>> it is not realistically within the realm of possibility. this committee follow the murray/ryan agreement and mark up at a trillion, $14 billion. that was the deal, and we will stick with the deal. the second issue that was raised is on the subject of entitlement reform. one of the reasons the mandatory programs are growing are because of the success of people who represent agencies at this table. social security, people live longer. so we have more people than might have been anticipated by the actuaries in 1950 and 1960 when people died from heart attacks and so on instead of the challenges of chronic illness. one of the reasons that medicare is also an issue is because, again, people are living longer, and we need to manage the chronic illness.

but there are paths forward to bend the curve, one of which is, again, from research. much has been said about alzheimer's. and, gosh, if we could crack that code, it would have a tremendous impact. so it all kind of goes hand in hand that, one, we've created some of our own problems, people are living longer, but those are good problems to have. what we need to do is look at how to manage those chronic illnesses and crack the code of the debilitating one. but let's go to murray-ryan and also a budget -- [inaudible] this goes to my last question. maybe you don't want to answer it but i'm you what would you rather have, more money, mod deaths money -- modest money or the canceling of sequester? anybody want to go first? because -- >> would you formulate the

choice once more, madam chairwoman? [laughter] >> well, let's go to what murray-ryan did, and i really salute them. what they did was they gave us certainty for two years. they canceled sequester or it would find a way to eliminate sequester for two years. we have yet seven more years faced of sequester, the sequester chopping block. so we have here a bipartisan effort to move forward. and crept no matter what we do -- and yet no matter what we do, agencies will face sequester which is across the board. so francis collins can't set his qualities, darpa is strongly hit by sequester because your employees -- and, again, it is not military personnel, it's often civilian personnel that could be furloughed. so we won't have a lot of money

to spend, but even if we did, say if we could increase by 5% inflation plus that, you know, or keep pace with inflation plus maybe 2% or 3%, that, maybe that could happen. but we have sequester in place. so my question is, is it more money, or is it -- would you prefer more certainty with the canceling of sequester? i, of course, would prefer both. but, i mean, that's my preference. but we have to look ahead to this year's funding which is going to be tight, very tight, and also the next two years after this. if we could pass the's opportunity fund, that would be -- the president's opportunity fund, that would be great. but that's what we face. dr. collins, do you want to comment? and if you don't, that's okay too. >> i'm glad you've raised this

issue because i think there's a lot of people who think, oh, well, sequester was a really bad fy-13 and maybe now it's all gone away, and as you point out, it has not. sequester applied in the fashion that the formula currently states, by my calculation, would cause nih to lose another 10% or so of our funding once inflation has kicked into the equation. that would be just absolutely devastating. when we're already down as much as we are, to take that kind of whack on top of it, i can't tell you how many talented scientists would just be plain driven away. i am a science person. my response is to come back to where i was earlier. if we really want to see american science flourish and particularly the type i know about, biomedical research, it has to find its way into a stable, predictable trajectory that you don't have to wonder from month to month or year to

year are you about to see another slash and burn experience. and ideally, because we've lost as i is showed in that graph a while ago, we've lost the ability to fund research at a prodigious rate in the last ten years. try to recover that and not consider that this is the new normal. the new normal, this is not. this is actually quite harmful to our promise in this country. >> dr. cordoba? >> sequester hurts the nsf quite a bit. we figure that there are about 700 proposals with an impact on 8,000 investigators, people that we did not fund. so we don't -- we've never seen a sequel that we liked, and we certainly do not like the prospect of sequester. i'm, i think if you can fund immediately whatever you can do,

that's a whole batch of people that may actually help impact our future, and while i completely agree with dr. collins on having stability for the future, i think we have to do now what it is possible to do now. but i'll close by saying almost two decades ago, senator mikulski, you asked me about a choice. i don't know if you remember that question, which should we cancel, this mission or that mission. i won't mention their names today. they're both flying, they've both been tremendous, tremendous successes, impacted thousands and thousands of investigators, one in the x-ray universe and one in the planetary realm. and we just want to join you in your wonderful efforts to do

everything we can and with all the societies that have been so engaged you've heard from recently to do everything we can. >> okay. >> for darpa, we don't seek to grow significantly. we've always been a small slice of what the defense department invests in research and development. we like having that small, very focused effort. but within that budget at darpa, we have suffered two kinds of corrosions in the last few years. one is the sort of steady drip of eroding budgets, a number of years that caused our budget to decline ability 12% -- about 12%. as you noted, that disproportionately affected defense, and we felt that 8% cut in the middle of the fiscal

year. impact, of course, on our programs, on our people who i worked very hard to recruit these amazing program managers, and to have them subjected to furloughs which seemed extremely arbitrary to them was a very painful thing to go through. so you're absolutely right, the lack of predictability of sequestration and the kind of roller coaster ride is contrary to making the kind of thoughtful, concerted investment that is so core to what we need to do. and, therefore, i think i would certainly say that that's just a very bad investment, a very bad way to make any kind of an investment. >> okay. and going to your testimony, it says that the total reduction to darpa's budget from fiscal -- see, people think that darpa is juicy, you know? it's defense, gee, they get all this money and, therefore, darpa must be -- but according to your

testimony, doctor, the total reduction in darpa was from 2009 to 2013 was 20%. >> that's right. >> that's pretty shocking. >> that's exactly the erosion followed by sequestration. so i do want to make sure we keep darpa healthy at a good level. i would, i want to shift though to the bigger picture, because one thing we haven't really emphasized here. twenty years ago when i was in public service, i was director at nist at that time. when i left w at that -- washington at that period of time, it was about half r&d. now it's only one-third of the total investment we make in the nation, and i think that is a macroscopic question about investment levels. i'm not -- so, yes, i think, you know, you've highlighted both issues, the big question about

what kind of investment we're going to have as a cub -- as a country and then the near term issue about are we going to have this roller coaster -- >> senator shelby wanted to say something. >> thank you. i appreciate this hearing. i appreciate the testimony here. it's both, it's compelling, it's disturbing, it's instructive too for a lot of us. we have to make decisions as senator mikulski said. we're bound by a top number. we'll have to make priorities. i think -- and i've said this before and i've voted this way, i believe that our basic money we spend in research is not enough, and we're leaving a lot of ideas and a lot of perhaps breakthroughs on the table, and we can't afford that as a nation. we're starving ourself in a way.

we're starving by lack of funding scientific investigators. we can't afford to do that. i hope we can find money. you do need certainty. uncertainty in what you do is the worst possible thing, and you need growth. you need both. i don't know what we can do, but with i'm of the mind to give you a lot of leeway because of what you've done in the past. you'll do a lot more in the future. and if we don't do it, somebody else in the world's going to do it because we're not the only big boy on the block anymore. we may have been at one time, but we're not now. thank you for holding this hearing, madam chairman. >> doctor -- thank you, senator shelby, and we really appreciate your support as we move ahead. dr. monis, just to wrap up. you're the last person. >> thank you. i will just with regard to the

funding level, i will just endorse the comments of my colleagues and just make two other points. one is that certainly from the point of view of department of energy, i can say, i can speak for sure that returning to what i would call the normal order of the appropriations process this year was tremendously helpful in being able to work with the members to get our priorities straight. so among -- at any level although obviously prefer a higher one, but at any level staying with this normal order in the process is just tremendously important. and then i would just echo the second point what senator shelby said when you used the word "leeway." as we have those budgets and the discussions about priorities, enough flexibility to be able to respond would be, is, of course, quite helpful. thank you. >> well, i think, first of all,

this has been as senator shelby said, it's been instructive, it's been inspirational, been eye-opening, and it's been disturbing. but we've at least, i think, got a picture of where we are. so it wasn't only about what line item needs to be funded and what line item can stay in place. because we really have the country's future at stake. we're going to encourage our subcommittee chairs to also, as they move through this year and next year also, to look at this. we were able to produce the cybersecurity budget, so we got a kind of a snapshot on this. we're going to produce for members and also we'll always be available to the general public what we do spend on r&d on these agencies. we did not cover today the cost of education to enable people to

pursue these degrees whether it's college affordability or whether it's access to advance degrees. and, therefore, and what that means. so we have a lot of work to do, but we're going to work together. again, i want to thank my committee for coming. there were 15 senators here today. that's 50% of the committee. and it shows the very keen interest that they have. so we've got a lot of work to do. we're going to, and we're going to do it together. if there are no further questions, senators may submit additional questions for the committee's official hearing record. we request responses within 30 days. the committee stands in recess -- the full committee stands in recess subject to the call of the chair. the subqgm;ne6j will continue to function as part of our bodacious approach to not have a lameç duck. we've held 60, we will have held

60 hearings in six weeks. so we're moving, and you're helping us move, and may the force witho,÷ us. thank you. >> a few live events to tell you about. committee will take up a series of judicial nominations for the 11th circuit courts covering georgia, alabama and florida. we'll have live coverage starting at 9:30 eastern. on c-span top military officials will be questioned about the financial management of the defense department. the committee will also hear from a pentagon inspector general. live coverage from the senate homeland security committee starts at 10:30 eastern. and here on c-span2 senator marco rubio will be at the national press club talking about retirement security, medicare and social security. senator rubio will also take questions from reporters.

live coverage at 1 p.m. eastern. >> up next, a discussion about the expansion of medicare in states under the new health care law. we'll hear from the surgeon general of arkansas, joseph thompson. the alliance for health reform hosted this event. [inaudible conversations] >> if i can have your attention, my name's ed howard, i'm with the alliance for health reform. thank you all for coming. there are, as you are seeing people being directed to, someth seats up front if you are still

looking. and i want to welcome you on behalf of senator rockefeller, senator blunt, the board of directors of the alliance to today's program on how i a handful of states are expanding coverage using federal medicaid dollars to purchase private insurance for low income residents. just a few words of context. the supreme court decided in 2012 that the medicaid expansion in the affordable care act couldn't be forced onto states, that each state could decide whether or not to expand coverage under the medicaid program. and about half the states have moved forward with the expansion, other states have decided against expansion. but some states are pursuing an altogether different path. the third way in the briefing title and in the hashtag if you're going to tweet about this event. and they're enrolling target low

income population from the affordable care act and private insurance using federal medicaid dollars. and to do that, they needme federal approval in the form ofv aat medicaid waiver. three states already have their waivers in hand and are operating their new programs. and today we're going to take ae look at the experiences of two of those states and a broader look at what some other states o are proposing to do. we'll also look at the balance between on the one hand exposinn these same low income people to, say, additional premiums or cost sharing and on the other, additional -- i'm sorry, additional premiums in coverage as a condition of getting it. and on the other hand, not getting coverage at all. so we're pleased to have as al.

partner today the commonwealth fund, essentially old philanthropy, established to promote the common wheel or then common good, and we're definitely pleased to have as the can co-moderator saraoub collins who's vice president for the fund's access program and someone with a very extensive knowledge of state efforts to expand coverage. wledge of state efforts to expand coverage. welcome back to the moderators chair and we are looking forward to having you help frame the issues for us today. >> thank you as the boss on behalf of the commonwealth fund i want to thank the alliance and extend a warm welcome to the panels today and the audience. the affordable care act expands health insurance. let me bring my slides appear. up here.

>> steve fitton's slides are good too created. >> the delos bands coverage through two major sources. first private plans sold to the new health insurance marketplaces that are running in all 50 states for providing subsidies for people with incomes up to 40% of poverty or $94,000 for a family of four in second and this is the focus of the discussion today a major expansion in eligibility for the medicaid program for people with incomes up to 138% of poverty or 33,000 for a family of four. the federal government is providing 100% financing to states that expand their medicaid programs. that faces through 2016 phases through 2016 in that phase is down to 90% by 2020. the law as ed mentioned the law

originally required all states to expand their medicaid programs. the supreme court's decision basically turned that into an option and as you can see from this map this has had significant consequences in what is happening on the affordable care act medicaid expansion. only 22 states and the dishes of colombia colombia so far have decided to expand their medicaid programs under allowable federal pools. three additional states have hhs approval to try alternative approaches to expanding their programs in two states are seeking approval to do the same. about 23 states have not decided to move forward on their expansions. because of the way the law is drafted to people with incomes in states that are expanding their medicaid programs who earn 100% of poverty or more are eligible for the subsidies through the marketplaces. people with incomes under 100% of poverty are not eligible and this was because congress basically assume that everyone in that income range would have

access to medicaid. consequently an estimated 5 million currently uninsured people in states across the country that aren't expanding their programs don't have access to any of the new coverage options under the law and states are leaving a considerable amount of federal dollars on the table by not expanding their programs. today we are going to focus as ed mentioned on five states that face political barriers to expanding their medicaid programs and were able to find a way forward through alternative approaches to very different from what is laid out in the affordable care act. in order to pursue an alternative states have to get permission from hhs but they also have to agree to increase eligibility up to 138% of poverty. they can't do a partial expansion. hhs has used its authority under section 1115 of the social security act to grant permission to stay to want to do this. section 1115 allows the

administrations to advance the objectives of the medicaid program. the secretary has broad authority to approve these demonstrations is required to determine if the did termination meets medicaid project this provides oversight including in a valuation has to ensure that public input into the process and ensure that it doesn't cost more than it otherwise would have under a traditional expansion. so far hhs has granted 1115 waivers for three states arkansas iowa and michigan and we are going to hear the details on arkansas and michigan from steve fitton bay. arkansas is is under review new hampshire's in the process of applying. these states are all taking very different approaches but with the exception of michigan most states are using what is referred to as manned. premium assistance where states

use medicaid funds to pay premiums for their beneficiaries and private plans offered through the marketplaces. states have also generally sought permission from hhs to charge premiums and add cost-sharing. some states have sought permission to produce traditional medicaid and if it's and some states have added wellness incentives. there are some pros and cons to these alternatives and we are going talk a lot about this today. among the pros first and foremost these alternatives are allowing states to break through political barriers they have faced and expand their medicaid programs. depending on the approach and i'm really preferring to the private -- to the premium assistance approaches these approaches have the potential to reduce churn when people's incomes change. ..

in a tradition expansion and out of pocket costs to benefits might reduce access to care. i'll stop there and turn it back over ted. >> okay. thanks very much. good context setting. let me do little housekeeping before we turn to our speakers. in your packets their is a wealth of good information, including a blog post from sarah and her colleagues of the

commonwealth fund and is excellent and lying and so the differences and similarities among the states that a try and pursue this path. there are copies of the presentations from each of the speakers. there are biographical sketches it did you more information. there will be and video recording available in a couple days, a transcript a few days later, both available at a website. the speakers live and the rest of the material in the kits is also posted on a website. you want to ask a question of one of the panelists? a green card and a packet that

you can use to write the question he heat. there is an evaluation sheets indicate that we did ask you to fill out of with the in the brief says clinton health but been even better. he when one word to those of the mlb watching and c-span. if you have access to a computer right now you can take a look at our website. you can click on the briefing icon. and did mention that the his aide twitter has stag you can use if you're so inclined.

feel free to do that if it is you want. let me start the presentations by turning to dr. jo thompson. we will give him the clickers of that is lines will align. dr. thompson is the surgeon general of the state of arkansas and director of the arkansas center for health improvement. his list of achievements but that the national and state levels is both long and impressive. highlighted by a she used to combat child of obesity and the health threat of tobacco use. back in arkansas he has worked with a democratic governor and republican legislator and was a leader in developing this creative alternative to medicaid expansion that sarah was alluding to under the affordable care act. that is now being carried out.

dr. thompson is it tell us how it's going. >> thank you. thank you for being here today. if you're wondering who used the surgeon general is, you probably don't have one. there are three states that nebulize that aspect. hon republican governor mike huckabee and democratic governor mike beebe messed me to surpass the saatchi ticket visor. i don't run the health department, the medicare program. i call it like and see it, and we end up where we are. i look forward to sharing what has been an interesting past few years as we have dealt with some of the opportunities are challenges that have come from washington. let me do a little bit of environmental assessment. arkansas, as you may note, is in a more reddish tier of states along the seven aspect of our nation. we have a democratic governor. for the first time two years ago since reconstruction we elected

a majority republican house and senate. we have a low income level, an insurance level, 25 percent of 19-64 year olds were uninsured with some counties have been more than 35%. our health care system is fragmented predating the affordable care act, and candidly, we were in a fairly significant since the crisis. i say all this to say our health care system was in jeopardy prior to the four will care act. adage of the affordable care act as a disruptive back. and look forward to sharing with you our expansion of health insurance coverage actually not all are initial foray. our system was in trouble and we actually produce the started to really ramp up our adoption of help from asian technology for the first time we put a work for strategic plan in place. we have actually worked in a

multi pair public and private effort to change the way we pay so that we have a public and private, too much commercial carriers, medicaid, medicare, self insured state employees, public-school employees, even some or self insure private-sector, walmart, corporate, as well as other large companies joined us in trying to change the way we pay. we have dealt with the cost issue when along came the challenge and win the state was going to expand health-insurance coverage and not. this is a patchwork quilt that we used locally to describe where arkansas was. and, the f access. virtually everyone with medicare when it 65 if he had i not paying job get private insurance from your place of employment. we'd deferentially invested in our children's health insurance

program so that we have over 60 percent of the kids on medicaid. if you were an adult and not disable then i state we had the leanest medicaid program in the united states tied with alabama. if he had no children and are not disabled you were never eligible. if you had children yet to make less than 17 percent of the poverty level and that was the to the 3,000 in assets. we were lean. of our 3 million citizens we estimated there were about 550,000 that lacked health insurance coverage. direct contribution to the fragility of our health care system, threat to our providers and the poor health of our citizens. going forward we had a political challenge. not only did we have a new majority republican house and senate, but in our state we have to get 75 percent of the house and senate to vote each and every year to spend either a federal or state dollar. along came the opportunity for a solution, but significant

political resistance, as you're well aware, both within the state and national. we came up with an alternative. effectively medicaid has had two or three mechanisms to pay for care. traditional fee-for-service payments which is what arkansas primary care case management program continues to utilize. other states have turned out sores medicaid managed care when it would put their client up and ask managed-care companies to bid for medicaid managed care book of business. a third which was infrequently utilize but legally available was premium assistance. if an individual work for employer the benefit was the least as good as the medicaid benefits, and from a cost perspective it was advantageous for the state to purchase private health insurance. could use premium assistance to buy private health insurance

coverage. it was prohibitive. the with the establishment of the new health insurance exchanges will with the establishment of a new essential help benefit will of the standardization of the price structure we ended up exploring the use of premium assistance to buy individual private plans. we identified a qualifying high values over policies as those of our most : a, and it has the essential health benefits with private provider payments. not only do we get netiquette covered, but instead of the differential we were buying private health insurance that paid commercial rights. and giving you the nuts and bolts. the political process was a little this year.

we ended up having big debate over whether a judge hundred and 38%. between 10030 percent of we expanded medicaid, which took away the right of an individual. not using. our solution using premium assistance in the private market garnered not support, all the democrats support and the majority of the republican support to actually reach a 75% or a private auction in place.

this is not medicaid managed care. replacing an and the same plan a summit in making 90,000 years receiving care through. medically frail individuals are retained in the traditional medicare program. some of our existing benefit to the medical beneficiaries among those on family planning or those with preston cervical cancer coverage only are better served will be transitioned in the full benefit of a commercial sector. as i mentioned, it required a waiver. are where requirements actually were not a waiver use the production costs but was threefold. we had to get a waiver to not require 24-hour access to drugs, get a waiver to require people of the wanted covers to go into the private sector and not stay in the traditional medicare program paid provider rates in

the commercial marketplace as opposed to the traditional medicaid lower-cost -- lower payment reimbursement rate. we emptied by partisans were was 75 percent approval and mist of the political discourse which is anything of a constructive. this is where we are going. a plan is 550,000 individuals. the sliding scale tax credit increasingly supported down de hundred 30 percent of the poverty level. the new runs on we will have peers there were individuals have cost sharing above 100 percent so that they also have some engagement in the financial well-being of the plan and responsibility for service delivery. or of the issues we have is a relatively non-competitive insurance market. a mechanism but we can improve the competition. these are the seven divisions of our state.

the large numbers of a number of carriers in the least two carriers in every market. as a comparison mississippi across the river and chose not to expand or actively participate and 36 counties that no insurance carrier offered. we think we the competitive aspects. we're too far reporting significant reductions probably most important leaders of the personal stories not as people provided. we actually saw most of the pent-up demand and prescriptions

in the first week of january people and it had a condition has in the dr. condon the prescription we are a state call or regulated exchange hundred and 55,000 folks face

>> they can stay in with the same doctor. all we're doing is flipping who's paying the switch. it's the exact same plan, exact same coverage, exact same provider network. and, of course, importantly, in the next two and a half years we'll have to assess whether it was cost effective. so with that, let me close. look forward to questions. i don't know that my contact information is in your list, but it's there on the bottom should you have questions after today. thank you for having me. >> steve? >> terrific. thank you very much, joe. we're going to turn next to steve fitten. he has directed michigan's

program for more than five years and headed the policy for those programs before that. he's a career civil servant operating, i guess, in a completely nonpolitical environment. after all, it's only to, what,' 15 billion out of $50 billion state budget, so it's hardly noticeable, right? steve has a story to tell about how michigan is extendingtora coverage to hundreds of thousands of lower income residents through its healthy michigan program.g we're glad you came to share with us. steve? is. .. wonder how is going to introduce a career bureaucrat. very kind. i am pleased to be here to share with you some of the high points of the process to pass and implement the helpless you -- help in michigan legislation. the michigan political environment, our legislators -- legislature is republican at this one.

it's a republican governor. and so where we started was to make the case with the michigan medicaid program t the michigan medicaid program is, was and is affected and the fundamentals are sound and a lot of ways, near the front of the line in terms of how medicaid programs operate. this is the counter of the commonly held notion in some segments that the medicaid program is broken and all your doing is putting more people into a broken system and is a false promise because you can't get services so we really set out to get the story straight in terms of michigan and the fact we have david to counter those concerns and we can show we have access and quality in the program. as you can imagine the conversation is into linear conversation so there is a tension to understates and what was going on nationally and what

might michigan do differently as we were making the case at least we were starting from of a good place and we would get comments like why not do what florida is doing and privatize the program? actually we did that in 1997, 17 years ago we privatize the michigan medicaid program in case you weren't paying attention and that has been done so we don't have that place to go so we started to have a conversation about where we work, where we sit nationally on these dimensions in terms of program design and structure and weak point to number of features in terms of where programs that the nationally, we have six of our 138 m os nationally according to q a. we have metrics that show we do provide access to care just in terms of the visit rates because we have the data and we show the we are affected by a financial standpoint so we share this live with them that showed that there has been an increase in health-insurance premiums on the

private side of 127% over this 12 year period, the medicaid program has gone up 31%. medicare during the same time period went 94% to show we had been able to be effective in terms of holding cost of care down and it was largely due to our managed care strategy but we had a volume purchase programs for eyeglasses, we started in thes and the multistate purchasing consortium that is going to ten states in the district of columbia. the pharmacy purchasing costs down. we are able to point to a solid track record and also had data on quality so this shows the percentage of women with a prenatal visit in the first trimester or within 42 days of enrollment in the program so both clinical and access and quality measures and we had them in great volume and i won't board you with them. it starts with the fact, we started with the budget

presentation from the governor in late january or february, and ended up in the end of august and legislation wasn't signed until early september but start with the fact the we need to give credit to the governor. the governor was all in on this and fully committed and went around the state doing town halls and convinced of the economic argument and obviously you can't ignore the impact of the deep recession in michigan over the last decade. far earlier than other states. that is partly what is at play but the governor also was moved by the various stories he heard of people who were uninsured and the impact on their lives so he was a strong advocate as was my boss and community health director. the engage with legislators there was intense interest and on the key parties in terms of understanding and improving the program we had good bye and for the discussion and ultimately able to get the bill pass at the end of august or so.

the political and policy issues essentials week, a lot to talk about and there was a lot to talk about. of large part of the economy a lot had to do with financing and economics. and growing rather dramatically, the rate of employer financed insurance dropped from the high $0.70. and around los 16s, lost between 15 and 20%, employer financed insurance of people were not losing coverage and uncompensated care, and in terms of the small business association and the chamber and a lot of focus and some focus specifically on the legislation on non compensated care and the impact on private health-insurance premiums and so there is a lot of focus on the economic aspects it is fair to say. we emphasize the fact that it is not a static situation.

if you don't do this world will not stay the same. the needles have been moving and will keep moving as costs go up and as private commercial insurance has gone up 127% in costs employers are priced out of the market. a lot of people understood that both from being exposed to it and looking at the data and so we got fraction and there was a lot of health policy to talk about and it is a pretty transform of time so we have the largest demonstration for patients entered medical homes in the country, big emphasis on that and trying to transform the health system and the way and operates and how to engage consumers, a range of topics on the policy side that there was the engagement. the themes of healthy michigan, there are a number of them in the legislation is quite long and touches a whole bunch of fronts if you will. certainly there was a reinforcement of the

managed-care approach we had in place in michigan since 1997 which included in 1997 mandatory enrollment of the disabled population which i think was very early among the various states in terms of doing that but there is also incentives beyond the health savings account notion as well as co-pays the alignment of incentives the beneficiaries, providers and health plans were pushing in the same direction. there is heavy consumer engage in finances and skin in the game and healthy behaviors and trying to find ways to make the population of michigan healthier. hi obesity rate in michigan, and many broad measures. and we had an m o u signed recently, and a whole bunch of

measures, legislators wanting to be cut the bureaucracy. and total premium previously on the medicaid side, to make incentive pool, it leads to 0.7%, and the notion that financial incentives, across the system. it does get attention and rightfully so. this is the place where we did need a waiver from the federal government. there are required contributions or premiums of 2% of income but only for those that are over 100% of a pampered -- federal poverty level. co-pay is what apply, will fly to the entire population and we do want to engage the consumer by showing what the care costs and that is a useful endeavour and we will be sending out quarterly statements showing

what services are dollars that are tied to them. there is a heavy piece of heavy behaviorist, health risk assessment not requiring it but it will be heavily incentivize on the provider and beneficiary side in terms of getting people to go through the process to be informed and encouraged to do healthy behavior is and being rewarded from engaging in healthy behavior's. there's an awful lot to learn here. and nobody has figured out how to managed effectively. there's a lot going on, there's a lot to learn yet. the implementation itself we don't get immediate legislation, it passed the senate 20-18 and not enough senators to get the two thirds majority so we end of

implementing on april 1st we did a lot of preparation in terms of the i t systems to make sure eligibility was going to work, and in the april 1st eligibility date into we had testing done to have that accomplished, but we do find out in government most of these jobs no matter where you find yourself in the ideological system you have to execute effectively, for the programs to work it does affect how people perceive the programs, and we have done very well. it has been able to determine eligibility with noah human hands and 1 no human intervention. and they complete the electronic application and get a message back for healthy michigan so you are eligible and it has been a big plus for folks, affirmative

action on the part of the beneficiaries who are applying. the last thing i want to say is that there is tremendous potential for improvement in areas we are starting to understand so we know there are a lot of individuals in the corrections system with behavioral health the issues we know that we are confident that a lot of that can be addressed and we can reduce the number of questions in the corrections system so there are areas to focus on and areas to focus on in terms of healthy behavior is so there's a lot we are digging into, a lot to learn and engage in, and it is a worthwhile endeavor. >> thanks very much. finally we will hear from allen, director of the national academy for state health policy, has been that for almost a decade

to. it is the non-partisan nonprofit research and policy organization dedicated to excellence and state health policy and practice. in a prior life allen directed the colorado department of health care and policy and financing and health policy adviser to the governor. one of the most thoughtful policy analysts, that we will be able to see very soon, that he will about to take over as editor in chief. we asked allen to give a broader view of the expansion choices that states based and in some cases i based on medicare expansion opportunities. >> thank you, adam. thank you, adam. for putting this event on. i stifled my segment what does

it take to get to yes because an overarching steam is you have to want to do this to make it happen and you are hearing, you heard examples of this doing so. it is the waiver, section 15 waiver and of the social security act, i always start with the original text to understand what this environment is about. to remind you what is available within the experimental pilot project demonstration project which ended judgment of the secretary will promote the objectives of title 19. focus for a moment on experimental pilot demonstration, this is not plenary waiver authority, it is tied to a learning opportunity. there is that word judgment and the secretary of state sometimes bristle at, not the judgment of the governor or state legislator

or secretary and it does need to be tied to promoting objectives of the law, despite the changes in the enforcement opportunities for states after the supreme court ruling on the affordable care act. the medicaid expansion still reside said in the federal medicaid statute and it is pretty clear the objective of title 19 to have everyone with incomes below 133% or poverty covered and the question is how to go about doing it. i remind you there are a lot of meetings about this third way or whatever we want to call it but it is worth remembering the vast majority of states that have expanded medicaid have done so the old-fashioned way which for stated minister recall the state plan amendment tell the federal government you're going to do it and it happens so the question for today is why might a waiver which is a lot harder to get the an appropriate mechanism for a state and federal perspective to

effectuate a medicaid expansion and again i want to remind you the state has to request and the federal government has to approve it so both parties to the deal have to believe that waivers more appropriate years and a garden variety medicaid expansion. kind back to the language of experiment, a pilot or demonstration there has to be some kind of learning going on. we have to be finding something out of the we didn't know before. i would loosely place it in four categories of learning, there is overlap among these but given the way the program operates, it is a decent starting place. a lot of times how carriers or health care providers are going to react to a certain change, the shape of the market and the shape of the delivery system. we are very interested in knowing how people's access to care utilization of care changes based on program parameters. there is a good deal of interest in engaging the medicaid enrollees and we want to know

how they will respond to certain circumstances and of course i put it last but it is often first which is will any of this save us any money and what i am going to do in a few minutes is try to pull out examples of these four kinds of questions which animate the approaches states that taking to use a waiver method in the status of the standard plan amendment. if we start with carriers and providers we are very interested in what state you heard from are experimenting with and others are interested in. is trying to understand if you consolidate the medicaid and exchange insurance markets what the effects will be. traditionally these have been separate markets. you had medicaid plans, commercial plants, with the exchange even without a third way medicaid expansion with the exchange we already started to see some of the plans on the exchange depended on the state are traditional commercial

carriers, some are traditional medicaid carriers, this boundary is beginning to blur. why have these markets been separate? partly they operate under very different rules. and partly the commercial plans in particular have always felt there were a lot of benefits in medicaid they didn't know how to administer and so it is a special area of expertise to be able to operate in the medicaid world's. with the central health benefits redefining the medicaid package in the medicaid expansion and with the exchange putting changing the structure of the entire market there are a lot of questions about whether if you bring these two markets together, who will participate? on what terms will they participate? how eager will they be to participate? get new entrants into the market relative to the world you have been in. i should say these are very interesting questions and very dependent on what the market looked like before you did medicaid expansion and so

figuring out a research question here is very dependent on knowing where you started. what about the area of access in utilization? as commonly expressed that there is a concern about access to providers for people on medicaid and steve's comments about the data notwithstanding is a broadly held view that medicaid doesn't provide as good access as other sources so as those described in arkansas and other states are certainly interested in the question, if you have the same provider networking medicaid and the exchange will lexus in utilization change? will they improve? it is again a commonly held view that more access to the commercial market will improve access and utilization for people on medicaid but i should say we don't actually know that. we know that many medicaid

providers have invested a lot in culturally competent care, geographically available care, linkages to social services people might need that commercial carriers historically have not. the question of whether bringing everyone into the same network will include access utilization is a great question to ask but this is why we have to ask it. we actually don't know the answer. we think we know the answer but we don't. similarly traditionally there has been a big gap between what commercial carriers provide and benefits and what medicaid provides now, greatly narrowed with the essential benefits package but we still have so-called wraparound benefits and the question is whether to make wraparound benefits work. we don't have a lot of good experience on that front. if we bring these markets together you have to wonder if people will get the care they are entitled to if it is not delivered through their major plan. ..here has certainly been efforts on the parts of states to exclude certain benefits from

medicaid package. cms has been less open, but it's just the opposite side. whether or not excluding certain benefits has an effect on people's ability to get care. many questions about medicare enrollee responses to incentives and changes in the delivery system. some of these have been mentioned by our speakers. how well medicaid enrollees respond to having a choice within the in change? not all the state of trying this are extending that choice to the enrollee. some are. can people navigate choice? how will that differ? a good deal of discussion already about financial incentives for wellness. cms is never been particularly intta we don't, we don't need a lot of research on whether or not utilization goes down when you eliminate benefits or cost sharing. we know that. the question then can we encourage peoplee to do somethig

different through some of these wellness approaches? i think a common thread across states that are pursuing this alternative method that they want to try out different ways to engage the patients not just through garden-variety higher cost sharing. speaking of cost sharing it ist not lost on states there is misalignment in the cost sharing provisions between medicare and the exchange for people between 100 and 138% of poverty in, traditionally in medicaid you extend cost sharing but the exchanges the statute is written with premiums down to 100% of poverty so there is a lot of interest what happens with cost sharing in that income range and i think we'll learn about that from these states and finally, it's not often discussed but most of these, actually, i believe all of the states are excluding some people from their demonstrations based on some sort of a health screen. how effective will those be? if we take those people out of

the risk pool for the mainstream exchange plans will we achieve the same as we thought we were going to save? i don't think we know the answers to these questions yet and it would be booed to find them out and find out what kind of health screen really works. of course there is the question of saving money. a big plus ascribed earlier is the possibility of less shurn but less churn only happens if people move seamlessly across different sources of coverage. just because the same plans offered on the exchange and medicaid that people move from medicaid to the exchange or vice versa when their income changes. we need to find out whether there is less churn and if it does yield benefits. is this more effective at providing stability than some states bridge plans or basic health program? we don't know yet. similarly there is a big hope when you put everyone in the same network that we reduce cost-shifting, that we cover more people and that the prices

for private coverage will go down. economists are not so sure. people whom run hospitals and health plans are sure. here's our chance to find out. and finally again a lot of interest in these behavioraln incentives associated with financing. so these are the kind of questions you have to, if a state is interested in a, in going forward, not with the standard state plan amendment these questions in the form of some kind of a demonstration or pilot need to be built in otherwise you're not really doing what section 1115 calls for. so i would just conclude noting that i like the catchy tidal of the third wave but we should be aware there isn't 1/3 way. a each of the states we're having discussion have a fourth, fifth, sixth, seventh way. differences many level of detail are many instances profound but advantage of having those instances from a research pilot

and demonstration perspective we'll learn a lot more which is what section 1115 is all about. >> thank you very much, alan. goodth framing of broader issues as well. we get a chance for you to join the conversation. as i mentioned, there are microphones you can use to ask your question verbally. if yousk do that appreciate your being as brief as you can and questioning as you can and identify yourself as to your organizational affiliation if any. i would want to invite our panelists who want to question each other and offer similar questions and sara, join in asw we speak and if you have a question to be written down, hold the green card up and someone will bring it forward. there is a gentleman at the microphone as they used to say. >> thanks, ed. mike miller. i'm a former orthopedic surgeon but now a health policy wonk i

guess. >> you want to stand closer to the>> microphone. >> i'mhe getting over a cold. a mikend miller, former orthopedit surgeon and health policy wonk for 25 years. i want to ask steve about his last slide, the one says questions. i wonder, for steve and joe, what kind of questions do you hope to have answered in the next six to nine months we'll know answers for about the operations or making your, your wafers work that are more operational rather than the kind of questionsr that alan asked in his slide which relate to the effectiveness of meeting waivers demonstration pilot characteristics?er so things that, maybe keeping you up at night and you're hoping to know how to do better or hope they work out or figure out as you go forward? does that make sense? >> so i'll start. we affectionately call that list, which isti not a short lit of issue, our transitions to

market issues. we are marrying two different approaches that are philosophically and operationally very different. the insurance world where you have no coverage until you pay your premium and the medicaid world where you have coverage immediately upon eligibility. the insurance word where you have had different levels of cost-sharing and variation in management efforts, the medicaid world, that had a fairly, regulated approach from the federal government. so i would actually say our biggest challenge, and it continues. we're managing through it. we meet every monday afternoon, obviously not today, for a couple of hours between the leadership of our insurance department and the exchange and our leadership oft our humann services department and medicaid to go down a list of 20, 25 different operational issues ase we marry two federal agencies, socio and center for medicaid

program and two state agencies. david: the insurance department and medicaid program. it's a four-way relationship. you can only imagine complication of different rules, regulations and philosophical orientation for each of thosefo four perspectives. >> i think for us there are a couple of areas of focus. one has to do with the engagement with the consumer. so maybe number one is, can we figure out a way that they can pay their required contributions and co-pays and will they? and so, first we have to set up a structure. we've talked to walmart and mayer which is a big chain in michigan to see if we can actually create a process for them to take in cash and credit to the account without charging us ang huge transaction fee. we're trying to figure out whether we can make those mechanics work and to see how folks will respond. on the health behavior side to see if individuals will complete the health risk appraisal or

assessment. then that is two-sided. it also has to do with primary care providers we need to engage with and the early returns are they're being completed at a rate we didn't foresee possible even if this first five or six weeks. we're kind of amazed that seems to be going well in terms of early returns. lastly i think we will start to see some data on uncompensated care and what impact particularly is on hospital sector. i don't think we'll know muchon about private't insurance premis six to nine months and we'll see datawe on uncompensated care and the impact there and that is obviously very interesting to us. >> okay. i'm dr. caroline conklin. i'm a primary care physician. my question is about theue premiums in the insurance. my understanding from what you said you're going to use medicaid money to pay premiums t for private insurers with some co-pays ori something, or a smal

contribution. do you negotiate with the insurance companies about the premiums? i would imagine that cms will only give you so much money per capita for private insurance premiums. and obviously people below 140% of the poverty line are not going to be able to contribute very much. >> this is one of the open questions, the insurancepe exchanges are newly-formed this year.n the premium price point for the newest central health benefit had neverh been experienced before so the carriers came in with price points on premium this year for a product that had never been sold in the marketplace. >> right. >> obviously over time we will introduce cost competition for the medicaid dollar. doesn't like us for some reason. so first year in the price point

competition is really largely guardedm by the medical loss ratioel requirement in the individual marketplace. over time as a large state purchaser we will likely introduce some price competition so that we'll buy the second lowest plan plus percent of premium which is the same strategy that the federal health insurance exchange will use for what is applied to the tax credit. >> right. but what if, there isn't muchbu price competitiont or all the prices turn out to be higher than what cms will give you for medicaid? they're not going to pay more for a medicaid patient in arkansas or michigan than they pay for a medicaid patient in new york? >> they currently do pay dramatically different prices for medicate patients betweennt states. our demonstration waiver is to actually test whether the purchase of the private premium

is worth the increased access and outcomes and continuity of care that we anticipate. so that is the pilot project to use alan's demonstration perspective. they are allowingct us to have a differential payment to test that pilot. >> thank you. >> you know, there is actually, i'd like to follow that up just to clarify for those of us who don'tt emerse ourselves in medicaid every day. alan noted that there's always a high interest in trying to explore potential savings in moving to this kind of a system and yet, medicaid rates, though they vary obviously a great deal from state to state, are generally perceived to be well below commercial rates. so how by moving from a medicaid program to a commercial program can you expect to save money? alan? >> i don't know why you're

asking me. well, what you spend is price times volume and one answer is that you might imagine that with better access to care, particularly accesswi to things like care that better manages chronic conditions or diverts i people from high-end institutional servicesp that,ti that youtu would bring the cost down. the original move of medicaid from fee-for-service into managed care where states were required to show minimum 5% savings relative to fee-for-service was based exactly on that premise. you would drive down high-cost volume and certainly the, i think the data have been hard to find because in many instancesto they're proprietary but if youce talk tos those who run the medicaid managed care plans, they will tell you that they jack up the rates on the front end on primary care to reduce that utilization and that is their winning formula. so that's one answer. the other answer is, maybe it

won't. and, and, it is, or, one might ask, if the solution to our problems is paying higher rates, do you need a mod he like this to solve that problem? so you know, the answer is we don't really know but there certainly is a, there's a hypothesis out there that, that is worth testing but it's a hypothesis that extends well beyond the private option expansion. >> if i could just add. our, our medicaid rates we believe would have been, had to have been substantially increased to actually gain the access that newly-covered lives because as ed as you suggested of the other piece we've already we anticipate by reducing dramatically the number of inuninsured we'llw eliminate soe of the cost shift going on within the private sector although i think it was

premature one of our larger carriers introduced a 10% reduction on specialty rates across the board as we implemented an off load of the uncompensated care. that didn't stick because we didn't have people already covered buta i think there will be potential deflationary pressure across the market as we eliminate some of the cost shifts on uncompensated care on the private market. >> steve, any experience in the month and the week you've been in business?an >> well, actually, reflect more on the conversation we had in michigan and that was, as weat engageio with the legislature a, you know, we had a lot of parties to this discussion but the question of, you know, the 100% threshold was very important. it was important in arkansas. i think it is important in a lot of states that are sort of in the middle and the fact that you know the private insurance option was viewed asn preferential from philosophical standpoint but what we ended up talking about was, what is the

total cost to government, whether it is's federal or state? we were able to make the case effectively enough in michigan that we were below the private market. in fact more effective than the private market and thereforee that the government would spend less if we did indeed have medicaid and healthy michigan going up to 138% of poverty. and so we're going to be held to that in terms of looking to what is thek total cost and how might that have played against what the exchange prices are in fact we've already done a preliminary analysis that shows we're below the where the exchange is. we essentially did what we didd becausei the assumption because it is cheaper to government to run it through the medicaid system.u >> yes, sir? >> hi, my name is seth golden with men's healthnet work. i have a question for mr. thompson. in regards to assessments you do in arkansas for nearly enrolled

medicaid patients we're wondering if you some form of program with michigan has with b healthy benefits trying teno assess what chronic diseases patients might have and you catch them early and something you are interactively doing to insure that? >> great question. many of our carriers are actually already implementing or in the process of developing essentially earlyn screening mechanisms to get case management and spoehr on these newly insured individuals. you had no experience before.ad there is no record what your issue is so there obvious benefit to the carrier to better manage those costs. the other reflection on your question that i would say is, that there is discussion around our independent accounts which have not dissimilar to steve's health savings accounts approach that i think in the out years be expectations for healthyi behavior requirement, other contributions in certain ways that increase the individual's first awareness. i don't know many of these

people havef the awareness of what the contributing factors are to the illness and over time fiscal accountability for those issues. >> go ahead. >> hi. joan, georgetown university, and i had a michigan question. we found your authorizing legislation super complicated to understand so i was wondering if you could talk a little bit more about your health accounts which i think are really unique feature and in particular i know you're going to be looking at sort of six-month period for utilization for beneficiaries and then revising their cost sharing based on some of theirt practices. so i knowsh you haven't fully gotten there yet but can you tell us a little more about your implementation and how that's going to work. >> sure. the part of the legislation that is referred to here has to do with the fact that we wanted to take the co-pay responsibility off of the provider. it was alleged that is just a fee reduction to the provider because of difficulty in

collecting co-pays. t and sohe the legislation calls r accumulating experience over a six-month period and then spreading thev co-pay obligation out to be collected in the next six months where it's prorated across the different months. and so we're working hard to operationallize that. i don't know how happy the staff are that's the structure we've adopted because it gets tricky in terms of what happens if people gao off the program inpl variese ways and are you goingo continue to pursue them because you're really collecting after the fact. we're wrestling with a lot of thoseh logistical challenges an, but we're, you know, we're working toward it and essentially trying to set up apparatus to make those collections after the fact ands they will bafe spread out in evb ways so we think it might bev more affordable and does reduce the burden on the provider. that is one of the interesting things to see how we can make that work. >> hi. i'm sue with the blue cross-blue

shield association. i would like to ask our panelists to look ahead in the future a little bit. >> get closer to the microphone. if you could just get a little closer to the microphone, that would be great. >> is that good? >> that's terrific. >> okay, great. in arkansas, when do you anticipate these exchange will move transition to a fully state-based exchange? would be in time for the 2015 annual enrollment to begin? and in michigan, when do you anticipate the state would have the legal authority to move to first a more of a partnership exchange and then eventually to a state-based exchange? >> so we had the political experience of not wanting to have anything, so we were a federal exchange. then the fed said we don't really want it. so now we're a state federal

partnership exchange. i actually don't think we could have done our private option if the state had not had control over the plan management function to be able to marry the medicaid program and the privae marketplace. in some of the legislation surrounding the private option legislation was the establishment of an independent healtha marketplace board that think likely will advocate to move from a federal state partnershipw to a state-only exchange, probably not the before calendar year 2016. i think timing is too tight to get to calendar year 2015. >> the exchange isn't exactly in my wheelhouse but i guess what would i say is this. both the house and senate at different times chose not to act in an affirmative way on either a state-based exchange or a partnership exchange and at this point i don't know what the political will would be. i know there's some regrets in some quarters that we didn't move forward with that but i'm sort of an open question and i'm

not really sure, you know, what the future will hold but i don't see anything in the short term that we're going to move. push the button, to a state-based exchange. >> i think we had one more person who was in line before this gentleman was in line. >> thank you. i had kind of a two-pronged question. >> want to identify yourself? >> sorry. i'm katy from congressman burgess's office. so i have a two-pronged question. the first is about enrollment, the risk pool. i know particularly in the private option in arkansas and this is sort of specific to the demographics of arkansas, but it is vast majority of enrollees are in the medicaid population. you also have a pretty significant portion of your enrollment coming from youre high-risk pool. soo how is this affecting overal risk and rates? then the second portion is, the private option seems to be moving a lot of cost controlses inherent in traditional medicaid

programs. so how is this kind of marry to increase costs and in state and federal budgets? >> so excellent question. let me set up the answer to the first. so if you's remember on my slids roughly there were 200 to 250,000 that could beem newly eligible for medicaid and same amount that would be newly eligible for the tax reds. we're about 160,000 into the medicaid and we're only 45,000 into the taxre credits. you allude to two previous high-risk pools, one that the state had ren and one the affordable care act established that were terminated and those individuals are probably in the 44,000 and contributing to someh adverse risk selection of our tax credits. we also had our legislature prohibit any state agency from doingl outreach or enrollment into the affordable care act. so we're not, our up take is not great on the exchange. however our medicaid eligibles that we're buying private curverage for are drawing down the risk pool so that arkansas's

risk pool is on average 10 years younger than every other state's risk pool. the only risk pool that has an exchange that's younger than ours is yours here in the district of columbia because all of you young people are in that risk pool. but we are buying down by 10 years our younger poor people into the risk pool, so we actually have an advantageous risk pool compared to almost every other state. now with respect to the cost controls, i think that is part of our demonstration. we were a still, a fee-for-service primary care case management state. we had lots of administrative efforts to have cost controls, including lower payment rates. the question is going to be, can we get improved care, access and outcomes for a marginal cost of using the commercial sector? and what i think we're alreadyor starting to hear. from some of our commercial sectors that original acutarial projection

may have been a little high because of perceived adverse risk and they may end up bringing that in at lower rate in future years that will help both the state's obligation and over time because of the tax credits that the federal government is paying into the risk pool, potentially the federal obligation also. >> so joe, i want to follow-up too on the administrative costs. the question came in how the administrative cost will be effective by doing the private option? >> i would say that our legislature was very interested that we did not grow state government because of the private option. so almost all administrative costs are transferred over into the premium price point that we're paying for carriers. so the administrative costs are in premium price. i can't say there is not administrative effort that is being expended but in terms of no new state employees, no new administrative costs, we're buying premium assistance and the administration of the plan, the production of the cards,

appeals process, the formulary management. all of that effort is transitioned over to the commercial carriers as part of their commercial obligation. it is ruled by commercial rules. the appeals process is the commercial appeals process. that factors under the insurance department's authority and oversight. >> alan? >> i just want to comment on the part of the question about cost control which i will actually transform slightly into cost quality and control oversight. and note that we have a two decades of experience innc medicaid managed care with state and federal oversight of health plans and the, how to do that has evolved. the exchanges of course, there is some potential, there is some standards in the affordable care act and then there is a lot of potential, even the most ambitious state trying to create a market, get a bunch of plans coming in has been fairly timid about exercising that control.ol

i think it is an open question whether or not the quality and cost contracting standards in the exchange will evolve more toward medicaid. probably not as far as medicaid has. but it is also i think notable that you take a state like arkansas without that 20-year history and actually, you're not really giving up a lot becausese you y didn't have that 20-year0- infrastructure. whereas if you take a state like michigan where you've been building that over the years, that plays out very differently, just to say this notion of sort of medicaid cost control exchange market, there's a starting point that's about right on average but actually it very quickly get as lot more complicated that an that. >> yes. senator pryor's office, i want to say thank you to dr. thompson for the work him and others in state government have done where 250,000 people are eligible for the program.

weth have over 10,050,000 that have signed up -- 150,000 signed up thus far. it proven wildly popular in the state despite restrictions on informing people andla being abe to market the plans. one question i want to ask, when i first heard about how the private option would work, i was a little bit skeptical when the affordable care act was being developed in congress there was effort to try to minimize churn and have a more uniform marketplace but the congressional budget office projected that for 2020 the plans and the marketplace, the qhps, would be 50% more expensive than what they thought traditional medicaid plans would cost. and ila think one of the thingse learned in arkansas, you get more granular dealing with from one state to another state. there is awe lot of difference r what the risk pool is for the medicaid expansion program and also with what the costs are for

a medicaid program. and my question is, states that have not expanded medicaid, at this point, is they evaluate t this as an option, what are criteria that would make the third option attract if i have for a state versus a state that may have challenges trying to make it work. thank you. . . >> i think you really end up with a conversation about what the state of health care is in your state, and there is, i think i talked about in my presentation, there are multiple economic aspects to talk about in terms of the impact on the state. how does it affect uncompensated care and affect private insurance premiums and trying to keep that under control and affordable for employers and for individuals. but also the public health situation. where are you in terms

but also the public health, in terms of obesity rates, diabetes and smoking and a number of these areas that are saw important to the health and the state and individuals and needing to engage in that process in the state and looking at the benefits of coverage and there are benefits of coverage and in a lot of ways a clear-cut case. it doesn't answer the question is the federal government going to renege or there will be some basic issues that need to be worked through, but i want to throw out one example of a comment or question we got as we were implementing health the michigan and an individual set up and i have a friend who signed up for the healthy michigan program and i wonder if you cover cataract surgery and they said the reason i am asking his and if they have the surgery

they will have normal vision and lost his job and able to drive and this will enable this to be a contributing member of society and improve their life. you hear those stories, there are compelling stories and the governor was great about getting around the state, and it is not true the entire population, but a segment of the population has not been getting service, they have not found a way to finance this and their life will improve and they will be able to be more contributing members to society and that is part of the argument as well. >> if you are in a state that expanded above 130%, you will be bringing it down, and doesn't offer a new option. if you have an estate that is an effective management function like alan alluded to your medicaid managed care is working

well, probably that is an expansion policy it makes more sense. and medicaid managed-care system that is not managed well or you are not invested in a managed strategy over the last decades, the different approach in individual exchange, and how assertive the exchange is managed a real opportunity to leapfrog forward. i do think operationally it requires medicaid director and wherever that authority lives and your insurance commissioner and wherever that authority is to work together in a way they never worked together before. >> i started by reminding you the vast majority of expansion did it, this conversationally begins in a state that that is

not a viable approach for political reasons. in my goings around the country, the defining message that i hear from those who are looking for another way to do this, a sense that medicaid and certainly part of the broader politics, that medicaid is a one size fits all program that the federal government after the court opinion, the federal government was not open to states to impartial expansions, they were not open to limited benefits and sort of a take-it-or-leave-it and they want to shape this program in a way that fits with their values and with the structure of their market and the resources that they have acknowledging that pick up a share of the cost in a couple years and a lot of this is just

about us sense that they want to construct something that fits them, not something that was written or defined in washington. converting that into a viable waiver proposal that meets the needs and the criteria that i described at the beginning is very hard but fundamentally the conversation begins when a state says they want to do the expansion, they don't feel the medicaid program as it currently exists is they want to expand further and they want to be creative as the states have been in trying to figure out a structure that would meet the federal government requirement and enable them to feel good about it. if you were ultimately approved. >> may be that you don't want to do the expansion but you have a

problem, for their situation. >> jeff levine, blogger and former cnn medical correspondent. want to pick up on what you said earlier since tell the michigan has come in to being there is great demand for prescription drugs. so is there out there and unanticipated or unfulfilledable demand for service that will put additional pressure on your systems, individual state system this that look a little meaner than federal medicaid. >> i am sorry. not fully understanding. the concern is about high demand for prescription drugs? >> or anything. there's a lot of consumer demand for service that you don't have the surge capacity to fulfill. >> the concern in our state was more focused on primary care capacity. there was a survey done by an

organization, center for health research and health transformation or health research and transformation, screwing up their acronym, charlie wi college, facility at the university of michigan, survey of primary care providers and found an overwhelmingly positive response to the ability to take on newly insured patients that would be held in michigan patients and there is also data that our health plans, and the ratio is very low to benefit number of beneficiaries, absent the information of how many insured populations, and all the data you saw was encouraging in terms of the capacity of the system to absorb the population. we are 5 weeks into this or something but initially we were paying bills on the second day. and individuals taking their

card because the primary care association involving outreach and helping them to enroll in health michigan and referrals so people were getting to physicians and this point we have not heard of big lines and there is a better way to say that. and problems with accessing primary care or big waiting times. i don't think we have enough information to know because most of the health plan enrollments until june 1st for the initial population, it is a lot of people in the short amount of time like a state like michigan, population of 10 million and the medicaid population of 1.8 something million traditionally and we are talking about having 220,000 individuals who will hit 300,000 in the next month or so or month in a half, someone

being optimistic. a lot of people, i don't know how it would go but all the information we have been able to collect and evaluate the capacity is there and could be surge aegis and in terms of primary-care, we think we are all right at this point. >> if i could just that we have similar concerns, one of the issues around our payment transformation is to remove our workforce to think more about team based care scaling the appropriate level, that is a benefit. anecdotally, it is early but our surge happened on the pharmacy side when people had previously seen a provider or had a prescription but hasn't had a financial mechanism to pay for the prescription so in january it was people getting care that they had previously been diagnosed with but one not successfully affecting that care.

we also potentially have an educational effort for folks who historically only used the emergency room because they didn't have access to a primary-care home and so there is going to be some migration of folks's usual source of care as they learn to use the health care system. >> the question on the benefit package in the book at arkansas plan and also mich. and arkansas, what bent -- dental benefits are included in the private option plan and someone asked about wraparound benefits of maybe both of you can explain the differences in the private option benefit package and compare to traditional medicaid. >> somebody medics plain what a wraparound benefit is. >> starting with a definition which since we don't have medicaid managed care will get wrong and medicaid has

guaranteed benefits that if a plan doesn't offer the state obligated to provide access point for. in our private options those wraparound benefits really include three major areas. not emergency -- we are buying of the central health benefit on the market place which our state used this second-largest small group market which did not include vision or dental as they cover benefits. the wrap around benefit we have to make sure people have are not emergency medical transportation. largely long-term care services and benefits for 1920s, the obligation goes through 20 years of age. if we have an individual who is likely to need those benefits we are trying to retain them in the traditional medicaid program so we can give them those benefits or extract them if they do make it into the commercial program when they need those benefits,

trying to avoid as much as we can the coordination of benefits between a commercial plan and state obligations that wraps around. sara collins asked in transition to market issues the couple plans but dental and bent -- vision benefits in, they were not part of the essentials health benefit program and the state is paying for. this makes our price point be above what the federal agreement is. this is one of the genera edge issues we are moving to eliminate those supplemental benefits if you will in year ii which will bring the price point into alignment. it fiber king for a day i might add them to all the benefits but the rules that we established requires us to go with what the state shows as an essential health benefit. >> it is important to remember

the medicaid enabling legislation was passed in 1965 and hasn't changed much. so the list of mandatory versus optional benefit would surprise you, i think. surprises me when i looked at it and i looked at it for four years now. what surprised me is it hasn't changed so pharmacy is optional even though no state in their right mind would make pharmacy optional and things like non-emergency transportation but for the healthy michigan program, one benefit design change that we made that might have been as significant as any is the fact that we included dental in a managed-care package previously and for the traditional program that has been carved out and we pay low fees and have access challenges so we got a mixed bag, completely different things for kids and have a good program for kids in the vast majority of the parts of the state called healthy kids denzel where we partner with delta dental but by

ruling the devil benefit in we think we will require that there be adequate network and organized system of care and impact, if you do pay actuarially sound great it is a different financing structures so we think that was important change and a good one. >> go right ahead. >> i am carolyn kramer from consumers union and one of the questions i have is you mentioned especially the questions we have right now about these different approaches to medicaid, whether costs will go down, access utilization will be affected, a lot of things we still don't know. i was wondering if you could talk a little bit about efforts that are under way to study those things and find out whether they are state government based or partnerships with universities.

i know that things are sort of starting to come out, medicaid experiment, so efforts like that that are under way, what is emerging and what we can expect. >> i won't give you a very satisfactory answer. part of the waiver is an evaluation component, it is hard to summarize because there are dozens and dozens of them and they cover a lot of different ground, people in the audience here who i am looking at who follow them more closely the 9 do and we to people living through it particularly around the questions, there waivers raised. but there is an evaluation component to every waiver. and i believe -- i can't remember if it was in this session or just a side

conversation before, given the high level of interest in this model, there is, i believe, a higher level of interest in the federal government in making sure that those evaluation plans will answer some of these key questions because there are others, the thinking has been there are other states lining up interest in these approaches so we need to have the answers but i am not sure how to generalize about what the nature of those evaluations is. >> just to be explicit the first amendment to our waiver was federally approved evaluation plan and an interim report is due at the end of the year, final year is due at the waiver. there are to my knowledge two or three other evaluations on going. i am not sure what the timeline on those reports coming out but there's a fair degree of interest on whether this is successful or not.

>> just to go to the next question, are all of these alternative state medicaid programs appearing to have something in common which is that -- away from fee-for-service. is this critical to the success of the alternative state medicaid expansion efforts? >> we think it is. we moved away from feet for service in 1997. you a predictable cost and also gives you some certainty in terms of provider networks and the organization and delivery of services and where we are looking at have a procurement for our managed care program in year-and-a-half we will be looking to try to affect financing relationships to plans and providers to move further away from fee-for-service rather than be a fee-for-service system in their own way but to try to make sure we are moving toward

value purchasing all the way through our system so we are there. >> i would echo prior to the affordable care act we started our arkansas payment improvement initiatives that i mentioned to move explicitly away from fee for service reimbursement system not to a capitated system but value based system. and a path to capitation. and the largest commercial carriers, medicare, medicaid and self insurance co. the private auction legislation requires all carriers on the exchange participate in the payment improvement effort as an explicit statement don't believe the fee-for-service reimbursement mechanism is the right approach to get the value we went out of the system, and consumers from the system. >> the vast majority of

low-income people without any sort of disability or medicaid had managed care arrangements, most states that consider this private option, it is not so much a shift from one way of thinking as they have embraced the model of risk sharing, and consider expansion of the past they would naturally take. >> moving into the last few minutes of our session i would deeply appreciate your pulling out the evaluation forms and filling them out as we go through these last few minutes. particularly directing that request to those of you on congressional staffs who are here because senator rockefeller would say, not to dismiss anyone else, that they are our most important target and the most direct policy of opinion leaders that we tried to reach so i

appreciate it if you would fill that in. sara collins, you have 115 more green cards. >> another somewhat related to last question but what is the level of direction and oversight with regard to patient providers and health plans? i would add to this question some approaches have healthy behavior incentives, miss michigan, iowa does too, pa. is proposing a set of healthy behavior incentives that are tied to having premiums waved and subsequent years, there is if you read through the waivers the labor applications and approval from cns there's a considerable amount of oversight and intention to those incentives and how they are evaluated. so i thought maybe we could

discuss that oversight within the context of those provisions. >> our experience has been fairly intense level of engagement and navigation with the cns officials. i would not say there's that much direction but they clearly have concrete boundaries they want to protect in terms of basic benefit offered through medicaid, basic protections afforded to individuals and income gradient that they recognize at lower levels, individuals cannot participate in the same way as someone who has some more fluent set of assets. having said that the bigger issue on many of these new additions are operationally how are you going to make it work? is not necessarily oversight or intrusion but how are you going

to make that healthy behavior assessment have meaning and how will you -- we are having a hard time with some of our individuals getting their insurance card. we have hundreds that are homeless. these are not small issues of building bells and whistles in early years, we can have a dialogue and discussion about goals and objectives of the program. many of our issues are let's make sure we can operationally, back to steve's earliest thing, we have to be successful on implementation or else this is really an at risk program and the more challenges you lay on top of it in early years the more likelihood you are going to have implementation failure. >> i can piggyback on the comments. i think it is fair to say that states almost always would like more freedom than what the federal government will afford

us. it is also true that the health plans we oversee want more freedom than we give them. it is and natural law of some kind. it is fair to say our experiences quote we have, a very ambitious agenda in terms of legislation and it is about financial contributions and having skin in the game and healthy behavior's and accountability and alignment of incentives, a whole bunch of things trying to affect the public health that move the medicaid program to the next level land there are certain places that the federal government does have values that they are concerned about in terms of protections and there is discussion on those that they have been quite flexible and open in terms of the program we have and the legislation we have in terms of getting from here to

there on the implementation. >> i would just state what is may be obvious but i think often not referred to in a conversation like this. the private option is the medicaid expansion. is not a different program. that means people who enroll in a plan for a private auction on medicaid enrollees and that means all of the constraints and conditions the state or federal government would put around the terms of that are present unless they are relieved due to a waiver. contract in with plans through an exchange is not qualitatively different from contracting with plans directly which is what state medicaid agencies do all the time. the issues that the exchange plan relationship is brand new. we don't know much about it. we don't know where it is going to settle out so i do think one of the year earlier questions

was i talked about one kind of thing and the others we are all operational. much of this is operational. the boundaries are clear. the question is can you make it work and if you do make it work do you get the benefits you thought you were going to get? in terms of what the flexibility is for the state is not that different from any other waiver and the legal entitlement to the enrollee is no different from legal entitlement to anyone else on medicaid. >> one last question. >> just looking forward to states moving forward on the exchanges or other market places. do you think the exchange markets partnering with other states to create broader insurance markets is an option for states in terms of lowering costs moving forward.

>> any appetite for that in arkansas? or anywhere else? >> at some level and interest the exchange is an opportunity for administering administrative costs which are associated to bringing up all these different exchanges. the barriers to doing so, we put together a paper on this, one state requested an analysis of doing a multistate exchange are well known to those who work in this field and they have a lot to do with the fact that insurance is regulated at the state level and there's a relationship that would have to be unraveled and redesigned if you worked across state lines in that area. i don't think there is any reason to think the plan issues change if you have an interstate exchange. is primarily about administrative infrastructure. >> one thing that is presences the multistate plans which are not interested exchanges the

potential for plans. i cannot imagine an interstate exchange. it is difficult for me to imagine an interstate exchange helping facilitate or not being a real challenge to a state that is doing a the third way expansion. i don't want 36 counties in mississippi. i want to keep my 75 and get them as covered as possible because that is within the degrees of political, operational and policy flexibility that i have. >> this has been an enlightening conversation and keep in mind the title of alan weil's presentation what does it take to get to yes? as it develops over the next weeks but the next couple of years, we will see if people are moving ps and what barriers are to get them there.

we are going to continue this conversation on friday in a slightly different way with our colleagues at the commonwealth fund by looking -- there were references to them today, the federally qualified health centers, the f q h cs. we are going to take a look at how well prepared they are for new enrollment, new rules, new opportunities and we will see if we can't try to find another way around toward helping states get closer to yes in the capacity part. i want to thank our friends and colleagues, sara collins and her colleagues at the commonwealth fund for their work on this topic and in this briefing. thank you for sitting through a very dense and fact which set of

presentations and discussions and ask you to help me thank the panel for explaining most of those difficult situations in a very erudite and understandable way. [applause] >> c-span2 providing live coverage of the u.s. senate floor proceedings and keep public policy events and each weekend booktv, 15 years the only television network devoted to nonfiction books and authors. c-span2 created by the cable-tv industry and brought to you as a public service by your local, cable or satisfy -- satellite provide. like us on facebook and follow us on twitter. >> the u.s. senate is about to gavel in to start the day. general's beaches of first with more were expected on a bill extending 55 tax breaks that expired at the end of 2013.

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