i agree with the description of the role of medicaid and i would offer to all of you that the known hypophysis if we do nothing is incredibly expensive and medicaid will bear the burden of that and will -- we will all bear the burden. families will bear the burden, states bear the burden, federal government bears the burden in a kind of unstructured way. so as you think about the work of the commission, while we didn't make a specific financing recommendations and have a broad discussion about their ranges of

the ways one might consider solving it, every single commissioner thinks the needs to be and this notion of a different model and one that actually addresses and confronts the long-term care is a way of taking pressure off of some of the public programs and what would it really takes to design a program that fundamentally actually shores up medicaid and medicare to a great degree because i would say and then i will stop i promise the night life in this system is the emergency room so i get the point medicare doesn't pay for long-term care but at the end of the day when something happens in somebody's family and you throw up your hands, it is a trip to the emergency room. i will tell you the doctor takes one look at the person and says upstairs we go and then the process begins. so i think what we are having together is a fundamental discussion about the need to think about a different

structure to take on this issue in the process of shoring up the public programs. >> the question addressed earlier to ms. tomlinson on how we were going to pay for this you give us all the reminder that if we don't design a program we are still going to pay for it we are just going to pay for it in some really terrible ways. thank you mr. chairman. >> senator white house. >> i hesitate to jump in because as far as closing words go what senator warren just said, if we don't do something we're still going to pay for it weirdest and to pay for it in terrible way is is kind of a good closing for the whole thing. much i go after you so i get to go ahead and follow up with a great closing. i did want to follow-up with ms. tomlinson about what we are seeing in rhode island is the people who have made the

responsible choice, invested their money into long-term care insurance policy are now finding that the premium is going up pretty dramatically to the point that for some people it is really no longer doable and that is particularly frustrating because he paid all this time and you have a connection to the policy and to bail out on it makes everything you pay already look like money down the drain which in fact, it is. so it strikes me that in terms of relying on the private sector to handle this problem they are actually going the wrong way in terms of where the prices are headed into where the likely market share of affordable long-term care coverage is headed. is that your feeling? >> that's definitely national, and again not to beat the drum

to much about my parents premiums went up quite a bit and that was in a really good program and about the best run i think an employer based long-term care program that exists. i think it points not necessarily to the private sector is not up to the task but that we don't have enough -- we don't have enough people in the risk pool for it to be a stable financial debt for an insurance company particularly when you are paying benefits on a set of products that are coming 30 years after you've sold them. so when we modeled this for the class act they are an incredibly challenging thing to do. for the insurance companies and -- >> out at the actuarial frontier. i wish i thought about. exactly. and it's not free comfortable. >> this is a problem they have let me turn to ms. feder. we've known each other while.

thank you for being here. what do you think -- you talk in your testimony about private public models. what would a couple of the likely most sensible models look like very generally in terms of bringing private contributions and public participation in to this? >> as i said, senator and it is a pleasure to speak to you, that the public, a public benefit has to be at the core and what i have begun to consider and would like to see us spend more time on and think there is is thinking of a limited public benefit that would be available to people after a waiting period if i would be determined then this is thinking now of the retiree population we would adopt for the younger disabled population, but what the waiting

period would depend upon what your earnings, lifetime earnings looked out after retirement so that would give an indication to the families of what they were expected with the whole they were expected to pay for the public benefit would kick in and would give insurance companies and i was interested to see recently talked about >> with the waiting period would be in the public program and what you would have to buy in the first months or years and he would know that. >> and people who have not have a shorter waiting period and people who had earned a a lot would have a longer waiting period so it would be adjusted to the income and we are looking at something like this because the insurance companies, the insurance industry has the biggest problem and when you out on the actuarial front year it was the tail, the biggest

expenditures and so they are essentially you are giving them some protection at the back. so i think that is something to export to dividing it's very important as we explore options there is another option which is that you give a limited benefit up front that everybody gets it. that leaves the tale for the insurance industry to cover and let me be less comfortable for them. but i think that we need to look at these options and see what is it that the public sector can do and guarantee that creates some space for the private sector innovation and that is where i would like to see us. >> the last thing i will ask and it is a question for the record is if any of the witnesses have information on what you believe the government's present exposure to long-term care liability is right now as we

speak. you are in the hypophysis model if you have any way to quantify what the cost is that will help our discussion in terms of being able to try to work with other people to figure out if we are going to pay for this and a smarter way to do it i would like to have that conversation in mind what the experts say we are going to pay for this anyway. >> i seem to recall that cms at one point and a present value calculation sort of a many trustees report or that i don't know if they continue to do it. >> that's why i made it a question for the record if you could get back and appreciate it and i yield back to the chairman and him and of a wonderful member for all of their leadership on these issues. >> it isn't clear to me where we go to date we have had two different opinions expressed.

the doctor argues the public benefit is the answer. why don't you give an opinion by setting aside the financial and the political difficulties why wouldn't the benefit help? >> [inaudible] [laughter] particularly in these times. i think people need to be given choices. i think they need to design things that best fit their situation and to be given the support they need in a prudent way so certainly there is a role for the government but the need to be provided as much in the way of the choices and opportunities as they can and

that provides the right incentives because we certainly do want people who can afford and i think many can to finance these costs and to ensure the costs that they do so and that it's not an unfair burden on others for that to happen and furthermore i think they've really do need -- i think it is a strong possibility, strong likelihood that the private sector with the right structure would design different options and different policy designs that would appeal to, you know, different situations and different needs which i think is impossible for a public program to do. public programs to be efficient and to be able to be administered and we are seeing this right now they have to be very simple and have to be very straightforward. that's why social security

works. if you give people choices through a public program it is very difficult. >> and here in line is it is another public program that we would be creating that i can tell you from my experience before i came to the senate i was the elected insurance commissioner of florida and the behavior of humans with regards to buying insurance, unless they think they absolutely needed, they are not going to buy it. and this is almost out of sight and out of mind. if you want to spread that a base by getting the young as well as the old into it is going to be very, very hard to get

people to buy this insurance. what do you think, dr. feder? >> i agree with you, senator nelson and we have a lot of experience with that and i am always interested when we talk about private insurance and long-term care that we are at the same time looking at our experience with the moniker of individual insurance market and we know that that is a market that rebel with problems because in part because of a desire to avoid people with pre-existing conditions and to limit their risk and that's what you see unless you have everybody participating. and the idea that i was discussing with senator whitehouse that i put before as a commission and hope that we will all consider in the future is that i think that it is based on the view that we can better

educate and help people prepare and help an industry respond if we do as it has been said set up a structure that creates some clarity about how you can prepare. ..

we just had quite a debate about that. and it was declared constitutional by the supreme court. but it is not easy. let me ask you on a completely different kind of subject, we've really had some problems in florida with assisted-living facilities, basically taking a damage of seniors. nursing homes. do you have any suggestions? we've got people starting these things up that are unlicensed. obviously, they are breaking the law. we are talking about the care and nurturing of ours and yours.

did your commissions as anything we have to be doing? >> so you raise a really important question, that are not. actually, as a commission, we had a lot of focus directly. indirectly, we had a real concern that we don't really understand how to think about or measure quality in that space. this is a space that has a lot of resources that are paid for privately for combat of voluntary services. so it's a different place than the rest of health care lives. the rubric for both regulatory oversight, quality control integration need a lot more

work. but the commission itself, to answer your question directly didn't specifically go into great detail about these alternative forms of community-based support, oversight and regulation. >> we didn't have more testimony on that then you're remembering. we had a lot of discussion on the workforce side. we have a great deal of discussion and concern. and we also had testimony as to problems, quality problems in nursing homes as well as assisted living facilities. we been over the years a lot of policy average to mitigate those on the nursing home site. the process inadequate standards and really try staff. because it's medicaid doesn't cover -- doesn't finance assisted living facilities. there's a real concern about

standards as you say. so i believe that we heard a lot of testimony. i know the alternative report make recommendations about -- we address the stuff on the training side. there's been an exposé recently of a particular living facility of grossly inadequate training for staff while claiming to be offering specialized care for alzheimer's patients or residents. it was both embarrassing and appalling when you thought on national tv. it is not a loan example. we did hear testimony not only about the need for, but examples of training programs. i believe what we heard from a state of 10. both better standards in training for workers, which is better obviously for the patients who may serve and also

creates better jobs by better pay for the workers who were aligned on care for families. >> i would say in the commission made many recommendations on workforce. your specific question was the oversight regulation and management of delivery entities. while we did hear testimony in that space, that is not a place where the commission made any recommendations. the workforce peace is only a part of what it means to operate these different kinds of environments. the health care perspective people are roaming one piece of it and the oversight of things like assisted-living, organizations and other kinds of residential care options that are sort of multiplying in front of our eyes. that's a completely different question than the workforce is an important, but it's only one piece of the discussion. the question you raise merits a lot of careful thought. candidly, the commission itself didn't get that far into the

issue. >> you want to comment with regard to long-term care for seniors who also have disabilities. does the system work? >> that's a great question, senator nelson. the system we have now doesn't work well for hardly anybody. i don't think it works well for older individuals with serious chronic illness or functional limitation or cognitive impairment. it is a very fractured, very provider centric system that leaves individuals and their families to do the care coordination, which is basically missing from most models and systems of care. we heard about some models that are better. there are paths to better processes of care. there's things that could be better. to your question, it's even

harder for younger individuals. many of the systems that serve them were actually not built for them. they may have been built for older people are different population. for younger individuals with serious functional limitations or cognitive impairments, they have their whole lives. there is a different place in their life church in erie than an older person is and have different desires and family work. i do think we have a long way to go. it is a particularly long way to go for younger folks with serious needs. >> supposedly enacted a plan for private insurance. the question comes, who is going to regulate it? would return it over to the state insurance commissioners? or the state health regulatory agencies? ms. tomlinson. >> that's a good question.

i think if we move in that direction of creating more incentives for people to purchase private long-term care or reform the marketplace to all those kinds of things, we continue to regulate at the state level the way it always has. there has to be more of a federal -- there has to be more of a federal role in setting the bare-bones standards. i guess you could call parameters around which of the policies would be designed and how they would work. fundamentally the marketplace is not working. we need some actual marketplace reforms. those come from a federal level. issues around the regulation, around the insurance pools and that could continue to operate at the state level. >> senator nelson, i'll just point out in the current regulatory set a come as states the main responsibility.

as part of tax issues, the federal government does have some role in terms of design of long-term care insurance policies. one would imagine if there were additional tax incentives provided that naturally would go an increased responsibility. also note that one of the reasons for the increases in premiums is related to federal policy. that's the policy of the federal reserve board was very low interest rates. those policies were 6% interest rates, which clearly were nowhere near that. so there is an interesting mix of federal and state issues at hand. >> you remove that a patient must stay in the hospital for three days before they can receive services.

there's a few of us have. but agree with that. can you tell us why you ended up recommending not? >> sure. i think there was a sense a row is created in a different time and place. i would say the commission felt that what it needs to be as revisited. they needs to be revisited and a model of care we thought through because the reality is the state has come down over time that we want -- the goal should be to get people to the right care payrate provider. so by having this three day stay requirement, there could be people who could step to a lower level of care sooner or unable to access the level of care. they are put in a higher level of care because the higher-level or different level of care, cq rehab, which is actually more

expensive than a skilled nursing facility might be. i think our call was fair to be an opportunity to move this day and replaced it with an approach that is more sensible and consistent with current care practices. again, be mindful of us put there for a reason, which was a cost control mechanism more than anything else. taking it away creates new opportunities. we think in the current environment it isn't serving the cost control gold that was originally put in place to try to achieve. >> i will add that was the consensus of the commission and another element of it was that there's been a trend of patients being in hospitals, thinking they were admitted and never actually been at it it. therefore that does not count. even if they're in the hospital for five days. that struck us as plain wrong. but it does raise the question

of what is the mechanism that does control the next phase as bruce indicated? we didn't have enough time to figure out the replacement. the three day rule struck us is not the right one. >> we are going to include in the record an article by bloomberg news that illustrates how difficult it is for seniors to be able to afford long-term care. this is our last hearing of the year say for some unusual thing we might he and session on new year's eve last year. >> will you bring the champagne? >> as a matter of fact, you remember. new year's eve brawl on the floor. i spotted one of my dear friends

in his talks, sitting in the gallery. i went over to him and said charlie, what in the world are you doing here? he said jackie and i went out to dinner and i decided this is the best entertainment in town. [laughter] >> except for the performers. >> well, you all have been great. thank you. it's a tough issue, so thank you for helping us get into it and start to peel back the onion. we appreciate it. happy holidays, merry christmas, happy new year. the meeting is adjourned. [inaudible conversations]

>> i think the success that an attributed to reaganomics is totally unwarranted. we have the greatest keynesian deficit inch between 1981 and the engine of the bush administration. those 12 years are all really the reagan program. he did have an economy that rebounded since volcker killed inflation and the deficits are enormous and they stimulated the economy. but they established a precedent for continuing chronic massive

peacetime deficit and put the republican party, the old defender of the treasury key into the position she means so and i'll quickly expressed deficits don't matter. i was the beginning of the yarn. if there's not a conservative party that is defending the treasury, taxpayers and fiscal rectitude coming or going to have a free lunch competition between tax cutters, the republicans and spenders, the democrats. that's why you have 17 trillion of national debt today and why it's out of control and my we have a doomsday machine.

>> the question i am most often asked why tell people i've been writing a book on the history of guerrilla warfare is what is the first guerrilla war? and the answer is guerrilla warfare is as old as mankind itself. it is impossible to say was a first guerrilla war to leave because that is essentially tribal war. tribal warriors going back to guide mankind that have been fighting with hit and run type experience different staging ambushes, attacking enemy villages and fleeing before the main doors of the enemy can arise. they don't stand toe to toe and slug it out with the enemy and the way we imagine that conventional army. so in that sense, tribal warriors have been taking part in guerrilla warfare for

countless years. by contrast, counterinsurgency warfare and conventional warfare are both relatively recent inventions. they were only made pot full by the rise of the first city state in mesopotamia about five dozen years ago. by definition and you could not have a conventional army without a state. contiguous states commuted no conventional armies, which had officers and enlisted rank and bureaucracy in logistics and all these other things we associate with conventional armed forces. as soon as you have the very first city states in mesopotamia, they were immediately being attacked by nomad from the persian highlands. essentially, guerrillas. so from the very start, organized militaries have always been a lot of their time fighting unconventional or regular warfare. you know what? those terms don't make a heck of a lot of sense. that's one of the big takeaways

i have been doing six years of reading and research for this book. the way we think about the entire subject is all messed up. we think that somehow conventional warfare is the norm. the way you have to fight divide is how conventional armies let it out in the open. the reality is that supposed an exception. take about the more modern world. what was the last conventional war that we saw? this is a hard question to answer because in fact it was the russian invasion of georgia in 2008, which didn't last very long. yet all over the world today, there are people dying and more. either afghanistan or mali or syria or congo or in any other countries. all these people that the dems been ravaged by unconventional warfare. this is in fact the norm. we have to adjust our thinking. we have to flip our thinking 360 degrees and understand unconventional warfare is the dominant base of warfare. always has been and always will

be. the >> what we know of the founders, you know, the 32nd version is the guys that were against the constitution with the religious conservatives that the day, the anti-federalist to very much, and included patrick henry at the time, wanted to have religious test for office holdings and so forth. the founders for the cosmopolitans. and yet, most of them were christians. but why did they take the approach they get? they believed also that no faith come including their own was beyond faction. medicines prescription was essentially a multiplicity of.

>> there's been developments over the last couple of decades in terms of government funding and religious institutions. so i would say that there were some real issues to work through and to figure out the rules that govern syria during the clinton years, the early clinton years. they changed over time and some people change and think is a good thing about them. there are some really important issues that people fight about with some legitimate disagreement.

>> up next, treasury secretary jack lew delivers testimony on the status of the international financial system. topics include financial regulations, trade talks and sanctions against iran. in the house financial services committee, this is about three hours. [inaudible conversations]

[inaudible conversations] [inaudible conversations] >> the committee will come to order. without objection, the clear action directors to declare at any time. the statutorily required herein is for the purpose receiving the test money and the secretary of state of the international

financial system. before you begin, i'd like to make a few preliminary comments. i want to thank the members and staff for their flexibility in scheduling due to the passing of the late nelson mandela in order to accommodate both the number of members and secretary for both mr. mandela spandrel and memorial services. remove this hearing to this morning. so as many members know, today the committee will feature a double feature. we will see the rest of you at 2:00 as well for monetary policy area. members will have an opportunity for lots of quality bonding time today. i wish to also announce ahead of time to 11:00 a.m. i will declare a short recess of the committee. i now recognize myself for five

minutes to give an opening statement. the committee meets today again to receive the annual testimony of the secretary of treasury and reforming that the international monetary fund and the broader international financial system. there are important questions must be raised. undoubtedly hard-working american taxpayers suffer from bailout fatigue. having been forced now to pay for the bailouts of aig, fannie mae, freddie mac, chrysler, gm, banks big and bank small and most recently the federal housing and restoration. many americans question the wisdom of supporting the imf and other multilateral financial institutions that take their hard-earned dollars and use them to bail out of the countries. americans do not want to be part of the bailout nation anymore than they they wish to be part of a bailout plan it. an important question at the outset is whether the administration's credibility has

been compromised and is compromised our ability to refer multilateral financial institutions. american presidents most awe-inspiring power may not be the ability to launch it does state that when he speaks, the world listens in the world listens because the president's words are backed by the moral authority of the united states of america. clearly the moral authority of our nation has been under question by the words of our president. whether it is in a red line in syria coming to you with the ram that dismantles numerous sanctions, that does not end the terrorist regimes march towards a nuclear bomb or revelations about spying on our allies, we now live in a world where too many of our friends no longer trust us and too many adversaries no longer fear us. the collapse in confidence and credibility is not designed to foreign land here at home. millions of americans to president obama at his word when he promised no fewer than 36

times they could keep their health insurance if they liked it. they now know better. next the last couple of have brought the jobs front americans suffer with the slow is because recovery and generation. is regardless, many americans question our ability to continue supporting multilateral financial institutions like the imf. and president obama took office nearly five years ago he was able to pass every major piece of legislation he wanted. the stimulus, obamacare, dog franc largest tax increase in our nation's history and the results speak for themselves. the income inequalities that pay that debt has never been higher. small businesses are drowning in the greatest sea of red tape in our nations history and a number of americans in the labor force is that it lowest level in 30 years. five years into these policies, hardship and anxiety bound, just listen to what i hear from mike

teacher and in the fifth congressional district of texas. people like nancy dallas who wrote i have been a convert job or close to two years. god has blessed me with many jobs on and off, but that does not pay the bills, unquote. i have spent more time unemployed in the last four years than i have employed, unquote. john from elbow in my district right cities had to close his business and have been seven years old and i try to find a job, but no one wants to hire a 70-year-old when so many younger people are out of work. these people deserve better than the results this administration's economic policies, which brings us back to the essential truth. you cannot strengthen and reform the global economy without first strengthening and reforming the american economy. respect for the rule of law, fundamental tax reform and tax relief, freezing federal red

tape hindering job creation and giving one sixth of the economy health care back to the american people. it also means ceasing to spend money we cannot have, the greatest threat to a stronger economy has a growing national debt. this is a debt that has much room under this president. never in our history have so few in that it so many so quickly with such dangerous implications. we know our debt is unconscionable, unstable and frankly i believe it to be a moral -- and moral, yet the president dismisses the thread at every opportunity and a fear leads the parade of washington did deniers. under the current policies is a matter of when for the sake of our economy, for the sake of our children, for the sake of our

freedom. i would call upon the president to work with congress now to avoid this catastrophe or nation does yours better. at this time, i now yield six minutes the ranking member on the statement. >> i want to thank chairman hazor lang for holding this hearing. i'm delighted to welcome you come secretary lu, before committee to testify in the international financial system. i'd like to discuss what i believe to be one of the biggest social, economic and political challenges we face today. both domestically and internationally. that is the problem of growing inequality. over the past 30 years, income inequality in the united states has his heavily increasing. this was the case even during periods of growth. before the financial crisis, levels of inequality in the united states reach peaks not seen since the late 1920s. while other advanced and

emerging economies have also experienced rising income inequality, the most shocking are right here in the united states, the highest level of inequality of any of dance industrial nation. in fact, today 20% of income in our country goes to the top 1% of america. if you look at inequality of wealth, it's even worse. the top 1% holds about 40% of the country's wealth. the gap between the rich and poor in america. moreover, the gains from growth during the recent recovery have accrued overwhelmingly to the wealthiest people in society. almost 95% of the income gains since the recovery began have been captured by the top 1%. this means the most unequal advanced industrial economy in the world is becoming even more so.