a muffled will mark the next up and evidently needed long-term oversight and reform. >> thank you. as i said to my review the testimony of all the members of this panel. it is extraordinary, and i don't want to miss it. if you could hang around for a few more minutes we will be back. this committee will stand in recess for tenants. [inaudible conversations] [inaudible conversations] [inaudible conversations]

[inaudible conversations] >> this airing of the subcommittee will resume. it would have been ten minutes except the senate train broke down. [laughter] we had to walk over the capital. please proceed. >> good afternoon, mr. chairman, ranking member, members of the committee. thank you for revisiting this pressing issue. changing the culture in the prisons will change the culture and our cities and states. the disproportionate and arbitrary use of solitary confinement is not only immoral but they missed the opportunity to break the cycle of crime. this approach doesn't increase public safety and is contrary did justice goals were the criminal justice system, accountability and restoration.

teaching people to become good citizens red and just give prisoners is a charge entrusted to the correctional officers by the taxpayers. skilled wharton's understand that in sharing prisoners become responsible and productive members of society at large is paramount to the safety of our communities whether inside or outside of the prison walls. part of creating safe communities in cyprus is includes removing said -- prisoners, individuals to buy its societal norms by placing themselves or others at risk. what is being test of the prisoners should be available to them. many in this room know that just -- just disfellowship holder size power and pride crumble when he left being president nixon's council to becoming a federal prisoner, but be -- upon his release from prison his work actually started touring as

solitary confinement unit in mollah prison in 1979. out of that meeting, senators, is where justice was founded. i am grateful to you, mr. mr. chairman, and ranking member crews for your support, as has been mentioned, of cosponsoring this martian since the act. i believe that mr. colson, if he were alive today, would apply your work in the area. solitary confinement to let in theory, is for the worst of the worst of the prisoners. however, davis says otherwise. case in point is illinois where study was conducted and found that 85 percent of the prisoners were sent to disciplinary segregation for my rules violations. prisoners in these circumstances too often do not have their cases individually reviewed and looked at from oversight. there was an analogy given earlier about police officers

when they are struck or other things, but it seems that the justice system does a much greater job on the outside of the loss of having accountability and individual review that seriation has had is starkly. when it comes to the discussion about mental illness, regretfully our family, friends, and neighbors suffering are too often punished rather than treated. and i would like to share the story of a man named kevin, a young man i have a privilege of knowing back in michigan who was diagnosed with bipolar disorder when he was 11 years old. fourteen he was pressured by a peer group to holding up a pizzeria with a toy gun. he wound up in an adult prison and spent nearly a year in segregation. he described his experience as an ongoing panic attack and felt as though he was stuck in an elevator that he needed to escape from. he eventually tried to commit

suicide but instead of helping cavan the prison guards at the time simply increased his punishment because that was all that they were trained and knowledgeable to do. too often our jails have become our country's mental institution i believe that supporting bills such as a community mental health collaborative mental-health fact that senator frank and spoke of earlier will help provide resources to our state, law enforcement community as well as to our state corrections officials when they're encountering in dealing with people other suffering from mental health issues. strategy's from the justice vote the use of segregation is first to use mission house and to

target anita president of mental illness, developmental the lace and that is at risk of sexual victimization. second, to use alternative responses to the disruptions the outside of segregation. third is to increase the training for the prison staff on methods that promote positive social behavior within the bureau of prisons. jurisdictions in playing the strategy several reduced there use of segregation but have tracked concurrent reactions and the use of force on prisoners and the number of prison grievances. i want to know is that the dca and other organizations had taken a very progressive stance on inviting in an external and independent reviews as is the bureau of prisons. to the senate panel whether it is the internal revenue system of the permanent justice i believe that holding government accountable comes would no expiration date. and the issues of human liberty and public safety are at stake

we must never give up the launch i would hope that this is at the end of discussion today and that this can be continued including the work with the newly authorized task force on prison reform. it is not the end. this is round two. i don't know how many more there will be, but i want to bring this issue up again. we keep inviting you to these hearings. i find myself agreeing with you more and more and least highlight a few things that i know you disagree on. thank you for coming. let me turn the microphone. >> thank you for your on this. >> and i will note that you did find something you disagree with

the chairman on. [laughter] >> we are a conservative think tank, but i will tell you that if you believe in making government less intrusive him of personal responsibility and accountability, we have to shine the light in the darkest of places. so i'm pleased to be here today. one of the issues that we feel strongly about is ending the practice of releasing and mist directly from such a confined. a major policy in texas with over 13 and releases. in washington state the study was done on their super max unit that found inmates released directly from solitary confinement with 35 percent more likely to commit a new offense. even more likely to commit a new violent offense. not released from solitary confinement. i want to point of the successes we have seen in states around the country. in mississippi, as that merely a

solitary confinement. and that has saved them over $6 million because it is less than half the cost. most importantly violence has dropped 70% since then made those reductions. and in maine, for example, they have gone from 1309 to between 35 and 45 today just in the last couple of years. i would i want to know is the corrections commissioner has noted the down side for a solitary confinement has left some sense reductions environment to of violence, restraint shares, inmates can themselves up which used to happen every week. almost totally eliminated as a result of these changes. reducing the duration. those that used to go there for drugs, they may still go, but if they test claim of bacon graduate out of solitary confinement and a summit is being kept for more than 72 hours a decision is reviewed by

the commissioner. i also want to know that one of the keys in texas to reduce in solitary confinement has been the gain enunciation program. announcing their gang. i also want to point out that using sanctions and incentives behind bars is a way to provide for incentives that the inmates to be a better which therefore reduces the need for solitary confinement. one of the models of the parallel universe model. the longer curfew. does that ms. b gave have been denied privileges such as making donegals and access to the mail and other things. this creates a positive incentive. we notice things like the white hope program. there is a 24 hours timeout. we have to make sure we're not

overusing solitary confinement. one of the strongest incentives is aaron's time. there please that senator corner and, white house, and other members are supporting time legislation, particularly for non-violent offenders. clearly by reducing the number of vendors we can make sure folks have an incentive for good behavior in prison and also by the way as steady shown from. the distress of the supervision. pat a list of recommendations that we would do commending the released directly from solitary confinement which include eliminating rules that deny reading materials. "trading and the escalation techniques. using that power of the universe model that creates incentives. creating the matrix and intermediate sanctions.

this should get a solitary for an extensive time of for those the cut minor violations in intermediate sanctions that can be used to get their attention incorrect behavior before releases solitary. reducing the number of vendors, time policy, the mission of housing which was mentioned earlier by those soup are in protective custody, former police officers, mentally ill, unfortunately those individuals often end up in 23 hour days sell as is being punished for disciplinary actions and me know that the smaller housing communities can address that issue. if we can address the overcrowding that helps immensely. when you have then piled in day rooms it makes it more difficult . i wanted thank the committee for their work on the essentially believe we are on the path to solutions that will increase our order in prisons and make the

public safer when these inmates are discharged. >> thank you. again, thank you to the entire panel. special thank you. coming in speaking openly about their own experience with incarceration. i have read your testimony three times. it is compelling and i invite you a few minutes to summarize and then we will ask some questions. >> thank you. chairman, ranking member, thank you for inviting me speak about my 15 years in solitary confinement on death row at the louisiana state penitentiary at angola. i am here because in september of 2011 came the 11,241st death row exonerate says the u.s. supreme court reinstated capital punishment. solitary confinement for 23 hours a day for 15 years between the ages of 23 and 38.

this is cool -- in my written statement that described the physical and mental torture that inmates suffered. the end kolar often unbearable and normal physical and mental activity coming human contact and access to health care severely limited. as harmful as these conditions of life in solitary is made all the worse because it is often a hopeless existence. things can survive without food and water. they can survive without fleas, but they cannot survive without hope. years on end in solitary, particularly on death row can drain help from anyone but is a solitary there is nothing to live for. i know what had to sell lost my help. after realizing of my existence of billing for years on end. i was on the verge of committing will was basically suicide by state by voluntarily giving my legal rights and allowing the state to carry at the sentence

of death, something they would have been done only a few weeks after signing the necessary paperwork. my lawyer talked me out of doing that by convincing me that i would be exonerate it someday. and that is why i was ill to regain my health. i was all of the fortunate because i have used borders but if they -- state effectively kills most men in solitary. and can see no reason to subject anyone to this type of existence . no matter how certain we are of their guilt. even if you want to punish some severely we would -- we should refrain from this treatment only because it is the human and moral thing to do. my religious faith teaches that we should be humane and caring

for all people, st. in center alike. what does this say about us as a nation and even before the law allows the state to execute a person we're willing to let the -- let it kill them bit by bit and day-by-day. i do not condone what they have done but i do not condone what we do to them and we put them in solitary for years on an and treat them as subhuman. they are better than that command a civilized society should be better not. would like to believe that the vast majority of the people in the united states would be appalled if they knew will we are doing and understood that we are torturing them for reasons that have little if anything to do with protecting other inmates and prison guards from the. no matter what else we want to call it. i would like to think that we can all agree that our constitution prohibits it.

at think the subcommittee for looking at the situation, educating the public about it and employees ten answer any questions you may ask. >> i talked of the inmate that i met that said we get an extra 50 years because they told them to put somebody in this celt i would kill him and i did. it was stunning, cold-blooded. did you run into similar circumstances and other inmates who were that dangerous? >> there was -- there was one. he volunteered for execution, and that is why he dropped his appeals. he stated that if he ever got out he would do it again. >> what is the right thing to do of that can a person based upon where you have seen in your -- i

don't know how to describe it, and prevalent experience. >> well, i have also -- i have also come in contact with individuals who are in prison, on death row. they make no attempt to profess their innocents. they would prefer life as opposed some death. but someone who would make a statement like that to kill someone that is but an insult them commences leave them in a sell by themselves. you let them out at the appropriate times. you do not just like the men all and forget about it. if i was to do that or you were to do that to someone in euro you would go to prison for that. it is inhumane. >> thank you.

i know that center and others maries the question about women, incarcerated women. you know the vulnerabilities that they have. think about other categories, those who are being held for immigration efficent -- offenses which are technical violations, not crimes perce. no question about it. and the vulnerability they would have because of language and culture and the threat of deportation. what can you tell us about those women and what they face? >> women have not been convicted of a crime and get are held in consignments for any variety of reasons. that is a horrifying thought. it's used not to control people who are dangerous but as a tool of control within an institution

when other management tools of an institution, whether it be a detention center, a prisoner, jail would be far more humane and likely more effective. >> was there any recourse at ten bury in terms of person or office that you could contact as an inmate if you sell or fold your being threatened to act. >> if you have contacts with the outside world. different prisoners have different degrees of contact with the outside world. frankly, a prisoner like myself was middle-class and as a lot of access, money on my phone account. a much better chance at gaining recourse if i was subjected to either it sexual abuse or any of

a kind of abuse. but within the prison system is the very slippery slope to try to gain justice and inmates have the very limited trust that prison officials unless a prison is run in a way that is transparent and humane in the first place. so there is a medium security men state of prison and visited an ohio number of times run in a very different way than any prisoners ever held in. and now borden is a remarkable person. so different institutions are run in different ways and it makes all the difference in terms of whether a prisoner who is being targeted for abuse whether by staff or another prisoner feels comfortable seeking justice. >> how much contacted you have with the yes on world?

>> i had five contact visits with my family in 50 years. >> how often were you able to the me with your attorney? >> never they add up to visit. i have a law firm from minneapolis. april lease on the head three maybe four times in 15 years, but i was more concerned with the case work there were doing. if it wanted to come and visit, fine. being in and sell like that you kind of chairs the visits. i was more concerned with the progress that was being made now case. >> it was appointed in director sam mills testimony where it really kind of stunned me. what i heard him say, 4% of the

federal population in prison suffers from mental illness. i may be off on the number, but not too far off. i have heard numbers of people with mental illness challenges and prisons, state and other allies directly higher than that. but is your impression about the question a mensa illness and incarceration? >> i cannot speak for him and i believe that the fourth person was right. we will went through my mind is it is possible that he was talking about those that fall within that definition of major manley will return numbers about 4%. our mental health means that we don't fall into that major category of 34%, about one-third of our population. intaglio a 70% of the population as some kind of drug and/or alcohol problem to throw into the next. >> will we found in the first

jury was that many people with mentally challenged people, and i can tell you what levels, but many people found it difficult to follow the rules as well as they should have. any type of resistance on their part because i had it wanted to resist further or mentally challenged. >> let me give you he sample i get when i speak publicly about it. foul was walking down the sidewalk after a bus stop and someone was mumbling to themselves, we would keep walking. antigen there was some type of mental health issue. typically in an institution that would probably be someone if there were disrupting the day-to-day activities of the institution, would get themselves into an administrative some sell. and so i cannot stress this enough in my mind, administrative segregation is

used and except for the extremely dangerous, used to allow an institution to run more efficiently. it suspends the problem at best but multiplies that it's worth it tells you about that person. and if he had not addressed for government debt to begin with you have done nothing, and that is the problem. was travois and what we're trying to change in colorado and making great progress is how can you hold someone accountable if they don't understand the rule their boat to begin with? it is a no-1 situation. >> senator. >> thank you, mr. chairman. would like to thank each of the witnesses for coming here and for giving your testimony. i would also like to thank you for your advocacy and involvement with the justice system and advocating a behalf of those who are incarcerated.

in particular, mr. thibodaux, i would like to thank you for your powerful and moving testimony. when i was a lawyer in private practice to have their virginity to represent john thompson who was another individual who was wrongfully convicted of murder in louisiana and then sentenced to death and subsequently exonerate it. it was a powerful experience. personally have the option is to get to know mr. thompson and representative -- represented in the court of appeals in the u.s. supreme court. the chairman's comment to apologize to you. and to thank you for having the courage speak out. it cannot be easy to do. this issue is an issue that raises complicated issues because you have got conflicting interests. mr. ramus, i would like to ask

you, in your judgment, with what frequency is solitary confinement used for relatively minor infractions? >> i can only at this point give you my impression. my impression is that it is incredibly overused in that area this -- i was talking during the break. really, the process has not changed in over 100 years. i try and think of what is still being done 100 years ago that is being done today that should be done? and i cannot think of anything. and so when i look at that whole process it, again, has become a tool to make a facility run more efficient. in that part of our mission, we are failing because we are sending the matter into the community worse than they came in command and believe that is

what makes this time in administrative segregation. when i hear some of the comments @booktv this bucket john j. university a few weeks ago on some issues interactions. sitting next to me was the director of the texas corrections in florida or california corrections, some pretty big systems. when i was asked that question by one of the audience members i said -- and appointed to the others, welcome to the knuckle dragging fun club because the public perception is that is what we are. and if i can stress one thing, and i saw mr. samuels trying to stress it, and i would also. at one time early in my law enforcement career i may have had that same impression, but i have to tell you that overall i have never seen a more dedicated professional group of men and women at risk their lives and do it because they want to have a safer community and put themselves at great risk to do

that. that aside, like any large bureaucracy -- envy tend to be the largest in any state or close to it, you end up with problems. it is how we react to those problems. that is why right now when i really appreciate what he have done by calling this hearing in miami participate because i can tell you that i don't know of any state in the nation that is not taking a hard look at their administrative segregation policy. you have really brought to the forefront. we all understand that as professionals the movement is -- this is not the right way we should be treating people. we get that. will we ask for his help in finding some solutions because there are some that are too dangerous that they cannot be let out. i have to stress, than as a small number.

>> thank you. in your written testimony you stated that while the goal of your reforms is to decrease the number of offenders house in administrative segregation, there will be a need for a prison within a prison. some vendors will need to be isolated to provide a secure environment for both staff and offenders. it strikes me that a great many people would think that solitary confinement, particularly for an extended amount of time is not an appropriate punishment for relatively minor infractions, but it could well be a necessary tool for those violent inmates and may pose a real threat to the safety of other inmates or guards. these are the members of this panel has interacted with the criminal-justice system in different capacities.

as carmen in mr. thibodaux as inmates. mr. brouwer administering. mr. dear roche administering and helping bring hope and redemption to those incarcerated mr. levin studying in the important justice issues. the question that i would ask of all five of you is in your judgment based upon the different experiences you have had, is there an appropriate role for solitary confinement? is there a need for it? and in what circumstances it at all? and i would welcome the views of all five witnesses. >> in my mind right now, yes. but in a limited sense. that is because i have said that there are some diseases for which there are no cures.

that does not mean that we don't keep trying to find the cure for the disease. what i have been told by my clinician's is that we have four to five in our system that if they are let out of administrative segregation they will kill someone. they lay their responsibility on me, and i get that. but i also understand that in all other areas that there is so much room for improvements. let's figure that group out. let's take care of on the other members sitting in administrative segregation that at this point i think there are many other alternatives other than keeping them there. >> i would -- >> yes. that is an actual question. what first of all say we have to distinguish 24 hours 72 hours to the fuse the situation. in texas long-term the average time in solitary is four years.

some served as long as 24 years. the other issue in texas is thousands are placed in solitary confinement solely for being suspected gang members upon immediately entering prison. i think it is critical that -- and i question the extent to which we are doing and in texas. we have gone down by over 1,000 in the last couple of years since the server bringing this up with a legislature. there is an ongoing independent study that the legislature approved last session. but one of the issues you brought up, commissioner, that is important is if you have somebody in solitary, having them be able to earn an hour more, programming and set so that they can get out or gradually work their way toward more interaction. then said that is a great idea. i think generally speaking the more you can create positive incentives and graduated sanctions for inmates to address this issue, that is going to be

able to make sure that the people in long-term solitary confinement to be those that have done harm to other inmates or staff for a may statements indicating that they intend to do that. ian, the short term can be used to diffuse. but even that there is diaz collation training, things, just making sure there is another overcrowding. proper ratios to diffuse a lot of the attention of leads to violence behind bars. >> there is a study, senator, i was done in minnesota for a fee based dorm that we have run there for more than ten years. there is a 10-year study of their single inmate that went through that program. every prisoner the went through there, the worst of the worst. at the same time we found that

there was no deviation between the technical violations of the people that went through that program and the general population in minnesota which had a 37 percent recidivism rate in other words from a human beings are still going to be human beings even if they move away from a criminal lifestyle. so i do think that director's comments about technical violations that we should take to heart, that is the same type of behavior i see in my kids, the same type of behavior see in the workplace. guess what, when we study it and find a bunch of people the mood with a criminal activity they will get it wrong on the technical side of how they get through the day. we need to take that seriously. when i started my statement, if you want to change the culture on the outside in our cities and their states we have got to change the culture on the inside, and i'll was so impressed and encouraged to hear people talking it was going out, mr. chairman, and the director,

his willingness to go see people doing it right because they're our prisons where the population of people in the prisons have made a decision that they don't want to live in a bad downward spiraling culture. when the of the award is change that culture and use very sparingly the use of segregation were people knowing that they can return back to a positive and improving culture when they straighten there act out, that is where it is best used on temporary, is with the invitation of working your way back because these corrections officers do have the responsibility the same as the people the serve and a fire department for. they have a difficult job. the we have to empower the improved we have to have

professions. and they're using this power how is it being the doubt and to what end, what the outcome, what metric? we can do up far better job than we our's three you will love the will to eliminate. >> i don't believe the solitary confinement as a rehabilitated value, and therefore i think that it should not be used other than for the most serious security concerns bow. what i have seen most often is disciplinary. this year that women do not go and attack ads say but some do spend years and years in solitary confinement. i can only emphasize that there is nothing rehabilitative about being locked into a tiny box for 23 hours a day. so correctional system should take seriously their responsibility to rehabilitate and to direct the tremendous

amount of taxpayer dollars of they consume toward that goal. >> in my 15 years in angola it got to apply where we were all being taken to the are one of the time. when i got there they were taking us one tear at a time, but an incident takes place and everyone suffers the consequences, not just the person who commits the incident. and that is a really big minus in the system because it tells everyone else that, well, it does not matter if i am a model inmate because i wouldn't punish someone does something wrong anyway. why should i bother. the solitary confinement is being used for the worst of the worst is assured because safety is the biggest issue in prison. let's face it. really eerie not everyone in prison is innocent.

so if it is going to be used know your limitations. you know, don't just lock someone up penicillin forget about them. there's still a human being somewhere. they may have mentally shoes. they may have the emotional issues. but if you identify that and and find a way around it then you can deal with it in a humane way does not have to be put on a jump suit and shower shoes and walk them -- locked in the self. the one thing i wanted more of when i was in the cell was time out of the cell. sadly that is not the reality. but if you want to have solitary confinement use it in the most limited capacity possible.

>> thank you very much. >> thank you mr. chairman. i want to thank all of you for coming in testifying in shedding light of this issue. and i particularly wanted thank mr. thibodaux because your testimony was very -- you have been there. as we say in hawaii, ma law for sharing your terrible experiences. i am concerned about reports that women are confined in solitary for reporting abuse including sexual abuse by the bureau prison staff and especially as i have been working with senator gillibrand and others to address the issue of sexual assault on the military which is under the institution where survivors of sexual assault can also be at the mercy of their supervisors in the chain of command to to the power dynamic and possible threats of retaliation that can exist in both of these environments.

so want to thank you for your testimony. and i do know that mr. ramus, you noted that 97 percent of our prisoners do get released into the community. so we need to pay attention to what is happening with them because, as you say, they should come out better, not worse than when they were imprisoned. i think that is a sentiment that all of us would share. ms. piper kerman, you heard the responses to my questions about what happens in the instance of the power especially with regard to women and sexual abuse. now, having heard their responses do you think that the bureau of prisons is doing enough. >> no.

i believe that in every woman's prison or jail that sexual abuse of women and girls by staff as a problem. kentucky are prison in alabama, those abuses have been revealed to be systemic. and very sinister. a staff member who was under suspicion for sexually abusing prisoners would be removed from direct contact with the prisoner or prisoners that he was accused . but there would be there on the property. a person is innocent well proven

guilty, i believe that. the effect they your abuser may not be far away from you, may be in view. so you might in fact see them all the time. the fear of solitary confinement in isolation, i cannot overemphasize how powerful an incentive that is. tivoli and happens. they do not happen quickly. on a very practical levels you will lose your housing, your present job, you're house of

privileges. all of these things conspired to really, really silence women. how much they can trust the people to him they are supposed to report abuse there are disincentives. >> the best case scenario is further the male prisoners and all prisoners debt increased access to the upside world. most inclined to trust, not necessarily someone inside the institution. access to council is a tremendously important issue the

vast majority are indigent. and so their access to council before locked up as poor. access to counsel while locked up is negligible. so those other things i will make the biggest difference. that would make the difference, not just in their ability to access justice while incarcerated but also to be rehabilitated. a small metaphor for the total isolation of incarceration. only put people to the margins and makes it harder for them to return to the community. i don't want to confine my questions. but for the rest of the panel

that may be one of the oas that we can shed light. i am not seeing this as symptomatic of everything is going on. it's a problem. would you agree that providing more access to the house side rule is one way that we can prevent some of the uses of power from occurring within the system? >> yes. and also an ombudsman, as scandal a schedule of -- sexual abuses, one of the things we did not state which is not a chain of command of any prison warden and actually reported directly to the commission, texas youth commission at that time, the members appointed by the governor, not even a paid director. when you have an ombudsman not an incentive to manage a particular prison unit in these reports are abuses can go to an individual can then independently look into that. certainly not everyone was

accurate, but some of the mark. l.a. when it is not kept totally within the unit there is more accountability and independence and examine that. >> of the rest of you agree? >> i would say very much so. we find that at prison the more that the prison lets folks and from the outside the less problems exist. it is an inverse relationship. i think that it will continue. and i know that the gravity further state or federal officials to my site firsthand when i was speaker of the house in michigan. we have a mentally ill men -- in may found dead in the sell-off. he will do investigation. we have people.

i think we need independent voices. people need immediate access, not a month later to a phone call about something that has happened in their life. >> thank you, mr. chairman. my time is up. >> thank you, senator. want to thank everyone who has testified here today. we have over 130 statements that have been submitted for the record. well not read the names of all the groups. i think each and every one. it will be made part of the record without objection. as my staff to look. i am a part of that right. the degree of civilization in society can be judged by entering its prisons. and that is why this hearing in this testimony is so important. we have our charge to deal with issues involved in the

constitution, civil rights, and human rights. i think all three of those elements come together and we are talking about today. there are some things that struck me as more or less complex. the results would be disastrous. we don't want to see children in solitary confinement or segregation. perhaps in the most extreme cases, but otherwise no. no the vulnerability of women in incarceration and even more so in segregation, and reserve linoleum back to mental illness on the behavior of prisoners. the problems that we run into once put in solitary confinement if you get a chance to read mr. to those testimony do with. he goes there in graphic detail elements of segregation or

solitary confinement which should not be acceptable under any circumstance, under any circumstance where the food you are given is barely edible, there is virtually no medical care given to those who are in this situation, where -- was struck by the sentence or use it for 15 years you're never seen a nice guy or stars. is one of those grouping realizations when you think about what you have been through the limited access the you had to keep your body fed, limit access you had to outside visitors coming even as you said, you made a conscious tries to you did not want your son to see you there during that circumstance. all of these things suggest you know which goes beyond incarceration. it is -- it crosses the line in terms of what we should do to any human being. that is what this comes to.

thank you all for being here. this is not the last of these hearings until the problem is resolved. i don't know that it will ever be totally resolved the we are moving in the right half -- right path. says that we are starting to move and the right direction. i commend the state's. i think senator crews will join me in saying many states have shown a real willingness to take this issue on even more than we have and it is important that we continue that and we learn from them in the process. so we will leave the record open get some written questions. if you could respond in return we would appreciate it very much. thank you for being here. this meeting stand adjourned. [inaudible conversations]

[inaudible conversations]at the

the -- >> assisted in that role by liz bernstein sitting in the front of the bureau of economic analysis. if you have comments or suggestions for running the round table we would love haer to from you. i would like to thank my employer within which we have the center for sustainable health spending and fortunately we are joined by the deputy director of that center are, she's in the red over there. our center every month puts out free briefs that on a timely basis track health spending, health prices and health employment. you just go to our website and

our stuff is there. and we also do something that's really become a wonderful thing for us, an annual symposium, in july in washington, and we get the absolute best speakers to talk about health care spending trajectories, structural versus cyclical, and cost factors. obviously if you've been paying attention today, which i know you have, so much of the conference has already been about health care spending because of the critical importance in various other aspects. speaking of thank you, i want to thank our three exceptional speakers for taking time out of their busy schedules to come and speak. we have a great lineup. we're going to start with kristen young from the white house going to talk about the administration perspective on health care reform. then we're going to turn it over to dan durham from america's

health insurance plans, give us the insurance perspective. and then we're going to go to a wise, sage think tank representative, marilyn moon, who will give us some broader perspective on health care reform. even though there's probably controversy with obama care, we are going to have some time for question and answers. so with that, i would like to turn it over to christian and you have a choice to sit or come over to the podiump. if folks can hear, can everyone hear? great. thank you so much for that introduction and i'm delighted to be here to talk to folks today. as we talk about the future of the affordable care act, i wanted to start by rewinding a little bit and reminding everyone where we were in 2009 and 2010 when we were debating the affordable care act in congress and in the final months

before passage of the bill. at that moment in history there were 50 million people who were uninsured and millions more were joining their ranks. people who didn't have health insurance through their job faced a messy patchwork of public and private programs, pseudo insurance products like minni meds and drug discount cards. for the sick ssdi, two-year wait for medicare, medicaid state options in some places and it was entirely possible at the end of that process the answer was that there was no insurance available to you at any price. our premium trajectory was terrifying. premiums had more than doubled in the previous ten years and folks looking at the shape of the medicare cost curve and projecting strends forward had scary realities they were confronting. now, nearly four years later, we are in an incredibly different place. millions of people are gaining

gofrmg through the affordable care act, some of them to fill short coverage gaps, some of them gaini ining health insuran for the first time in years or decades. while there's still gaps, one big gap we can discuss in a little bit, we've made a lot of progress in filling those gaps and in restoring some sanity and taking away some of the desperation you used to see in our old health insurance marketplace. financial assistance is making individual market health insurance affordable to millions of families across the country and providing meaningful security and protection for them as they plan their lives. of course cost growth is at historic lows. we can have a full debate about the role of the affordable care act and promoting the trends we've seen in health care cost growth over the last few years but there is no question that we fr are in a different and better place than we were when we were talking about passing the affordable care act in 2009 and 2010. in the short period of time between the passage of the law and when we saw the health

insurance marketplace premiums for 2014, we saw 15% drop in premiums below the cbo projections because we had so much -- three years of great trend in overall health care cost growth and we're in a very different place on that issue than we were just a few years ago. and so while there's a lot of work to be done and there have certainly been some challenges over the last few years, and be in particular the last few months, we've also made incredible progress and we have a lot to look forward to and that's what i want to talk a little bit more about. i work primarily on the health insurance marketplace and private insurance market so i will spend most of my time talking about that. the health insurance marketplace has enrolled 3.3 million people in the first several months. in october through january, october 1st through february 1st, 3.2 million signed up, the other chunk through states that are running their

own marketplace. about a third of the people who have signed up in that time period are 34 or younger. the coveted young adult demographic is making up a healthy and growing portion of enrollment in the health insurance marketplace. financial assistance is a key part of what the marketplace does and the trends we've seen in recent months have been encouraging. it's familiar to all of us that work on it, but the financial assistance that's available through the affordable care act is chronically misunderstood and something that even people who are coming into the marketplace to shop for coverage are often surprised by. financial assistance is available in two forms. tax credits which reduce the cost of premiums and are available to anyone with incomes between 100% and 400% of the federal poverty level. cost sharing reductions are additional assistance available to a subset of those folks, between 100 and 250% of the federal poverty level and those cost sharing reductions fill in the gaps and deductibles and

co-pays in health insurance product that people buy. so together tax credits and cautionary reductions provide the core of what the marketplace adds to the health insurance market that financial assistance making coverage affordable for lower and middle income families. to date 82% of the people who have enrolled in a plan through the health insurance marketplace are receiving financial assistance, tax credits orcusion nary re -- or cautionary reductions or both. that number started out low and we've seen tremendous exc acceleration and now the vast majority of people signing up are receiving financial assistance to make that coverage more affordable for them. one of the more surprising facts is the fact that only about 20%, less than 20% of people who are enrolling in coverage are selecting a so-called bronze plan. that's the lowest tier of coverage that provides the least amount of financial protection, still light years ahead of where we were in the pre-affordable

care act marketplace, but the lowest level of protection available in a marketplace. i think many people who are used to dealing with the insurance market expected much more of the enrollment action to be in bronze plans, the cheapest plans available to people and instead we've seen a lot of enrollment at the higher levels. and with only 20% of people enrolling in that bronze plan. we have about 65% of people in silver plans which are the next level up. there are a number of factors that drive that silver plan enrollment. but i think we are all encouraged by the trends people selecting health insurance products and finding the product that's right for them and the relatively low enrollment in bronze plans and catastrophic plans demonstrates that health insurance provides something meaningful to the families enrolling. people are seeking out the financial protection that's available to them and taking this opportunity to evaluate really what's going to be best for their families rather than

simply selecting the very cheapest plan that's available. the trends among young people are similar so you've got 19% of people overall selecting a bronze plan, about 15% of young people are making that same decision so the trends and who is selecting which type of marketplace product are consistent across age groups. that's something that i think is different from what we might have expected a few months ago but really demonstrates the role that the marketplace is playing in helping people figure out what's best for them. i also want to talk a little bit about medicaid. the numbers here are a little bit more difficult to parse as i'm sure many of you know, medicaid data available before the affordable care act is not great. there aren't wonderful data streams on who is and isn't enrolled in medicaid and that's changing and we're finally in an era of better state reporting and data about what's going on in the medicaid program.

since october, 6 million people have been determined eligible for medicaid. 6 million families who are -- 6 million individuals and families getting the assistance that comes from the medicaid program and again, it's difficult to say exactly who among those people are -- were made newly eligible by the affordable care act or signed up because of the affordable care act, but 6 million enrolled in the medicaid program over the last few months and that number continues to grow. more than half of states have chosen to expand their medicaid programs. they're doing the right thing and because of that, over the next few years, 4 million people who would otherwise be uninsured are expected to gain medicaid. but one of the major gaps in where we are right now is the fact that there are a number of states that have chosen not to expand their medicaid programs under the affordable care act and as a result, 5.4 million people who would otherwise be covered will be left uninsured because of a decision by their state not to expand medicaid. over the long term, i think we

are incredibly confident about where we're headed with medicaid expansion. you see every couple weeks news from another state that's taking a step forward towards expanding their medicaid programs. the low hanging fruit was the states that were always playing along and were always going to expand their medicaid program but we've seen new stories from places like utah and indiana where medicaid expansion might have seemed ungettable a few months ago and there's forward progress and momentum in that area and to reiterate we are confident that the person who's on this stage three three or four years will be looking at a landscape of where nearly all have expanded their medicaid program. the politics of medicaid expansion are interesting. it's one of those cases where doing the right thing lines up with the economic interests of hospitals and businesses and almost everybody else in the state stands to be in a better position when a state expands medicaid. this is an interesting issue and something to watch in the coming

years. as we continue to look towards 2015 there are a couple big trends i want to talk about. the first is the risk stabilization programs. the affordable care act included three primary programs that were designed to stabilize risk and smooth the transition to the health insurance marketplace. the reinsurance program, the risk corridor program and risk adjustment. reinsurance picks up the cost of the highest enrollees. risk corridors is a temporary program that protects insurance companies against inaccurate rate setting. if insurance companies make judgments that are inaccurate about the overall pool of people they will be enrolling some of the risks of those inaccurate judgments is shared across the market and with the government. if the overall pool of enrollees is healthier than the insurance companies expected and they've overpriced their product, they will owe money back into the risk corridors, into the risk

corridors program. if they've underpriced because the pool is sicker risk corridors will pay out to them. risk corridors and reinsurance are both temporary programs that are focused on marketplace plans only those products that are for sail sale in the formal health insurance marketplace. the other piece of the risk stabilization programs and the one that's certainly most important over the long term is the risk adjustment program. risk adjustment is perm fence and in addition to that it is market wide. it includes all for sale. so we have folks that are -- the 3.3 million growing people who have enrolled through the health insurance marketplace, when you move to the risk adjustment program you add in the millions of people that are enrolled in individual health insurance products that they bought directly from their insurance company. risk adjustment stabilizes

across the inside and outside of the marketplace products and insures issuers can't benefit from cherry picking healthy enrollees. data on reinsurance risk adjustment and the sort of overall way that those risk stabilization programs fit together, won't be available for quite some time. there's a long data lag. the programs conduct their risk stabilizing fund transfers on a calendar year basis. what ultimately ends up happening with the risk stabilization programs for 2014 won't be known until the summer of 2015 and going beyond. but as we -- as issuers plan their pricing decisions and look forward, the risk stabilization programs are really going to play a key role in something that a lot of attention will be focused on in the months to come. another major milestone coming much sooner is plan bids for

2015. in the late spring insurance companies will begin submitting their bids for premiums for 2015, the first time that we know anything about what issuers are expecting for 2015. i think that will be another key decision point and another opportunity to i a ses where we are and -- assess where we are and what's happening. another change coming in 2015 is employer responsibility. as i'm sure many of you know the law included a requirement that all employers offer coverage to their full-time workers or pay a penalty if they don't. the implementation of that rule was delayed until 2015 and so we've just released the final rules for employer responsibility that will be in place in 2015 and that's another place where i think we will see a lot of action in the coming months and as we prepare for 2015. before i close, i just want to say a few words about something i hope isn't too out of flas a room full of economists and that's the stories of real people who have been affected by the affordable care act. at the state of the union you

heard the president tell the story of a young mom who had been locked out of the insurance market because of a preexisting condition, able to enroll on january 1st and six days after her coverage started she found herself hospitalized with an unrelated emergency that needed emergency surgery because of the affordable care act she was able to get that surgery and it didn't bankrupt her family. there was a woman in maryland diagnosed with brain tumor in the spring of 2013 and she and her daughter were counting down the days on a calendar until january 1 ben the mom would be able to get coverage and the surgery she needed to address this major issue. for the minimal insurance policy offered by her employ ir.

$10,000 annual limit. five minutes after any major medical issue she would find her insurance exhausted and left paying everything out of pocket and even though she knew this insurance wasn't what she said the best insurance out there, she was mom and felt like the responsible thing for her to do was carry health insurance to provide some amount of protection to her family. so she was paying a substantial chunk of her paycheck every month to get this low quality insurance product. the bad coverage of the healthcare.gov she found she could find a health insurance product for $28 a month and wrote a letter to the president talking about what the extra money in her pocket would mean to her every month. that's what the affordable care act is about. it's about putting more money in that woman's pocket and giving her the ability to provide meaningful financial protection in the event she does need

health insurance. with that i think i will turn it over to folks to continue our discussion. >> thank you. >> i neglected to say that impressive bios of these three folks are on the website. i didn't want to use up time to go through them. and i also neg fwlektsed to say that the conference we're having on sustainable health spending will be on july 15th abelieve and lastly as you can tell, an added bonus of these three experts is they're giving your power point weary eyes a rest. dan? >> good afternoon, everyone. thank you, paul. it's a pleasure to be here today with my fellow panel members. my comments today will focus first on the current enrollment challenges that health plans are facing and then looking towards the future, the feed for affordability and market stability to ensure the future success of the aaffordable care act. in terms of enrollment, today health plans top priority is

helping consumers through the enrollment process to ensure they have secure and affordable coverage. healthcare.gov and the overall enrollment process continues to improve but there still are some significant issues that need to be addressed as we move into march which is the last month of the open enrollment period. while the front end of the system has been vastly improved, the significant issues remain on the back end of the system and we've been working night and day with cms to help presolve these issues. health plans continue to identify a range of enrollment issues that have risen such as duplicate enrollments where an individual goes on to the health exchange website, thinks they've enrolled but the enrollment file never makes it to the help plan and the help plan has no records. this is still occurring. still trying to work it through to make sure that we get this problem fixed once and for all.

still an issue with other issues that we're dealing with today which is recent functionality on change and circumstances. this is when an individual enrolls but then the life event occurs. they get married, have a baby, move to another state, most of these changes affect their eligibility or their premium amounts. so as a result the change actually has to be made by the federal exchange. health plans have been providing cms technical feedback as it continues to improve the automated functionality of this change in circumstance system but given the lack of automation much of this work still involves manual processing which can be time consuming and costly for health plans. we'll continue to support both federal and state efforts to fix the technical problems and also improve the direct also improve the direct enrollment process, that's a process by

which consumers have the option to enroll dreamtly through a health plan, but the direct enrollment process also has some technical glitches that we're working through and we'll continue to kind of triage those with cms as we move forward here. we're also working with cms and oth other stake holders on a sitlyfied process, one centered an an easy to use application and streamline connection to healthcare.gov. i don't think we'll see that for this enrollment process but certainly hopefully in the near future. regarding small employers, given the technical issues, cms has delayed enrollment through healthcare.gov. so small employers enroll directly with the health plan. usually through the help of brokers and agents. we believe this delay is appropriate since the basic infrastructure for the federally facilitated c.h.o. p. exchange has yet to be developed and thoroughly tested. resources focus on the

enrollment in the individual marketplace. specifically fixing these backend issues that i identified earlier. many of these issues will linger well into 2014 and we believe it's important to focus the resources on those issues before shifting them to the federally facilitated c.h.o.p. so looking ahead, what will be the success of -- what will determine, i should say, the success of the aca? i think for new exchanges and health insurance market reforms to work, coverage has to be affordable. and there needs to be broad participation in the health care system to ensure a stable marketplace. regarding affordability, cbo recently revised estimates on premiums and now project them to be 15% lower than its previous estimates based on the average cost of several plans in the marketplace today. but it's important to look beyond these averages. the aca compresses age rating to

a 3-1 ratio and prohibits health status rating which results in higher premiums for younger and healthier individuals, compared to what they were paying previously. and a sufficient number of these healthier and younger individuals do not enroll, the risk pool will become less stable which will increase premiums for everyone else. so premium subsidies, as kristen mentioned earlier, are critical, as is the individual mandate. both of these provide incentives for the purr chags of coverage, but they may not be sufficient if premiums are not affordable for these individuals. health plans are currently developing their products for 2015 in a broad and stable risk ba pool is essential to ensure affordable pools next year. the aca includes other provisions that put upward pressure on premiums including an eventual benefits package, more benefits that are typically

provided in the individual marketplace. new benefits, of course, mean higher cost. in addition the aca proposes a new sales tax on fully insured health plans that makes health careless affordable. according to cbo, this tax will be largely passed through to consumers in the form of higher premiums. this tax totals $8 billion this year, and increases by over 40% to $11.3 billion in 2015. so certainly reducing affordability in terms of the cost of premiums. due to this tax, a family purchasing coverage in the individual market this year will pay an additional $270 for the premiums and businesses will pay an additional $360 for each family they cover. we believe this tax should be repealed or at least delayed to ensure that coverage is more affordable, as we continue to implement the affordable care act. health plans have worked aggressively to implement new

tools to hold down costs. one way they've done this is through a development of networks as a choice for individuals who are purchasing coverage. high-value networks keep premiums affordable by creating financial incentives to encourage utilization of higher value treatments and services such as through evidence-based care and lower utilization of unnecessary treatments. high value provider networks are currently designed in two ways. first there's the use of tiers of health care providers based on specific performance metrics including cost efficiency and quality of care. and second, there are smaller provider networks comprised of selected high-value providers who have a track record of providing high quality cost efficient care to patients. state and federal adequacy rules, laws and regulations ensure that consumers have access to a sufficient number

and type of physicians and hospitals in health plan networks. these network designs have become a larger effort on the part of both health plans and employers to preserve benefits, mitigate the impact of rising costs and to promote quality of care while still providing access to a range of providers. and i like to turn and talk a little bit about the importance of the employer mandate and the individual mandate. cristen had mentioned the delay in the employer mandate, but i want to focus primarily on the importance of the individual mandate because some have called for a similar delay in the individual mandate. we think that's a key element of expanding health insurance coverage to the uninsured and it's a central part of the aca coverage expansion structure along with insurance market reforms and tax subsidies. a repeal or delay of the individual mandate would cost premiums to increase

significantly, resulting in more uninsured americans and destabilizing the exchange marketplace as a result of adverse selection. so we think it's critical that there not be a delay in the individual mandate. and then finally, i'll talk about other provisions in the aca that help ensure affordability and market stability. focused on the risk stabilization programs are the three rs. cristen already went through a good explanation of risk adjustment, temporary reinsurance and temporary risk corridors program, but i just want to emphasize that the new market rules create uncertainty about who will purchase coverage and what their cost will be. particularly during the initial years of enrollment. that's why these three rs protect consumers and promote competition. policies on the operation of the three rs have been addressed in a proposed rule on notice of benefit and payment parameters.

of specific interest is the need for additional risk mitigation. we need additional relief here. as a result, the administration's transitional policy that allows many people to remain on their current coverage. without additional measures to stabilize the market, the new transitional policy could cause higher premiums in the exchange marketplace as a result of adverse selection. the administration has recognized this and the potential for market disruption and has proposed adjustments to both a temporary reinsurance program and the risk corridors program to amelirate the selection issues. we believe adjustments are necessary to help consumers have affordable coverage in the 2014 marketplace. final rules on the mitigation efforts are expected to be released soon and what the rules say will be critical with regard to affordable premiums in 2015. and with that, i thank you and i

look forward to our discussion. >> terrific. marilyn? >> thank you. you've heard a very nice, i think, discussion so far of both the aspirations and some of the problems and challenges facing the affordable care act. without all of the hand wringing and jumping up and down that we normally hear in the media these days. and i welcome that because i think this is such an important area when one that you want to get right and you want to improve over time, but a lot of the heat that has come out of the discussion hasn't really even addressed some of those issues. so i think you've heard a nice selection of things being discussed here this morning -- this afternoon. there are three key problems that the affordable care act was trying to address, and it does so in more or less success or it should over time.

one in every six people in the united states had no insurance or thereabouts when affordable care act got started. that's an enormous number of people that you have to try to deal with. unfortunately, we're not going to solve the problem for all of those folks but trying to make a big whack at that number is very important. and, of course, then we're dealing with a sector of the economy in which one in every six dollars of our gdp or thereabouts goes to health care. so this is an enormous change that was coming into place, and an enormous change in which the goal as the president said, perhaps a little clumsily, you don't want to disrupt all the good things going on in market. so you take a very complex huge health care system and you layer on top of that a complex and fairly clunky law and try to make it work. and it's not a pretty thing to have happen. i'm actually surprised in some ways at how well it has gone.

the clunkiness of that, of the law, is not because people didn't understand what some of the challenges are, but because it's just very difficult to do this if what you're trying to do is leave in place lots of things that you like, not make a lot of constituents very unhappy about a lot of things which is part of the political process, et cetera. and the third piece of this challenge that we haven't tackled very well yet, but i think is going to be increasingly important over time, although don alluded to a little bit is the whole notion of maintaining or improving quality of care as we make these changes. that's really an essential piece of all of this, and it is the scare that a lot of people have, even if their insurance doesn't look like it's going to change, will the quality of their care remain the same? and don talked about this, and i'll come back to it in terms of some of the high value provider

network changes which is a nice way of saying what people are talking about now of those limited networks that are going to restrict my choice and cause me problems. when you're not being very rational in talking about it anyway. i think it is wishful thinking that it could have been an easier process or a simpler process to make these changes. in the 1990s, the argument was, well, if the rate of growth of health care spending would just slow, the number of people getting insurance would rise and this would be a self-correcting problem. well, actually, the cost of health care did slow in the 1990s as many people were put into managed care plans, but unfortunately, the number of people how were uninsured did not go down. in fact, they went up over time. we know that technology and greater use of services are the big drivers of higher costs and they don't get managed very readily or very easily.

we also know that good insurers want protections to do the right thing and certain changes are necessary to make the system work. this market is not a market that's a self-correcting market that does all the nice things you learn in economics 101. it's economics 301 where you learn about the market failures that are going on. finally, covering people costs money. something else that people like to forget when they're talking about the problems that are out there. and that is if you add to the system people who have not been able to get into it because they have health care problems. in some cases, pretty minor health care problems that they were excluded for. in other cases, very major health care problems. then surprise, surprise, the costs per person are going to rise. that's a fact of life and something we have to adjust to. the other thing i would remind you all as economists is to remember when you hear the discussion that's going on in the media that to remember the

counterfactual. what would have been if we had not had this change? not what used to be versus what it is today. i remember when -- i have a trainer and when she came to me and said, this stupid aca, they canceled my policy. she was in the private individual market buying a policy every year. and she said, they canceled my policy and they said it was because of obamacare. and i said, okay. i said, and how often in the past have you had to change policies because they've canceled it and told you to buy a new one? she said, well, gee, i guess that does happen about every year, doesn't it? i said, yeah, i think it probably does. about every two years would be a pretty good basis for a lot of private insurance because of the churning that goes on in that market. it wasn't really obamacare that caused it to be canceled, necessarily, it was because of the nature of that market. so you have to be careful when we're pointing fingers and assigning blame to remember the

counterfactual. so what has been the scorecard so far? we've heard a little bit about this. first of all, i think everybody could agree, even the administration, this was a terrible rollout. this is not what anybody wanted. boy, what a nightmare that system was. on the other hand, i'm totally sympathetic to how hard that was. imagine if you're a software developer and someone comes to you and says, we don't know whether we'll have five or six states or 34 states. we don't know how many plans you're going to have to adjust for. you're going to have to be able to talk to as many states, different medicaid programs as exist which have legacy systems that are often out of date, unworkable and don't work within the state but we're going to have to be able to make you talk to it. then you're going to have to talk to all the insurance companies and in some states where they'll allow hundreds of policies to be written, you're going to have to deal with

upwards of around 5,000 policies that ended up in the national exchange. gee, that sounds like a really easy task. doesn't it? to get it to all work just right. it is not going to amazon.com to get your care. but the problem with that rollout was that it made other things look worse. it meant when things were canceled, when people had their insurance policy canceled, they instantly felt that they were trapped because they couldn't go on to the website, they couldn't find out that there were other good plans out there for them, so there was a lot of angst, and fortunately it wasn't the case but people feared it was the case because they couldn't get net informatio information. the good news is that website is much better and people are getting insurance and i think the demand for insurance and the number of people who signed up shows how important this was to individuals and how important it continues to be. and when you look, for example,

at the state of california where insurance is now actually, i think, running a little ahead of what the best case projebss were because their website largely worked the whole time, then this is, i think, pretty much has to be viewed as a demand-driven success. there is a demand, very strong demand for health care. what about the whole issue of the young not signing up? well, let me think. i am going to offer health insurance to people, sick people who haven't been able to get it and have been desperately waiting for insurance are first in line. gee, i'm shocked. i'm shocked that they're the first ones who signed up. and the 25-year-old who doesn't really need it, he doesn't think, because he's invincible, and he also doesn't exactly file his insurance -- i'm sorry, this tax forms as early as possible, et cetera. may with one of the last ones to sign up. i'm also shocked about that.

i think we're getting exactly what one would have expected. we have be careful about this, watch for it. we have to worry about the things that don legitimately raised that insurance companies have to worry about. it seems to me we're in pretty good shape and have in place the kinds of protections that you heard from cristen that are going to help those insurance plans, weather what's going to be rocky times. are there going to be problems ahead? absolutely. we're going to hear new horror stories. there are going to be problems. there are going to be insurance plans that decide they just can't hack this market and go belly-up and people are going to be upset. there's going to be a lot of stuff that come the os out. the limited network, i suspect, issue is going to be raised again because nobody likes to have choices changed. on the other hand, i think things have gone quite well. the other thing that didn't go so well was president obama's

statement and the man is a very good communicator in some ways but somebody gave him really bad advice. he should never, ever have stood up and said if you like wrr insurance policy, you matter what, you can keep it, everything will be just groovy. he should have said, if you have a good insurance policy, meets the standards we want to be met, therefore it will stay in place, if your employer cooperates the way he hopes you will, then you will get to keep your insurance plan. that would have been much more realistic, and it actually would have been better because we would have said, then let's celebrate, for example, this woman in missouri, i think it was, who had the $10,000 plan. we should be celebrating that she doesn't have that insurance plan anymore. we should be celebrating the plans from the bad insurance companies that as soon as you had a health claim canceled your plan because heaven knows they

only wanted to sign up healthy people. we should be celebrating some of those changes, not saying we should promise that everybody gets to keep everything and nobody has to pay any more and nothing is going to be bad. some things are going to be more expensive. some things are going to be problematic. the same is true for some of the changes in medicare that are related to this that have also been in the news lately. one of them being medicare advantage. here it's the wonderful case of the medicare advantage plans are very upset because for a long time, they've been getting extra subsidies and now we're cutting back on those and nobody likes to lose a windfall. i'm sympathetic. i don't like to lose windfalls, either. it's the kind of things we have to think about when we make these changes. what are the changes to come? they're mostly in the quality of care and delivery system reforms that are going to be necessary to help move this clunky not

very well functioning health care delivery system forward and those are going to be changes that whether or not we have the affordable care act, we're going to have to worry about because health care would otherwise be just way too expensive, no matter what. and we're going to have to worry about making some changes that are going to disrupt both consumers of care and those who deliver care. mom and pop doc shops just don't work very well anymore. we need good coordination of care. we need -- we need providers who can talk to each other electronically. we need a whole lot of things that will change. we need to have better evidence and then not deliver care when the evidence is clear that it isn't so good. which means that perhaps low testosterone treatments aren't going to be covered by insurance. get ready for that, folks. that may come soon. and we should all stand up and cheer if that's the case.

we are going to need to make some tough changes and some tough choices and they're not going to be easy because they're going to threaten all of us one way or another because someday, someone's going to come to you and say, i know you say this works for you but there's absolutely no evidence that it does and there's evidence that it hurts you. therefore, as insurers, or as the government we are not going to pay for this any longer. we're not going to tell you probably you can't ever get it. you'll be able to go off somewhere and get it, but we're probably not going to subsidize it or have the public help pay for it. those are the kinds of tough choices that we haven't tackled very much yet that we're going to need to. we've done some clefer things, i think, that are going to get at some low-hanging fruit. i applaud, for example, the efforts to try to reduce unnecessary readmissions. that's a win/win for everybody. if you can figure out how to keep people who should not be readmitted to hospitals from going back in, by making sure

that they get good follow-up care, they get good wound care, they get their drugs readjusted, all of the things that are part of good care and don't always happen, everyone should celebrate that. that will be a good thing. but to get there, we had to impose requirements. we have to have penalties for hospitals which if you interviewed hospitals like three or four years ago, as i happened to do, and suggested to them, for example, that they might follow up with patients who are discharged, their answer was, not our problem. they're out of our -- they're not here. if they come back, we'll give them very good care. but they're going back to their primary care doc, god love them. hope that that person knows they were in the hospital and takes good care of them. now we're seeing changes, sometimes it's with carrots, sometimes it's with sticks, but these changes are going to come. some of them are going to be tougher. we haven't done a very good job of deciding what's actually working in our health care system or not. drugs have a major problem and

there's a lot of things wrong with them, but drugs we test much better than a lot of other things. there are large number of treatments that you and i get that we assume make good sense, that sound like they do well, that our doctors firmly believe in, and that nobody has ever tested except, perhaps, a randomized sample of seven women in some midwest city when the doc decided to do it that way. we just do not test for these things very well. we need to do a lot better at that and be a lot more skeptical about our health care. hang on to your hats. more things are coming. there's going to be a lot more fodder for people to raise -- to raise cane and say the sky is falling. but i think if we want the health care system that we deserve, and which we're thinking about a good health care system, i think we have to remember that we always get the health care system we deserve. we just don't get the health care system in all cases in

which we have given the time and attention to make sure that everyone gets coverage that is done so in a fair way and that we pay attention to quality. and if we're trying to move closer to that, without getting all the way there, it's still going to be disruptive, but some of that disruption is going to be for the better and some of it would have happened, anyway. thank you. >> okay. round of applause. [ applause ] okay. here goes. please be brief. please identify yourself. please indicate to whom your question is addressed. and as i always say, remember that a question ends with a question mark. from bloomberg. nice and loud.

[ inaudible question ] >> just so i heard the question correctly, he said the leveling off of health inflation? [ inaudible question ] >> i've looked at recent reports by the congressional budget office and the office of the actuary at cms, and they do anticipate an increase down the road once we get through the current economic difficulties and certainly we've seen it in health plans largely as a result of provider consolidation, in certain markets where hospitals continue to merge with other hospitals and buy physician practices. those prices go up and those prices are reflected in premiums. so i think until we see stronger pushback by the ftc, doj and

authorities at the state level to make these markets more competitive, i think we're really going to have a problem there in terms of inflation in the future. >> i think there are multimillimultiple things going on, some of which are one-time things and won't fully solve the problem. some of which may well indicate some sea change. the reaction to the affordable care act is very consistent with the reaction to all sorts of other major changes that happen. and that is health care use kind of slows down and drops off a little bit as people look around and wonder what's happening. people were afraid a number of years ago, for example, with the medicare changes in a physician payment system that it would suddenly mean all sorts of increases. didn't mean that because everyone took their time to figure out what was going on. that's part of it. another part of it has been the economy which has been not

healthy. and that has undoubtedly helped slow the rate of growth of spending. and i think some of it is a little bit of a swrjob owning, you're going to tell people often enough and actively enough that changes are coming and people are going to be looking over their shoulders at you, looking at you very closely to see whether or not your cost increases make sense, then you're going to be a little bit more cautious and i think those things could be sustained over time. so i think we've seen a mix of things, some of which may be longer standing but some of which are going to go away. so i would expect to see health care inflation rise, but not to the kinds of rates that we've seen in the past. >> i think my colleagues have covered it well. we've had a couple of great years. we're optimistic about the future and this is something everybody is going to continue to watch closely. >> go ahead.

>> i actually have two questions. unrelated. for dan durham. first is, i wonder if you're as optimistic about your panelists -- [ inaudible ] either five years down the road. and secondly -- [ inaudible ] [ inaudible question ] >> excellent questions. i remain cautiously optimistic that, yes, this will work out the kinks with the enrollment process. it will become easier and automated. it may take a while, but that will certainly help individuals

with the enrollment. as marilyn mentioned, the demand is there. we think it's critical to get these young and healthy in the door. again, as marilyn mentioned, they often, particularly the young, wait until the last minute. so we might see an incredible influx at the end of march on the enrollment side which will certainly help and signal to the plans that the risk pool is broader and stable when they go to put forward their 2015 rate. so, you know, it's difficult at this point in time given the troubleshooting that we've been through, but we'll continue to -- >> although the strange thing, or at least unexpected thing about that is they have to do that now on the basis, still, of no experience with newly enrolled. so it's really a whole year hence that you're beginning to price on actual behavior. on actual claims. >> well, yes and no. the original timeline contemplated in the law called

for -- to be beginning just very, very soon. cms has taken some steps and announced this in the proposed rule that dan mentioned earlier to push the timeline back a little bit and give issuers plenty of time to take a look at their enrollment for 2014 as well as give them a few more months of experience with claims so that they would have better information going into the bid submission process. they certainly won't have a whole year of data, but that challenge is important and something that the administration has really taken steps to accommodate. >> did you want to quick comment on arkansas? >> in arkansas i think it's really up to the state. they're pursuing an expansion in medicaid by advancing premium support to use those medicaid dollars to help individuals purchase coverage through the private exchange. and that's the way they think it's best to move in that state. some other states are trying to do the same thing. so, you know, i know there have been certain problems with

the -- i think it's their house down there in terms of moving that forward, but it's really up to the state to decide the best way to move forward in terms of the medicaid expansion. >> yeah, it's failed passage three times. in tr in three days last week. they're still trying. go ahead. >> sometimes we think about health care as providing more insurance for more coverage. sometimes more drugs for more longer period of time so it's sustainable drugs that are used for your lifetime. sometimes we think about we're needing more doctors. time in the office. sometimes it's more surgeries. i guess my question is, concerns whether or not we're going to improve wellness and life exp t expectancy at a good wealth rate, or more precisely, to what extent does the aca enhance healing health outcomes through better inputs such as low e obesity, better foods, better

lifestyles, better drinks, less fee for service? thanks. >> again, i think that's a very good question. the aca does allow for plans to offer wellness programs in the group market. there is a ten-state pilot that's allowed in the individual market, but we haven't seen the secretary move forward with that. we hope she does. that's very important. these wellness programs are critical and they can result in exactly what you were pushing for in terms of preventative care, getting people to recognize health risk factors, whether it's obesity, whether it's smoking and the like. and we think it's critical that these wellness programs be part of health insurance. >> i think pushing prevention is important and ought to be part of all of this and that's something to keep in mind. the one thing i would point out is that there's some pretty interesting studies that have been done of the medicare population that found that people who came on to medicare who did not have insurance, who had periods, considerable

periods of uninsurance cost the medicare program 15% more on average than other similar folks who did have coverage. and that wasn't just for the first year. wasn't just a catch-up. that was over a ten-year period. so getting insurance has something to it that allows people to have access to care, whether it's drugs, checkups, prevention. it does do things to improve the health status of individuals that over time should help lower health care spending. won't in the beginning because you'll have some catch-up as people get more care, but over time, it should help with health care costs. >> i'll just add that health care -- health is a lot more than health care. that the health care system is only part of the story here and my colleagues at the cdc and the public health agencies are doing tremendous work, much of it supported by the affordable care act to address some of the social determinates of health and investment and community revenge. that is it's not the topic

today, but it is an incredibly important part of the story. >> danny bachmann, deloitte. earlier today, doug holtz ekan said that there was an incentive in the aca for companies to drop insurance for relatively low paid employees. he said up to 300% of the poverty level, i think. and to have them go on to individual exchanges. and he suggested that the cost of doing that would ultimately be much larger than we're currently projecting. he kind of implied that it would be unsustainable. would you be willing to comment on that? >> sure. we've had an employer. based system of providing health care in this country for decades. there was no formal legal requirement that employers provide health care, yet that's where the majority of people get their health insurance. so we have decades of tradition

in ploemployee-based health insurance that i think are important to keep in mind as we look at the incentives of the affordable care act. the health care law contains strong incentives for employers to continue offering coverage. it also contains important nondiscrimination provisions that are designed to prevent exactly the kind of cherry picking that you're talking about. so the law includes these protection to ensure that employers are not discriminating in favor of more highly compensated employees and the provision of their benefits. and while the rules on that are not yet out, when you talk about the long-term story and long-term changes, the back stop provided by the nondiscrimination provisions and employer responsibility requirements are important. >> and just remember that there are some employers who want to get out of the business of providing insurance and have been looking for a good excuse and remembering the counterfactual, it will be the -- obamacare made me do it

when they were just waiting for the right moment to do it, anyway. so when we analyze this, we're going to need to parse that out very carefully and figure out what's going on. i think there will likely be some decline in employer-provided insurance over time but we've been heading there for the last 30 years. so -- >> okay. i think that's it. and one last plug for our july 15th meeting which our director, charlie is fond of saying. he did the econometrics behind the study, three quarters is cyclical and a quarter is structural. he's now on the record as saying that as we get into 2015, if we don't see the big bump that's been projected, then we'll know for sure a lot more of it was structural. so stay tuned. thank you for and

infrastructure spending. this is just under an hour. >> it's an honor and privilege for me to introduce this morning dr. jason furman, june 2013 served as the chairman of the counsel of economic advisers previously awarded in national economics. ..

.. >> wagner school at new york

university where he is a visiting lecturer. we are very fortunate to have dr. jason furman with us. we cannot think of a better guy with the policy agenda of the president. also but dr. jason furman graciously accepted to take our questions so if you have a question go to the microphone. keep it short and please introduced herself. please join me professor jason furman. [applause]

>> thank you for the introduction and for inviting me here today and for everything i have learned about the economy from all of you in this room has been great. i spoke a couple years ago in denver. i am excited to be able to come back today. my remarks today i want to start about the current status of the economy with the opportunities that i think we have to both strengthen the recovery the increased productivity and growth to help insure the benefits are shared by the. the u.s. economy now stands more than five years removed from one of the tumultuous and challenging period in its history that has now

become a platitude i am obligated 2.0 around this time 2009 the shot that just hit the economy that was possibly worse than the shots that precipitated the onset of the great depression. my predecessor christie romer pointed out the stock market fall in 2009 was similar to the fall of 2008. but the home prices were considerably larger as a result five times larger at the onset of the great recession as the onset of the great depression. we have also documented ways that the shock was worse. while