we now have health care system in which it your income is less than four times the official poverty threshold for a family of four is now in the vicinity of $90,000 a year, scaled down for smaller families, you are eligible for subsidies, refundable tax credits and assistance with cost sharing, on a sliding scale that starts with recently complete coverage of what is called the silver health plan and that is the premium

that is charged for a health care plan that covers 70% of the covered health care services on an actuarial basis. plans can provide that coverage in different ways. many people also want more generous coverage or they receive it through and foyer sponsored plans. if you buy through a health exchange you can buy plans that cover up to 90% of the cost of coverage which leaves relatively small amounts for deductibles where there may not be anybody or cost sharing only for certain services. it is very generous coverage. perhaps not as generous as try care is not described as being but a close. so the question i have is whether it wouldn't be desirable

as part of the national health care system to provide for the base level of coverage to be a general responsibility not of the department of defense but of the overall health care system that is serving the rest of the population. for special reasons as part of compensation, the department of defense may want to provide more generous coverage than the silver health care package. they may want something approaching or even surpassing platinum coverage. if that is the case, that is the responsibility of the defense department. as an extra recruitment benefit that is provided to attract the kinds of soldiers we want to have. if that is the case, then the

defense department would have to consider, and i think it would be a close question, as to whether the most effective way to attract the kind of course we want to have is to spend money on a particularly generous health care plan, a higher cash payments for some other form of compensation, they would have to judge the best way to attract the force that the defense department needs but my fundamental point here it is this is a nation that has embarked on achieving a degree of close to universal and relatively uniform access to the health care system. that is a national obligation. is not, in my view, a defense department obligation. is not clear to me why the basic costs of eyecare for non active

duty personnel really is the defense department responsibility. thank you very much. >> that sets up a lot of the questions, i know you want to get at the additional one of whether this overall system strikes you as relatively each patient or in need of fundamental reform above and beyond the issue of the beneficiary and what their packages are and how generous those packages are, is the system itself in need of fundamental reform and anything else you would like to address. >> i appreciate the introduction. i can't claim the mantle, and the damage from this more from a perspective of of being a management consultant influenced by the consumer in the past of military health care and as a businessman and. i appreciate dr. woodson's comment about thinking innovatively about the work

force. the work force is normally one component of the system and indeed if we are going to change the military system to be something better in the future, then we need to be thinking of it as a system and thinking innovatively about all parts of this. >> i agree there are multiple populations when you think about this. you have the active duty population that i never heard anybody think you should have anything other than the best health care possible land the civilian population benefits from that. history of bent centers and what we're seeing now with prosthetics and traumatic brain injuries, nobody does that better than the military and we all benefit from things like that. the second population is the dependent population. when i think of this from a management perspective, as a businessman you have to be

thinking about the benefits you are willing to have for everyone. not everybody in the military is able to take it appendage of the benefit of having full medical care covered for dependents. many people in the military are dependent and the military benefit program is going to be fed and you would have a baseline that everybody is covered at one level and those who decide they will have dependents they are sharing in the cost with the dependent care much like it was done in any other business that we see. it is rare that a business provides free health care for all of its employees and all of the dependents and the third population henry talked about is that population that has retired from the military and their dependentss or 10% of the people

in the military retire from the military. we are not talking about huge numbers with military experience. those people go on for other carriers, do other things and have the opportunity to be able to enjoy a health care through other employers. having a program where they can go in and get free health care and do it as often as they want seems to be a burden the american people shouldn't have to bear. a i think there have been enough studies done to let people know that as soon as you provide a free good for people it will be used more. so we know that. one of the ways in the country we're looking at getting health care costs under control is

putting more of a burden on the cost of health care on to individuals and people are sharing more and the expenses of that and indeed the co-pays and deductibles they have to pay. part of what the military is doing is looking at how they improve the lifestyle and the way the people in the military think about their own health. i think this is important and the program dr. woodson established, get at some of the education but it can't be just bought the people who are responsible for health care because so much of what occurs in the military is influenced by the leadership, we all know smoking is bad. we all know that it has tremendous impact on the lives

of people and it costs of lost in the military health care system. we all know that obesity is bad and drives up the cost of all health care and yet in the military we still subsidize the sale of cigarettes in the exchange system so that it is far below what someone would pay if they went into what walmart or something like that to buy it. i don't think you can keep everyone from smoking in the military but you shouldn't subsidize them. i think the same in terms of the health habits of people. people in the military have weight standards they have to maintain wages and great thing for the va a to do but maintained by healthy eating habits. command get involved in this to be able to do it in the future. innovation in the health system is an important thing. >> we are going to go to you

now. we will take two questions at a time. once we get a question we will work for it for a while. in the interest of getting a few of your comments on the table we will go to your panel. the gentleman in the fourth rope ease and also in the second row. >> i am always concerned when i hear comments from the panel and appreciate your thoughts and expertise this morning but when you are looking at challenges the dod is facing as a pro 50 army officer what is going on with that. what are their never any comments made about the real problem with acquisition reform out there? there is a well-publicized study by government accountability office, $500 billion in cost overrun which could pay for the

sequestration burden, why is that never addressed and the focus of the panel seems to go on as i would call it the low hanging fruit, cutting directly at the personal side of it. it bothers me on that part. the second part is the same time we are reducing that the uniformed leadership has put a letter on ville that is well publicized, uniformed leadership in particular asked for protections on their compensation and it is same time they want to reduce it for the rank-and-file of the military which bothers me in terms of the disingenuous peace for leadership so how would you address those things that are going on here in those two point packs and you have not talked about either of those two particular the acquisition reform component. >> let me -- i asked everyone to speak of military health care reform. the rest of your decca's and

questions are worth addressing. >> thank you for being here today. i am a war college fellow at georgetown and health service officer often given that distinguished honor of moving reserve forces to and from active duty based on the nation's needs and i tell you from my perspective that that is one of our most difficult challenges with the health care system, moving reservists in and out of the system. for lack of a better word, it is a system built from the top down, very difficult, it is wrote with congressionals and individual complaints that take a lot of time to deal with so i want to ask you from a different

perspective, our responsibilities if reform will include reconsidering how the reservists' access the system and come up with a fresh point of view building from the individual on up so that in the future in dod reform the reservists have to be part of the solution. using the reserve components will save us money ultimately. if we could redesigned the program where make access to the system only easier, perhaps have benefits correlate with their social security number as they are entitled or authorized to go to active duty, something like that approach perhaps, we will reform including redesigning the program for research access to the system little easier. >> work on the panel. also at the end of that, give secretary woodson a chance, something needs to be said at

that point. i don't know what is better for you. >> thank you for that question. one thing i was trying to allude to in my comments was just that. we need to reexamine a lot of cold war policies that don't allow us to tap into easily the pull of the reservists so i am a reservist and i also was the surging general responsible for mobilization so i would go to projections all the time and hear from reservists. i love the work, they are true patriots, don't hesitate to be called dog but did the transition from active, inactive to active duty. what i was alluding to, use the example of buying 0.4 at tea, to create these comprehensive

packages for selected groups of reservists so you can bring them off easily, it helps them and we could manage benefits better just to start the discussion. >> bob. >> to the gentleman's question about other issues and acknowledging as mike said that this panel focused on health care there have been a variety of proposals you are familiar with by the department and i can't speak as a department official but as a former one that tried to look for ways to hold down costs. everything from looking for ways to make do with fewer civilian employees and effective health care but also affected many other activities, cutting back on contract payments and things like the navy's contract court looking for lower priority activities, strategic sourcing, gathered together purchases and make use of department by power. acquisition reform was part of that. you are familiar with the buying power initiatives that have been

going on for a number of years. there are fundamental constraints in terms of the department's desire to continue to field weapons that are technically superior and a limited amount of competition that we have is clearly the best way to hold down costs but there were a number of initiatives taken. the fact that we are focusing on health care today shouldn't be taken to mean that is the only thing dod is looking at. they are looking at a variety of issues including acquisition reform. >> other thoughts from the panelists? anybody else want to weigh in? >> there are a number of transitions that have been alluded to including what happens to reservists when they go on active duty and come back and that is just one. the transition between dod and

va is another one. we have to keep your out how to have a common set of identifiers. if you move from one system to another your records move with you and they know who you are and what happened to you and all of that is clearly an imperative and if we think about all these things as a national health system as henry said we may be able to make some progress and maybe with a system that really moves people in and out. >> concern was expressed about the fact that higher cost sharing and restricting the

medical benefits would fall disproportionately on the relatively lowly paid members of the military. at least that is how i interpret it but it is a big part of the compensation of a sergeant but not so big a part of the compensation of the colonel. so if you are raising the cost of health care, argued disadvantage in -- i don't think that has to be the case at all. there are lots of ways to go about doing this. you could have an income related premium, the essence of the way health reform works. you can have additional compensation in other forms and that is part of the package of changes in health benefits. some of the issue of what the distribution of compensation is across different ranks is something one can decide separate the from the question of how much of the cost of

health care should be shouldered personally by people in the military or their families. i think i am with you on the distribution side of things but i think it is a problem that can be dealt with. >> the proposal last year did have lower co-pays for example for the advisory below so there was an attempt what you said, the great concern of the military to take care of the more junior enlisted. >> other questions? we will take two more. jason and the woman in the fifth row. >> executive fellow at brookings, active duty, really enjoyed the discussion. i will be one to save the i agree there are opportunities to

reform and compensation -- politically can we forget there, should we ever get there without a broader discussion on the other drivers for the rest of the population impacting the cost of the budget? it will be difficult to get to the military piece politically without the appearance of balancing the budget without at the same time addressing medicare, medicaid, rising entitlements and how we look at that going forward. >> i am with the national military family association and also the wife of an active duty army officer. i would like to understand more about your ideas of streamlining military treatment facilities

and transitioning military beneficiaries to the aca. i am aware there is also a lack of civilian medical resources and a lot of these areas and if you were to offload military beneficiaries into the civilian medical community what would the plan b for sharing military families had adequate access to quality health care? >> the first volunteer on these questions, framing the discussion today, we have got an active assistant secretary, former comptroller and other people who were brainstorming. you are hearing different ideas and different things. and begin with either of those questions. >> political opposition to the

benefit reduction to anyone, and the retirees of medicare beneficiary, and one of the reasons for looking at the changes. and it is certainly possible that medicare at the moment having some success in holding down costs as is the military. if it takes advantage of the payment reform to enable them to have better choices. to have the incentive to use

their resources efficiently. that seems to be starting to happen. how do we solve the problem together question? the more we can pull specific groups about what happens to us together into the conversation. on the sparsely populated areas, i wasn't saying the health system froze them into inadequate civilian facilities. if you have areas which both the civilian and military are concerned about where there aren't enough facilities it is a problem that may be valuable together easier than it is done

separately. that might involve using military facilities for civilian needs. it might include the military veterans or whatever we're talking about in to the system to create a larger pool with more benefits to support a system where there are not that many people. >> other comments? answers to these questions? we will take the next two. a citizen -- i understand we need to get another entitlement programs to think about the revenue side of government. the joint chiefs, department of defense decided they need to look at compensation programs to include health care because the law now limits total military

spending and they don't throw military compensation. there will be less available for training and modernization and there is not adequate training right now coming off of sequestration. that would be their answer and it seems a logical one that they need to look get the military because they limited total spending and so we need to find dollars for training. >> i will quote my good friend mackenzie, a scholar at the american enterprise institute, she likes to stay in her southern for all we have two sacred contract with men and women in uniform. the way that abraham lincoln spoke of and as there in uniform, that the best prepared for the fight so when there is a fight they live and the enemy dies. a powerful way to put it, sounds better coming from her than from me but it is a good way to underscore the point that there's a trade-off between all

these different programs. you have a question as well. [inaudible] >> are you factoring in the fact that the military health care system can be more efficient and lower cost than the civilian system just by using medicare hospital rates and negotiating prices for drugs, military system is less expensive than civilian health care and much more efficient still. >> one more question here please. >> the military -- the question

of moving military families to the national health care system, is it being taken into consideration for families overseas? what is the ramification of moving them back to the dod? what is the expense with that? what is the time constraint? >> one more clarifying thing. what we're framing here, and more theoretical levels, i don't think it is an active proposal of secretary woodson or anyone else in the department. >> on the use of rates, there has been progress on that score, 5 years ago dod was not using medicare rates, they were allowed to do that by the congress, and savings and drug pricing schedules that companies sued and lost, was helpful for the department. there may be more there but is

important to acknowledge there has been progress. >> if you like, this issue of how each fission we should think of the dod health care system. and i wanted to comment on what happened there are 140,000 dod employees in the health care system, and 80,000 to are civilians and who are military. it doesn't look inefficient or expensive. >> by nature, government is never going to be efficient. isn't designed to be that way. things that no other health care system has to do.

has to take care of the active duty military. one of the problems we always have in any big organization, organizations tied to the way they have done things in the past, it becomes very difficult to do change in what drives people to come up with that change. and there's only so much money, the dod is allowed to spend on their wall and if they are going to spend more modernizing, other ways to reduce. i am very sensitive to the idea that the military goes to remote places and if there are challenges to be able to get medicine, medical care in those places.

holding on to places like that learned yesterday in the air force, they are getting only ten people through the facility and a is probably not in anybody's best interests. there are better ways to provide medical care because the overall costs of maintaining that facility is absurd in comparison to what you want to be able to do. when i talk about in novation i am not trying to get the most efficient way. if i wanted the most efficient way, very mechanical approach, if you are thinking of innovation you have to start thinking of ways to do things better for the future and be willing to let the past to go. thank you. >> i want to go back to the issue of inefficiency or inefficiency and invoke the references that was made to the

impact of the price of care on the quantity of care that is used. expenditure = price times quantity. simple equation. is now about a quarter of a century since the best and largest social experiment ever carried out was completed. the impact of cost sharing premium differences, and use of health care in the rand corporation. pre care costs resulted in 30% more use of health care services than did a normal health insurance plan back then. we heard the statistic that the use of health care under try care, quantity of services means for comparable population, even

larger percentage. if there were evidence that the difference in the quantity of care would have a big impact on health care, you are into the business of health, into the business of trade offs. is it worth it to spend more in order to get the additional benefit? the evidence is that the impact on health is negligible. there are some differences that were detected a quarter of a century ago and i suspect you would find some if you did a comparable study today but they are tiny and it is fair to ask whether this is a good expenditure of funds in the cash strapped, perhaps not sufficiently trained and ready military at the present time. i would like to make one other

comment triggered by the reference to the inconsistency between the federal government and deficiency and about ten years ago, a very careful study was done of the likelihood that people would receive the care indicated for the condition when they go into a hospital and see a physician. tens of thousands of records were examined. the results were really quite startling. it didn't make any difference, likelihood that you would get the care that was recommended. didn't make any difference really in those percentages if you were rich or poor, old or young, male or female, black or white.

they were almost identical percentage. there was one place, at a higher probability of the care that was recommended. that was the veterans administration but that was the one part of the health care system managed and run by the government. a terrible reputation. in the 90s, a real revolution occurred in that delivery system. a pioneer in electronic health records and way over its previous standing and this one study, managed health care delivery system, did a better job in delivering recommended care. the rest of the health care system. on the average, in the private

sector particular places that did a sterling job but it was this one group. i think it is the case that if innovative managers whether within government or outside of it are given their heads that are supported and given the flexibility to affect julie reforms we could see efficiency in both places. >> making a similar thing, along those lines. price times quantity and as an analyst i found it very challenging, not to see one answer about whether in-house care is cheaper, private sector care. depending how you measure it, practice patterns, when we replace the military system versus a long civilian patient's

wait before how much physical therapy they have to take. and hotel montes, ward's versus private rooms. it is the very challenging, the rates are fantastic. when you get them. the maker by decision, it is not an easy one. >> there are a lot of improvements across the system and we need to be thinking about them in the same way and changing the incentives for the providers and beneficiaries so that we get better health care.

>> a couple more questions in the fourth row. and final-round. >> thank you for your time today. i am with the military officers association of america. i had a punch, i very much appreciated two quote bcu had about the military, we need to take care of the people in uniform today and those in service. my husband is an active duty marine and i am acutely understand the need for a military to be prepared. absent that statement, the 10% someone mentioned, given a lifetime of service and sacrifice, and went analysts reiterate, the nation has an obligation to them in terms of health care and retirees. absent that statement is the military families of which i am a military family member.

what is the obligation to the military, providing health care, where panelists thought about those obligations to retirees and military families. >> i am with the national military family association and also active duty family member. part of the rationale for including family members and retirees in the military health care system is to insure the military health care providers have a sizable, diverse population on which to practice. if we remove family members and retirees from military health system either by one of these innovative ideas requiring them to participate in the aca or removing financial incentives to be part of the military health system, what impact will that have on our military providers? with their training and preparation suffer by not having a diverse population on which to

practice? >> you want to start? >> the people who retire. i think that there is an obligation on the part of federal government that when someone comes into the military and they want them to continue to a retirement age, whether it is 20 years or 30 years, there is a contractual obligation to adhere to that. i would argue that those people who are currently in the military and are going to stay for retirement that you meet that obligation. i don't think that needs to be something that is perpetuated far into the future. i think that there are obviously considerations to what you can afford to do that or not, then you can change with the contractors from new people coming in cities end up with a situation where you grandfather the ones that are in the

military and providing a different benefit system for those future people coming in. this is not inconsistent at all with what you find in almost every other place in life. we saw the great turmoil in wisconsin when the governor changed the contract agreement with public sector employees that had been in place for some period of time. i am not proposing doing something like that. i am proposing looking at what the benefit is in the future. you need to be able to balance the benefits as part of the total package of what you need in order to be able to continue to attract the quantities and qualities and skill sets of people in order to be able to defend this country because we have a volunteer military. it is not a conscripts any more. is purely one of economics, how

do you attract the people you want to have and keep the numbers that you need to have in the future, and it is a combination of things that you are able to do ended doesn't have to be the same thing. >> way down? >> we should distinguish the obligation to what kind of health care do we want people to have, and the obligation to the active-duty military, is something that i think has to be decided politically, but whatever obligation you have you want people to be in this system

that is effective and not wasteful, duplicative and subject to problems between one facility and another and one of the way as people think we get a more affective system is to have plans, whether military or civilian competing against each other, and for that, you need a fairly large pool of beneficiaries. if you are thinking of the system as a whole, you might want to put in place a system which maximized the ability to delivered good care especially in sparsely populated areas to everybody and think about how you use the facilities, civilian

and military, to do that. that is all i was suggesting. it is quite independent of what the subsidies are for various categories of beneficiaries. >> in response to this, first, the details of what is available on the web site and for those who want to know, i would encourage you to look at that and i will say that for the options that we looked at, the one option:of the options was to take -- what would the enrollment fee and copayment be if you took what they were in 1995, and if they had kept pace with the increase in per-capita medical inflation, what would they be today? in essence taking the financial

burden that was, if you want to call it a burden, established for retirees and service members, and keep that burden essentially the same as adjusting for inflation. and that results in double the enrollment fee. it goes for $5.50 a year for family coverage to $1,100 a year and what you see is we estimate that people do leave, but not everybody leaves, and people do consume fewer services but not everybody consumes fewer services. these behavioral effects, i don't want to give the impression that somehow people are forced out of the system when you change the financial arrangement, we still look financially if these options took place, it would still look financially attractive to many.

>> the department of defense recognizes they got an obligation to retirees and active duty family members, that they propose, would fundamentally change that. from being largely having no co-pays to having what i would describe as fairly modest ones, zero for the most junior enlisted treatment facilities. i remember the numbers, $20 in network if you go outside the military treatment facilities. that and many proposals last february save $2 billion a year, roughly half of that comes through reductions in oversutilization have been discussed already. only half of it actually comes from fees themselves, reductions in utilization but i don't think there's any question, it doesn't change that there was a commitment to retirees. >> we will take one last round

of questions and i will invite the panelists starting with bob to respond as they wish but also to add any final concluding comments of there is something they want to make sure we haven't heard something yet. so in the third row and towards the back in uniform. >> my name is kathy with the military officers association. i am a retired navy nurse and i have been in the system 30 plus years so i'm well acquainted with military medicine. we discussed in the past the cost of readiness, and various forms can you comment on that? >> thank you for everything, the 10 year veteran air defense

officers, i was concerned that we talk about separating military health system and readiness. the military health system goes toward everyday for the civilians and the area and trauma centers and making soldiers on the home front even when there isn't a war. we need to be cautious as we proceed down that road because we need to treat with or without a work and as dr. woods stated, the second point i would like to ask is overutilization, has there been research into frivolous healthcare, is there an appointment kept, seen as

actually frivolous usage. and deemed as frivolous, would pay at co-pay. and to recoup some of those benefits. >> let me start on the readiness. the readiness is the hardest thing to be fine. and the base portion of the budget. and the sources and conflict. and the $50 billion range. >> a strong commitment to readiness in this department of defense and there should be in a world that faces many threats, and in health care, most

assuredly part of it. these discussions, a i can tell you from personal experience, benefits and the health care system and military readiness are racist. it continues to be. >> to add anything you might wish, oppose one final question to you, the responsibilities you have contributing to this that you are out of service and the department of defense. and the military health care system, a it needs a lot of work, it is reasonably fair and there are significant but not revolutionary changes, and we don't need an overhaul but we need a lot of work in specific areas. >> it was a clean sheet on

military compensation, the i think it was brookings. it most assuredly describes the occurrences, very complicated. i don't see starting over in this kind of environment and therefore i would say if it is doing its fundamental goal of attracting and retaining people, it is most realistic on the margin. i want to give other panelists a chance to comment on overutilization. you probably know better than i do. >> we will go down the road. >> i don't want to speak for dod. they tried to wrestle with those sorts of things i hesitate to

call frivolous. in the civilian sector, the sort of plans you outline that if you go to the e r and it was not an emergency, the deductible is higher, i don't think those sorts of things have been proposed officially. >> an unfortunate word usually. there are certainly good studies that will tell you care coordination particularly for crowded -- will help avoid running to the emergency room when you are really sick and avoid getting release sick and getting into the condition where

you have to go to the emergency room. some of these studies have to do with things that you don't ordinarily think of. we were looking at pediatric as much and if you can get children into cleaner environment, one with less molt and hazard in the house hold they are much less likely to have emergency room visits for asthma. that is not a health care thing, but it is disease management that can save money. >> continuing again on alice's theme, virtually any contact you

have with the medical system has some probability of helping. it may be a high probability if you walking with a broken arm, pretty sure you are getting a benefit. it may be a very low probability and there are cases where actual harm is likely to occur. there is no clear distinction anywhere on that probability distribution that contact with the medical system is in one case clearly indicated or clearly not indicated. so inevitably, you are putting, making a decision about a policy change that has the effect of reducing the degree to which somebody uses health care. there is some probability of benefit.

the point that i think karl lott made or i made citing the branch held insurance study for many years ago, the probability of benefit is really, i will use the non argumentative term. so this isn't an non/off signal where you know it when you see it. it is an ambiguous typical decision. when we talk about people's willingness to demand care is usually goes incidentally with the fact that preventive care is free, vaccinations are free, baby care is free, no cost sharing their because we know

those payoffs big time. but cross sharing for other things, some sort of trade off and the benefits that are sacrificed from imposing some charges that are very small. >> medical services are going under transformation starting with the aca and things that need to be fixed. the military service delivery is part of that. might experience in this town, the best solutions are ones where all of the stake holders can come to get there and recognize there is going to be change and be when to work together to get that change

possible. not exactly what each stakeholder wants, i strongly encourage you to get in the fight, not to justify or protect what you have but to establish what is right for the future in your constituents. >> thank you. last word to you if you have anything to add. >> i don't know the we and the captain's questions. beamer agency four times higher per-capita in the department of defense, worry about the medical effects of that. there is real concern on follow-up. i would worry about trying to adjudicate frivolous use but co-pays for emergency reviews.

>> the military and their lot of stress, we owe a lot to the men and women in uniform and the civilians who support them. that includes health care, reasonable health care. all of us agree to that. can we do effectively without the use of tapping into broader resources whether it is changes in incentives and budgeting differently. that is the debate that needs to happen. we are committed, the department is clearly committed to a strong health care system and drug beneficiaries. >> before we thank the panel, making sure we are applauding for men and women in uniform, retirees, veterans and anyone else who contributed to the nation. thank you for being here and holidays. [applause]

[inaudible conversations] >> c-span2 providing live coverage of the u.s. senate floor proceedings and keep public policy events and every weekend booktv for 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 satellite provider. watch us on hd, like us on facebook and follow us on twitter. >> done this weekend's newsmakers, tom price is our guest. is incoming chair of the house budget committee talk about the budget process, the 1.one trillion dollars spending bill signed by the president and what will happen when the republican-led congress begins

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