of want to say it again. we compete with a lot of different nations on earth. but our competitors. a lot of our strongest allies but also very strong economic competitor is japan. and for years i remember learning this when i was i think my second you on the finance committee, 2009-2010. one of the things we learn in a hearing was in competing with the japanese, they were spending 8% of gdp for health care costs. 8%. we were spending 18. the japanese were getting better results. april live longer. they had lower rates of infant mortality and we did. so spending less money, getting better results. at that point in time we had 40 million people going to bed at night with no health care coverage. nothing. if you want you to go to hospital, maybe emergency room and try to get something but for many of them nothing.

we've had some heart wrenching stories shared with us about individuals who were having a hard time affording the premiums and making sure they get coverage for themselves and their families. there were 40 million people, not just ones or twos, 40 million people. that were in a situation like that. we can't forget them. we can't forget them. i'm not going to add to think he wants to do that. i'm not smart enough, my colleagues and i probably can't even if y'all can figure this out together, are not smart enough to figure out how to take a very good idea and make it an even better, not just i.t., but program. one entails a partnership with not just the federal government, not just the states, not just the governors, lieutenant governors, insurance commissioners them to provide complete insurers.

this is what we call an opportunity for an all hands on deck moment. it's wil what we used to say ine navy. that moment is going to come i think sometime in january. when the sun for java coders goes out on the ship, my hope is a lot of folks including people in this room, people i served with, people will be new in the senate, maybe in the white house and to answer the call as well. we will do what we do best as a country, and that is to work together. we have done it and we need to do it again. we did it to clean it medicare advantage. we did to clinton medicare prescription drug program party. we need to do in this case as well. thank you all so much. thank you, mr. chairman. >> it looks like you went over your time. [laughter] >> sorry. >> appreciate you holding down the fort here.

kind of along similar lines of people taking a look at these enormous premium increases, out of pocket deductibles homages dropping coverage. i also want to talk about people gaming the system. we heard reports of this where, because under law you can sign up, go to the enrollment, openable appeared, sign up for the health care, never pay a premium, have coverage for three months which federal government if they're paying the premiums for you, providing subsidies, and then quit. never pay a premium, have insurance basically three out of 12 months. is that something you see in your states? quick answers. >> i don't have a specific example of that but it is a concern i can tell you in speaking with providers and hospital or commission yesterday, one of which was a row hospital put recently filed bankruptcy, those kind of issues are significant especially in our rural communities. where they have less ability to absorb those types of losses.

>> commissioner wieske, d.c. the and wisconsin speak with we do. we have heard consistently, yes. >> is that a growing problem? >> i think it is. yes. >> transport speak with we have heard that and also in the special implement their it as well. lack of oversight. acclaimed i discuss was a special implement. we are seeing the morbidity of the special role the crowd about 100-200% more on average. ..

one of the signs of the market stabilizing with it be if the prices were declining over the years. what happened in wisconsin is enormous price increases that first year of the individual market. nationally, i'm going to quote individual who did a study and said between 2015 and 2016, on the individual market, rate increases around 12 and 13%. in 2017 they look like 25 and 26%. that's going the wrong direction. that's not a sign of a stabilizing market, cracked market, correct. anybody want to talk about that

or dispute those figures? >> part of the problem we have discussing this is it so hard to get good solid metrics. things are all over the map. >> in 2013, during my confirmation hearing, i talked about, i talked about, i thought at this point we would have a stable market and it's not stabilized we are looking at 100% rate increases and our individual purchasing insurance has gone down. we had 189,500 folks who purchased individual coverage and now it's about 180-4500 so we seem fewer people buying their own coverage. it's gone down because of the expansion of medicaid. >> fewer people participating in high-risk and they will self select and be sicker and it makes it a less stable system. >> that's correct. this is typical when you've seen certain kinds of reforms, when you hit this year, the third-year of implementation and you're movie into the fourth year. if you look back at a number of other reforms, it's typically the third and fourth year where

you start to see the spike and see what is called the death spiral in some of these markets. the rates are increasing and your risk pool is getting worse and worse. >> one thing about obama obamacare, it is affecting the individual market. less so on the group market. i do want to speak about that. from my standpoint, fortunately, the group group market has been able to operate and has not seen, but you have probably seen the cost shifting of insurers from the individual market because they can recover and shift that over to the group markets. can you. >> guest: the dynamic there. you talked about people moving plans out of the group market into orissa plans, completely self assuring and leaving the market. i would like all of you to talk about that dynamic between the individual markets in the group markets and what's expected in 2017 and beyond. >> i don't have numbers to speak specifically as far as enrollment and the exact shift

of individuals from the individual market or vice versa, i do think it's human nature to move to the path of least resistance which in many cases is what's going to cost me the least amount of money. we have not seen quite the trend that you are commenting on with regard to employers going to self-insured plans, however i expect that to change. i do think we will see more of that going into the future. especially where, even if we stated that a 12 or 13% premium increase, which is significant, our largest increase was in the first year. we had a 51% 1% on average increase in the first year. even if we thought that we could get to a point where we are stabilizing premiums, we are still not stabilizing the market in that the carrier where you have 19 counties with one carrier. you are still not stabilizing your market. i think again, i don't feel like we have the stability of the

market and your point is, are are you shifting, argue cost shifting. for all intents and purposes that is what pool does. a pool does cost shift from one individual to another for insurance purposes. i don't think we can give you any numbers so to speak as to her the individual market is shifting to group or vice versa. >> it's pretty obvious politically that the number of provisions, the more harmful provisions of obamacare were implemented in the late fashion. are there additional provisions to kick in that will affect that group market? >> think the end of the transition policies, the president's promise that he is sort of at the end of fiscal 2014 he will have some position policies. in wisconsin we allow that. from a a small group market, there's roughly twice as many individuals in the small group market in transition policies

and in grandfather policies that are not obamacare compliant. when we get to the end of 2017, all those plans, unless they do another extension will go the way of the dodo and that will create a big change in the small group market. >> you will see a cumulative price increase. really, what we've seen since 2013. >> cracked. any of those consumers who have not participated either in the end, we have about 46,000 folks who thousand folks who were in that as well, they will see whatever the rates are in their particular counties. >> if you take a look at what i said based on the numbers from the manhattan institute, where the lowest demographic group at 1.8 times, the times, the highest more than three times.

that's the kind of chemo that affects you will see in the small group market. all of a sudden in 2018, just hit them like a ton of bricks. potentially for those in the transition market, yes they will have significant increases and same thing in the individual market spread those folks will see significant increases next year. >> is that something you really need to understand. >> have a question for the group and i won't hold you much longer because you been really patient and i appreciate all the input we've gotten. i think we have some smart people on the panel. hopefully they will help us unravel this at some point and come up with a better system. yesterday join my colleagues in introduce the ability to afford affordable health options act. it basically says if your family in an exchange in urine and ask situation as is the case with 25% of the families in ohio where you don't have choices, you can go outside of the exchange to buy insurance.

to me, it's not the ultimate solution because i do think the whole system needs to be reformed, but it's a measure that's needed right now to give some of these folks i represent and the other states that are seeing less competition, a little bit of choice. again, cost and quality being what comes with more choice. what you think about that. i know those potential problems with the tax credit and we need to work on that, but what you think about that as a concept, to say let's let people go outside of that network to be able to get insurance when the choices are so constrained. >> thank you for the question. the more choice we can give consumers, the better. the more that we can eliminate overly burdensome regulations to allow the free market to work so they can have consumers choose

the type of plant they want to purchase for what they can afford to pay, i think the better off we are. i would certainly support an option to give consumers more choice to purchase health insurance. i would note that governor walker sent a letter asking for this in 2013 as as well, broadly and we are very supportive. it doesn't necessarily make any sense why the consumer should have to spend all their private information and run everything through a federal exchange in order to be able to get subsidy. if it's an insurance subsidy, that might be something we can look at broadly and we don't do this for anything else so i think it makes a lot of sense. >> this is something that makes a lot of sense, absolutely my concern would be one of making sure that the market is and somehow compromise allowing people out and what that would

do to the integrity of the pool itself by doing that. the seat idea is to get as many people covered, whether they're in a rural area which is not going to be well served before the affordable care act and it's an ongoing problem in a challenge enroll communities. we want make sure that i made second-class citizens from having the choices in the free market. that's a task for all of us, regulators and certainly for the congress. clearly that's the objective to avoid that. it is currently happening. i don't know if washington is looking at the exchanges going forward, but certainly in a place like ohio we are seeing fewer and fewer choices in that second class citizen is happening within the exchanges. i will say there are some counties where there aren't necessarily insurance companies willing to write at all.

we may not have one in ohio yet but i am told from talking to the lieutenant governor we may have that in our state too. it's getting dire. we've got to figure out a way, this is one that would provide people with flexibility they need to get the care that they and their need. you want,. >> thank you very much for allowing me to participate in that round. i appreciate all the information you have provided and i hope you'll stay in touch thank you and thank you to each of the witnesses for being here and providing some good testimony as to what's happening in your states. i appreciate the comments of my colleagues here. i appreciated your comments talking about how we need to be bipartisan and figure out how to deal with some of these very complex issues and do it in a collaborative way. i hope we are now at the point where we can get away from this

partisan divide that has prevented us from dealing with the healthcare system in this country were folks things we just repeal. we are well beyond that debate. 's not going be repealed. it doesn't mean it's perfect, although there's also a lot to celebrate. we should be in a position to celebrate what's good and fix what's not so good and to take it in a practical common sense kind of way, roll up our sleeves and do that. i think it's also important as we have that debate to remember that the healthcare system wasn't all that great before the affordable care act was passed. the reason it came out is because of significant problems that existed in terms of access and policy. in my state of michigan, part part of the of affordable care act statistics showed that it was up and growing at 15 faster than wages. that's not a sustainable course. the healthcare system was not on the sustainable course prior to

the affordable care act. at the same time, you have large numbers of people who simply did not have health insurance. this great country of ours, we have folks who knew that if they got sick, that might mean personal bankruptcy for them and running their family. that was the number one cause of bankruptcy was that summer he got sick how can we accept that kind of system that existed before the affordable care act were now everybody, even if they have a pre-existing condition can get the healthcare. to me, that is, we are the american people and it's a very popular option as they leave a job and they lose health insurance and they have a pre-existing condition, they can still get coverage. they're not in a system where they are out of luck. it frees up people from an entrepreneurship perspective as well. your family are protected, your

children are protected so if i look at michigan, the numbers, if, if you look between medicaid expansion and the marketplace and the chip, it's somewhere around 700,000 people that now have health insurance. they didn't have it before. i think that significant and we should celebrate the fact that we have 700,000 people who now know they have coverage and protection should they get sick. but, having having said that, nothing is perfect. i've never seen a perfect bill in my years as a state legislator and now in congress, i've never seen a perfect bill. i don't think one exist and never will exist they have to go back and refine it and try to find those changes. along those lines, a lot of has been talked about with competition which i am very troubled by as well and the lack of competition and how that doesn't bring prices down. first for the the lieutenant governor, you have been

particularly outspoken about the concerns about reduction of competition. you said we need to make sure that it continues to be robust. under your role, g of the authority to hold public hearings? >> yes, in some cases i do, senator peters. >> were you asked to hold any public hearings about the merger with humana. >> yes we were, senator peters. >> did you hold any of those. >> i did not. >> so here we have two major insurance companies and you talked about how some places in ohio just have one provider. he talked a great deal about how we have to keep robust competition. it was my understanding that a number of people did ask you to hold hearings because there was concerns that it would reduced competition and cost and hinder

the individual market in ohio. why did you choose not to hold those hearings on the merger? >> thank you. i was referring to my health policy expert. the law in this case would not have permitted us to hear a pup hold a public hearing because they had met the requirements under the law to proceed. there is no statute that would say that we could have or should have held public hearings in this particular situation. >> are you working to change that law? >> know i am not. >> you think would be a good idea to have these hearings. >> obviously, as you all no,

each state deals with these acquisitions a mergers differently but they also impact states in a different way. where you may have a merger of insurance companies being reviewed by the department of justice where a determination will be made in total whether or not there are competitive issues, states deal with this individually. individual states may have a different impact on overall competition. where ohio may be less impacted by that particular merger from a competitive perspective, you might. >> guest: another commissioner of another state where they would express more concern because of the nature of the market that they hold within that state and the type of business they write and how it might impact competition.

>> it sounds like it's a good reason to have public hearing in your state because every state is different. you want to know how they would impact your state. certainly i would think the people of ohio would be interested to have that transparency. what were talking about, consolidation and what's happening, i'm particularly concerned. the recent epipen situation where you have a drug that really hasn't changed much in years as far as the competition and we have seen a 400% cost increase by the drug company. we understand they have to charge a fair price to have research and development and develop a price and we believe there has to be some return to them. when you have a drug that has been in the marketplace and has not changed and you've seen a 400% increase that is then passed on to the individuals who buy it or the insurance companies that have to cover it,

i just had dermatologist in my office this week and they are saying 500, 600% increase in things that used to cost for $5 the pastor now several hundred dollars for a dermatologist with these drug companies that are increasing these prices. be open to your panelists and what should we be doing to reign in these outrageous price increases from drug companies when there isn't even a change in their product and it's at the end of the lifecycle and they're just profiting. they are profiting and getting huge bonuses. >> we will take that as a question for the record. we will we are over time. >> ibs that we be given two minutes to respond, please. >> two minutes,. >> thank you.

>> two minutes to respond to a major reason why healthcare costs are going up in this country. >> you could've started your question what that. but anyway, 22 minutes and if you have further. >> always have appointments that i've got constituents waiting for me and i appreciate the fact that you will have more time in your allotted two, the rest of us have been here all morning listening to this testimony. i also appreciate the fact that you wanted answered your question but you could've asked that question rather than asking question that's totally unrelated to this hearing and she did a great job of answering by saying you're wrong and i just want to state that for the record as well. i'm happy to stay and keep the constituents waiting but i hope we can keep to the time and members show up to these hearings to listen to the testimony and hear from these experts rather than taking their time at the end. >> if i may say, i was here and i heard the testimony from these

folks and i did lead to vote. so i am sorry that i went to vote, but it is one of our requirements. >> i understand that. i will give you minutes, but let's go because i've another hearing to go to. >> at the department of insurance, we regulate the business of insurance. we do not regulate healthcare nor do we have any authority over the regulation of healthcare cost. >> anybody else want to comment. >> it's the same in our state. >> same in our state. prescription drugs is a major issue. >> i would absolutely agree. i think it's important to keep in mind before the affordable care act we were seeing actual rate increases going up faster. this is not a new feature. we really need to start to focus on how we can make this work better. >> i would suggest fda reform.

used to take about ten years it used to cost $1 billion and now it's too .5 billion. that would be a good a good place to start. governmental reform with the fda. do you have additional questions >> just a pretty easy one, yes or no. we talked a bit today about the value of having states increase the coverage under medicaid in terms of making the marketplaces work better. as a former, i follow my friends as well, but your testimony, and i applaud him for having made the change. i would just ask, is this

something, do you support this in your home state of ohio? >> is this something you support? i know the governor has. >> i do not regulate medicaid. it's a separate agency and i support the governor in this decision that he made. >> you think he did the right thing. >> i support the decision that he made. >> thank you. >> i want to thank all the witnesses. in the spirit of bipartisan bipartisanship, here, here would be a little fix. reduce the mandate and return the freedom to americans. but the states define. this was the vision of our founding fathers. return choice to the american public. i'm happy to repeal the cadillac tax. that would be my little olive branch if you want to do bipartisan reform to fix this, remove the individual mandate, but the states in charge and eliminate the cadillac tax.

take you all for your testimony and for traveling here. i do have consent to enter a statement by christina, an advisor to to arizona governor for the record without objection. >> with that, the hearing will remain open for 15 days until september 30 until 5:00 p.m. for questions and statements to the record. this hearing is adjourned. [inaudible conversation]

[inaudible conversation] : and homeland security secretary jeh johnson. the president talked to reporters after the meeting for just under 10 minutes. >> obviously, everybody has been tracking the course of hurricane matthew, and i just received an update from our fema director,

craig fugate, as well as the rest of our national security team. and i just wanted to make a couple of key points. first, what we're seeing now is matthew having moved above south florida and some of the largest population centers, working its way north. and the big concern that people are having right now is the effects that it could have in areas like jacksonville on through georgia. and although we've seen some significant damage in portions of south florida, i think the bigger concern at this point is not just hurricane-force winds, but storm surge. many of you will remember hurricane sandy, where initially

people thought, this doesn't look as bad as we thought, and then suddenly you get massive storm surge and a lot of people were severely affected. and so i just want to emphasize to everybody that this is still a really dangerous hurricane, that the potential for storm surge, flooding, loss of life and severe property damage continues to exist. and people continue to need to follow the instructions of their local officials over the course of the next 24, 48, 72 hours. those of you who live in georgia i think should be paying attention because there's been a lot of emphasis on florida, but this thing is going to keep on moving north, through florida, into south carolina. there are large population centers there that could be vulnerable, so pay attention to what your local officials are

telling you. if they tell you to evacuate, you need to get out of there and move to higher ground because storm surge can move very quickly and people can think that they're out of the woods and then suddenly get hit and not be in a position in which they and their families are safe. so pay attention to local officials. in the meantime, i've been in contact with the governors of all four of the potentially affected states. i want to thank them all for their leadership. there's been strong cooperation between federal and state and local officials. fema has worked diligently to pre-position resources, assets, water, food, commodities. and as the hurricane moves north, what craig and his team will be doing is moving those resources and assets further north so that any place that

happens to get hit badly, we'll be in a position to immediately come in and help. but i really want to emphasize the governors have been on top of this. state and local officials have been on top of this. they are the ones who are tracking most closely what is happening in your particular community, your particular area. you need to pay attention to them. do what they say. do not be a hold-out here because we can always replace property, but we can't replace lives. i want to thank craig and his whole team, as well as department of homeland security, and my own national security team for really staying on top of this. we're going to monitor this throughout the weekend. our thoughts and prayers are with folks who have been affected. even if the damage in south florida wasn't as bad as it could be, there are people who've been affected, and for them, they're going to need help.

last point i'd like to make is, we're still tracking what happened in areas like haiti that were hit more directly. haiti is one of the poorest countries in the world. it has consistently been hit and battered by a lot of natural disasters to compound what is already great poverty there. we know that hundreds of people have lost their lives and that there's been severe property damage and they're going to need help rebuilding. so i would ask all americans to go the american red cross and other philanthropic agencies, to make sure that we're doing what we need to do to help people in need. and we'll continue to provide information if you're interested in how you can help the people in haiti and others, you can go to whitehouse.gov and we'll

provide you some direction in terms of where. even the smallest contribution can really make a big difference. all right? thank you very much, everybody. >> does fema have enough funding? >> fema is in a good position right now. we had some concerns last year when we were in the midst of budget negotiations. i think that we did a good job of making sure that fema was properly funded and, not to make him blush, but we happen to have one of the best public servants in america, craig fugate, and his team, and they know how to manage their money and use it effectively. so that's not going to be an issue. of course, we always want to be cautious about making assessments with respect to damage. we're still on the front end of this hurricane. we're not on the backend.

so we don't know how bad the damage could end up. we don't know how severe the storm surge could end up being. and we're not going to know for three, four, five days, what the ultimate effects of this are. if we end up having really significant problems and really severe property damage, then the stafford act comes into play, our ability to provide through emergency declarations and other mechanisms, more help to local governments, that's always going to be a question. we have, as you know, we still have flooding in louisiana that has left a lot of people homeless. over 100,000 people lost their home there and we still have to rebuild. there is a backlog of need from natural disasters across the country that we'd like, hopefully during the lame duck session, to figure out how to fund effectively.

so the issue is not so much fema's funding for immediate emergency response, the issue is going to be making sure that after the, in this case, the hurricane, but in other cases, flooding or wildfires or other natural disasters, after they've happened, are we in position to properly help people rebuild. and we'll obviously make those assessments after the fact and then we'll talk to congress about how we can help out. all right? thank you, everybody. [inaudible] >> thank you. i'm not going to go to the precinct. i'll probably do early vote. i'll fill out my form. don't worry, i'll be voting. i'm going to be doing a little

campaigning end of it, too. all right. thanks, guys. >> wisconsin republican party will be hosting a fall fest in speaker ryan's district. donald trump is expected to be the tomorrow along with ron johnson and governor scott walker. c-span will bring you live coverage of that as a talk with voters. it begins tomorrow at 3:30 p.m. eastern. >> the second presidential debate is sunday night at washington university in st. louis, missouri. watch live coverage at 7:30 p.m. eastern for a preview of the debate and then at 8:30 p.m. predebate briefing for the audience. 19 live coverage of the debate followed ideal reaction, your calls, tweets and comments. the second presidential debate, watch live on c-span, watch live on demand at c-span.org. listen to live coverage of the debate on your phone with the free c-span we are available on

the app store or google boy or. >> if you missed any of the vice presidential debate go to c-span.org using your desktop, phone or tablet. once our special debate page watch the entire debate choosing between the split screen of the switched camera options. you can go to specific questions and answers from the debate finding the content you want quickly and easily. and user video clipping tool to great clips of your favorite debate moments to share our social media. c-span.org on your desktop, phone or tablet for the vice presidential debate. >> every weekend, booktv brings you 40 hours of nonfiction authors. here are some of our programs this weekend.

>> i think leagues are going to be part of government life and the speed at which come the multiplicity which we communicate with each other now not only in long cables, olive george kennan, a short e-mails, text, social media, tweets. all of that is going to be part of the body politic. >> on sunday, nobel prize-winning economist joseph stiglitz on the future of the

euro. >> go to booktv.org for the complete weekend schedule. >> veterans affairs secretary robert mcdonald testified before the senate veterans' affairs committee. about a report released by the commission on care. and recommend ways to improve the health care system. the chair of the commission also testified and explained the report. this is about two-and-a-half powers. -- hours. [inaudible conversations]

[inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations]

>> the committee will come to order. i would like to welcome the secretary and dr. shulkin. we are glad to have your today. we're going to change our methodology just a little bit. we have two votes, one at 2:45 p.m. and one following that vote. we are going to run a hearing continuously. the ranking member tidal wave opening statements so secretary mcdonald to make his full statement. you go into as much today as we can. when i have to leave hopefully there will be some here so i can turn it over to. with your cooperation, we will work with those two votes to make sure we don't have to shut

down, and if we do shut down its only for a couple of minutes. let me welcome everybody to this meeting of the senate veterans' affairs committee. we had a great ring on the innovation taking place at the lastheva last week and i think s hearing will be equally as good, commission on care of course a great project examined the veterans administrations its delivery system for veterans anything out a lot of recommendations that are very meritorious. a lot of thought-provoking recommendations. i appreciate the embrace secretary mcdonald has given to ideas from others that come in. we talked about so i know you a great testimony for us today. let me welcome the secretary of the va robert mcdonald to make his testimony and we'll go from there. welcome dr. shulkin to be a force testimony as well. >> thank you, mr. chairman. chairman isakson, ranking member blumenthal, members of the committee, thank you for this time to talk about p.a.s ongoing transmission in the commission on care's final report. i wish the house that allowed me the same opportunity last week

that neither i nor the veterans service organizations were invited to testify in person. ask my written statement be submitted for the record. >> without objection. >> thank you, sir. let me thank mr. schmoke and for sharing the commissioner i know it wasn't easy that nancy did an outstanding job in keeping things together. over all i see the commission's report as validation of the course we bid on for the past two years. there started anything in the report we haven't already thought of or are not over doing as part of her ongoing my va transformation efforts. we differ on some details but we wholeheartedly agree with the intent of almost all of the commission's recommendations your 15 out of 18. we agree on how wrong it would be to privatize the health care. privatization would be a boon for some health care corporations, but as seven leading vsos told the commission in april, it could threaten the financial and

political viability of some va medical programs and facilities which would fall particularly hard on the millions of veterans rely on va for almost come for all or almost all of their care. there are many things the offers that nobody else offers. we have unique lifetime relationship with our 9 million patients. nobody else offers that. our mental health care is integrated with our primary care and specialty care. nobody else offers about. the health care is whole better health care is customized to meet a veterans unique needs including care for many nonmedical determinist of health and well being like education and services, career transition support, housing assistance, disability compensation, and many others. nobody offers about. our research and innovation makes va of the many pairs such as aesthetics, spinal cord injury, dramatic bring into, ptsd, polytrauma and telehealth. nobody else offers that.

if we sent all veterans find care they would all lose the choice of integrated comprehensive care tailored for veterans by people who know veterans and are dedicated to serving them. that's what va is to veterans and that's why you don't find veterans demanding community care as the only choice. a demand for that only choice comes from elsewhere. it doesn't come from veterans. veterans know better. i have tested this during my time as secretary. when somebody tells me that veterans should only have the choice of the choice program, i asked them, are you a veteran? by large the answer is no. and to ask, no. and i asked him heavy talk to veterans about this? an interesting answer. vinokourov a little bit more and i found that unique the banner of choice are always two things, interest and ideology. let's face it, privatization would put more money into the pockets of people running health

care corporations. it's in their interest so of course it makes sense to them, even if it's not what veterans want or need. then there's the ideologues. they only deal with the issue in the simplest, ladies, theoretical terms, government bad, private sector good ear that's as far as the thinking goes. thankfully most members of the commission were more understanding. on one area i disagree with the commission and that's the idea of an independent board of directors for the veterans health administration. i probably don't need to say much about that since the constitution probably will not allow it i will say pha governance board doesn't make any sense to me as a business executive. it would only make matters worse by cultivating the bureaucracy of the top in spreading the responsibility for vha so that no one knows who is ultimately responsible. the fact is we are have a government board. congress is our governance board

and of congress work the way it should, nobody would be talking about adding another layer of bureaucracy to be a. va is not the holdup on increasing access. we're doing that. we have been doing that for more than two years now your va is not the holdup on expanding community care. we are doing that, too. we submitted a plan to streamline and consolidate our community care programs last october, almost a year ago. what's happened to it? va's i felt upon hiring more medical professionals or getting rid of real estate that cost us much more issue than it is worth or adding more points that care where they are needed. we currently have eight major medical construction projects in 24 major medical leases needing authorization. they are already funded but we still need a green light from congress to move forward. we are not even the holdup on holding people accountable for wrongdoing. ask the former the employed in augusta, georgia, recently convicted of falsifying health

care records. he is facing sentencing that could include years in prison and thousands of dollars in fines. all told we have turned it over 3755 employees in the past two years. we've made sustainable accountability part of her ongoing leadership training. the veterans first act would help us hold people accountable and look forward to seeing it brought to the senate floor for passage. the senate appropriations committee has also approved a budget new people to the president's request. but again we need to see some follow-through. the holdup in our very real and ongoing my va transformation is our need for congressional action. we submitted over 100 proposals for legislative changes that we put in the presidents 2017 budget. no results yet. i detailed our most urgent needs him at august 30 letter to the committee. they include approving the presidents 2017 budget request

to keep up with rising costs and medical innovation. extending authorities to maintain services like transportation to the facilities in rural areas and location and rehabilitation. fixing provide a grievance to keep long-term care facilities from turning veterans out, to avoid the hassle of current requirements. and ending the arbitrary rule that one of the nba's dedicated conscientious medical professionals care for veterans from more than 80 hours in any federal patriot. we also need you to act on modernizing our archaic appeals process. under the current law with no significant changes in resources, the number of veterans awaiting a decision will nearly triple in the next 10 years from 500,000 today to almost 1.3 million. we submitted a plan to reform the appeals process in june. we develop a plan with the help of the vsos, state and county veterans officials and other veterans advocates. they are all on board. we just ate congress to get on

board. i'm only after what's best for veterans. as yo you are not running for office and i'm not angling for a promotion. i could've taken an easy job two years ago but i didn't. i answered the call of duty thinking only of giving veterans the benefit of what i learned at west point, in the army, and 33 years and the private sector running one of the most admired countries in the world. and i've tried to do that. two years in the transformation process my only concern is to see it continue. i know nancy will tell you transformation is a marathon not a sprint. it will take several years to turn any large organization around. to turn va around we must maintain our momentum of change and we can't do that without cooperation of congress and passage of some of the legislation would talk about. that's an absolute certainty. the commission, the vsos and va are all in agreement on this, congress must act our veterans will suffer. that's unacceptable to me at a

now that's unacceptable to you. so what we do to break this impasse and get things moving? whatever it takes i will do it. just let me know what it is. thank you, mr. chairman. >> thank you. we appreciate your testimony. dr. shulkin, we're going to testify or are you here for moral support and hard questions? [laughter] >> i have one question i would get to the notice of the committee. for the message is right will go continuously through the votes went late into -- and come back after you vote on vote to. open between the votes went back and forth we can keep moving one throughout the hearing your we've got three great panels. >> recommendation number one which i know you read. you refer to in your testimony. and detect any idea what u.s. that the cost to put implementing recommendation number one for the commission on

care? >> recommendation one is about establishing an integrated high-performing community-based health care network. in our plan in october, i can't remove the exact number but i'm sure david will remember it but we had different levels of cost depending upon what we decide to take on. we are our in the process of establishing that network. >> the sector is referring to the plan that we sedated at the end of october 2015 will be currently spend right now about $13.5 billion a year in community care. that's a combination of choice and community care fund. in order to do the changes that we suggested, we suggested that we did $17 billion because of want to fix that emergency medicine provision that so many veterans get stuck in the hole.

we need the investment in infrastructure to do care coordination in an integrated fashion. we think that's the best use of money for taxpayers, that it's, it's actually an efficient plan. the commission on care plan was far more expensive than that. >> and i think it contemplated putting the other network, the va being a part of a to work with private sector as well, correct? >> that's correct. i think probably caught up in also doing that without the contracts we have today for two gatekeepers which was at just issue a single sum was -- seamless card. >> yes, sir. would integrate the network and would also include department of defense partners and ending health service and other federal partners that we have. >> and this is not a setup but just like you your answer. is a not too into that first bill that this committee passed out unanimously by the provisions for provider

agreements we're expanding opportunity for va to make that happen and make that possible? >> yes, sir. >> that was the right answer. i just want to make sure we do that. >> i said would like veterans for us to get to the floor and were happy to help any way we can. >> we appreciate your continued support. >> we appreciate the committee's leadership in putting it together. >> last question is really atomic. recommendations, working on i.t. system in the va. i'm still interested in hearing how much progress we've made on interoperability. under the program at georgia tech which i think y'all are under contract with georgia tech, understand there's been a recent breakthrough that's held on the? >> yes. >> for small just as you mentioned, mr. chairman, in april of this year we did certified interoperability with the department of defense. but under laverne council's leadership, we have created accounts of what's called a digital health platform, and this is really taking with the

industry is to a new level that it's going to increase our ability to interoperability with community partners, which is one of the recommendations of the commission on care. so what you are referring to is georgia tech is really a fantastic technology center. we develop a conceptual prototype for this that i think we're looking forward to sharing with members of this committee, that we think is really a path forward to take us to a new level. >> it. we appreciate the progress you're making. senator blumenthal. >> thanks, mr. chairman. secretary mcdonald, i think in your letter to the president dated august 6, august 2, i'm sorry, 201 2016, you indicated u had concerns about the cost estimates. that the commission put together to reflect various options on the vha care system model which

range i think of laws 65 billion, to 106 billion in fiscal year 2019, depending on a roll but, management and other factors. i want to say i appreciate the commission really devote itself to seeking to improve the va health care system and i certainly appreciate its recommendation but i wonder if you could explain the va's concern with those commission estimates. >> this is the nub of the issue with in terms of difference between the commission report at our point of you on the network. amateur nancy will comment more on later but the question is, how much unfettered access to the private sector do you allow the individual veteran and who takes responsibility for integrating their health care? we believe that as the va we

need to take that responsibility, that when anything goes out to the private sector we select only the responsibility of that health care. and integrator tends to be the primary care doctor. and if we don't do that, that it results in not very good care. and also dysfunctional care because it's not integrated. it also results in higher costs care. because those doctors that they may go to, for salt may not be qualified by us as being capable combat high quality enough to be in that network. and secondly may not follow the standards of costs that are necessary to be part of that network. >> i think the secretary has said it very correctly, senator, which is we really have differences here with the commission on to report on two accounts. one is, the quality of care we believe is going to be better with va maintaining the care

coordination and integration role. we believe that we understand the needs of veterans best, and we do support and we embrace working with the private sector. that's absolutely correct. but we believe the va needs to be the care coordinator. but on the cost side this would be in my view, a responsible just to turn people out with no deductibles, no cost control mechanisms. this will be returning us to the late 80s, early '90s where there was just my way cost. so we think the very best thing for veterans and the very best thing for the taxpayers is to do this carefully and integrated network the we proposed in october of 2015. >> speaking of costs i'm the commission on to report found 90% of all clinical supplies were acquired using purchase cards and 75% of what the vha spent on clinical supplies is

made to this purchase mechanism. only 38% of supply order to make your standing vendor contracts, which presumably would be more effective and efficient. i've been told as well this same issue may arise with respect to medical devices and perhaps other kinds of supplies. that's a stark contrast i get to the private sector benchmark of 80-90% of supply purchases from already existing master contract with negotiated price discounts which the va can do unlike medicare, ever pushing for medicare to have the same options of negotiation. what is preventing vha from using those kinds of master contracts? >> nothing. in fact, if you recall the dream we had on the 12 priorities

which all that innocent we did not get the same hearing in the house, one of those 12 12 breakthrough priorities is to set up a consolidated supply chain. right now and one of our medical centers has its own supply chain, which as you suggested, is nonsensical. what we can do, what we see from our consolidated mail order pharmacy, when we do have a supply chain is our cost advantages tremendous because of the scale that we have and also our customer service is fantastic. it's been rated number one pharmacy in the country for six consecutive years by jd power because of that scale advantage. what we're in the process of doing is building a consolidated supply chain for all of our medical centers. so far we've avoided about $35 million of cost. our commitment to you was to avoid $75 million of cost by december. i think we will beat that. >> thank you.

thanks, mr. chairman. >> as the courage to everybody in the audience and members of the committee we will take a look at a different order in terms of questions and testimony because, today senator brown back for giving the courtesy by being on time given the tough schedule i will let into the next followed by senator boozman, senator manchin entity everybody else as they arrived. we will keep every move as fast as we can. >> thank you, senator boozman. i will ask two brief questions. secretary mcdonald, first to you, you correctly note and to test the implementation of veterans choice went through some initial growing pains as we all expected. your meetings with vendors and providers and health experts and others come layout preview the challenges and opportunities that you see for veterans choice where we are going. >> veterans choice, we've made tremendous progress. we recognize we set up our

program in 90 days that affected roughly and send out cards to 9 million veterans. we made tremendous progress. but we also make changes along the way. since the original bill we have now changed the way we define distance, the 40-mile limit. we've changed it from geodesic distance to driving distance. .. >> we are pulling the responsibility back in. the integration coordination responsibility and are now taken responsibility for customer service. we have have taken third-party administrator employees and put them into our buildings as a test in order to make that easier for the

veterans. where we had a? about 22%% of our appointments every day are in the community area there about a 1,000,000 veterans that rely on the choice of program. there are about 5000 veterans that only use the trace program which is a strikingly low number. it demonstrates that most veterans really want the hybrid even if they have the choice program, they want the hybrid. >> they really want to know they have a choice. there are generally mostly satisfied with cleveland do or that the virginia and i think the choice is important. and doctor, are are there bureaucratic or legislative hurdles that impede vha from updating facilities and infrastructure like providing the medical staff who with the best care possible? >> i do think if you ask most of

our field hospital directors they would say there are challenges. i think we have seen a strong direction towards being more responsive to the hospital leaders under luverne council's leadership. she has established account executives who now work with vha. we are working together to break down the barriers. just as nancy has said in her hearing last week, this does take time. we are breaking down years and years of barriers. i think were headed in the right direction. >> thank you. >> thank you mr. chairman. thank you all for being here. we really do appreciate your hard work. the choice program has over 1,000,000 people participating in it which i think is a good thing.

you don't list that as a legislative priority as far as that reauthorization, is it a a priority or not? am i misunderstood? >> we look at reauthorization as part of our program to consolidate care. we believe we did request reauthorization in october 2015 package that we submitted under the consolidation of care. >> that's good to know. >> we do want reauthorization. >> i would just add that i'm sure this is why you're asking senator, the program program ends august 7 of 2017. without reauthorization we are going to see us actually go backwards because we have now reached 5,000,000 choice appointments. appointments. that is fantastic. this program should be congratulated. we are just getting it to work. if we could get veterans first through it will work even better. so reauthorization is absolutely priority. [inaudible]

august 17 is an important day but if a woman is pregnant, we really need to know nine months in advance of august 7 whether or not we are and how we are going to care for her. the sooner the better. >> i guess i was my follow-up. it is good to know that you cleared that up and it is important. truly you have done a great job and it has been a momentous task. do you have any contingency plans in regard to august 2017 if the reauthorization, and also i think you can really help us if this hearing in future hearings by helping members understand [inaudible] this committee but throughout congress, how important it is to get reauthorization done. >> we are in the midst right now of renewing our strategy for 2017. most of our leaders are at the national training center now. one of the things we brought up is the importance of communicating that august 7 the

date. also nine months it in advance of that. i think it is critically important. >> just to quantify this, we spend about $13 billion per year in the community. 22% of our care goes out to the community. for billion dollars of that is a choice program. we would have to reduce access to care by about one third in the community. that would hurt veterans. our contingency plan, we are here to help veterans to help and provide resources that you provide us. we will continue that mission and do the best job possible. there is no substitute for what you have provided in the choice program. >> thank you mr. chairman. i do think think that is something that we really need to work on to make it clear how important that reauthorization is going to be. >> that was a terrific question and i appreciate the answer. it gives us our homework to do

before that august date next year. we will stand in recess for a moment. rand is on his way we will continue the hearing and we'll be back be back as quickly as we can't. we'll stand to recess until senator moran to get there. thank you mr. secretary. [inaudible] [inaudible] [inaudible] [inaudible] [inaudible]

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>> we have the circumstance just to set the background for my

questions, we face one of the worst examples in my view of lack of accountability at the virginia with the case of a physician assistant who abused kansas veterans at the leavenworth virginia hospital. and potentially other veterans at other facilities within our state. he has been criminally charged with multiple counts of sexual assault and abuse on numerous veterans who sought his care and his counsel. he had a criminal record admitted on his application for state licensure when he was hired. the virginia hired him anyway. clearly he should never have been hired. and he should not have been retained as an employee at the va. he he is a physician assistants and they are not considered significant risk the

vetting that should take place didn't what he did on his capacity is target veterans who are suffering from posttraumatic stress syndrome and he used his position at the virginia to add to the wounds of the war of those who served our country instead of healing them. there are number of witnesses, witnesses, many of them wish to remain anonymous. criminal proceedings have been filed and just to give you a flavor, there are two army veteran brothers who were patients of this individual who felt they had no choice but to go back to this physician assistant for their care and treatment. the quote was the fear of losing what i earned versus the fear of being sexually assaulted again,

i don't know which one was more important. >> i don't know whether to go back up because i woke at the care need if i don't. the victim asked to remain anonymous in july 2014 when the charges were filed said this. it violates the it violates the veterans trust, we're dealing with a number of issues and we have to come back to the agency when caring for the agency is now adding further wounds. mr. secretary, i want to focus in on two aspects of this. again, i know your staff has reached out to mine i know what i wrote you a few days ago a few weeks ago, this goes to accountability it goes to something we have had a conversation about a long time. i want want to go to how does

somebody get hired with this background and perhaps even more portly, it is troublesome to me that this individual was never fired. after the inspector general's report he voluntarily left the virginia. one of the conversations we had for a long time is about the ability to fire people at the virginia. and of all the circumstances i can think of, i cannot figure out why this would not be one in which a person was fired as compared to voluntarily retiring which i assume among among other things it has a different connotation, different aura of being fired versus retiring. i assume it has different consequences in regard to benefits and this individual's future. future. so, if we could, you had virginia officials, leadership in front of our committee last week, i got what you would

expect for me to hear from them and i am not discounting what they said but they wanted a zero-tolerance of sexual assault on veterans or staff, others at the virginia. i know that is the case, we want a a zero tolerance but we have specific instances here where the hiring process was faulty and the discharge process really didn't take place. >> first of all, any accusation of sexual assault, sexual molestation is unacceptable. as soon as i heard about the site went to leavenworth, i was there. i dug to the data and i have different data then you have to. we need to get together and compare our data. what i understand from my visit and the documents i reviewed is that when this individual, when

there is an accusation of this individuals potential of having done this we immediately removed him from caring for patients. we immediately started the procedure to do the investigation and fire him. he resigned and we went back and looked at the hiring process. what i was told at the time and again you have different data so i have to find out what data you have aware you got your data, there there is nothing in his file that suggested this was a risk. that this occurred. obviously you obviously you have different data that i have. this is not something we would tolerate and obviously if this showed up in a person's hiring hiring process we would not hire them. maybe david, do do you have different data than i have? >> know, i have the same information as you have.

>> secretary mcdonald, our information comes from the inspector general, the virginia inspector general. significant number of press accounts i suppose as well. criminal proceedings are now pending in the district court of leavenworth county, kansas. i have seen the applications for his licensure in the state of kansas and its bed that he had a criminal history which unfortunately the licensure folkestone pick up on either. i assume that was reviewed when this individual was hired by the virginia. in addition to that, would you, are you telling me that when someone resigns you lose your ability to fire them? are you telling me he beat you to the punch? >> if someone resigns they're no longer an employee, that's true the private sector public sector.

someone resigns, they resign. obviously you have judicial options which is what is occurring right now. >> i think, i have no doubt that the facts that i describe them are accurate. we would continue to ask you to use this as a learning experience, not only help prosecute so we can send a message to veterans about how careful we are, but again in my view it goes back to hiring practices and discharge procedure. again, i would ask ask you to respond to my letter in writing so that we can see your response and then we can have a conversation again. >> we will certainly respond to your letter in writing.

obviously we are a learning organization, we do want to learn from mistakes and we want to learn from what is going right. you have the best practices hearing this week, so we will get back to you. i want to be careful not to use media reports as proof of accusation. so let's let the judicial process play out, we will share with you what we know and we would appreciate seeing the documents that you have. >> my information, i met with the inspector general, we have had conversations, extensive about this topic. i can assure you what i am reporting is not anything but what i was told in that setting. >> i have not met with mike on this so i will. >> i would ask you that if you would ask the virginia professionals, the leadership in kansas, both leavenworth and

dashmac, can you instruct them to have a dialogue with me and fully lay out the scenario as they see it to me? >> absently. that is their responsibility. we ask each one of our medical center directors to work with the members of congress. >> thank you mr. secretary. >> the senator from montana. >> thank you mr. chairman and i think both the secretary for being here today. this committee has placed a priority on ba accountability as i know you have. when we hear stories like the one senator moran just put forward i know the hair on the back of mina grace is just as it does yours. once we get to the facts i think it is important that the drifter would goes quite frankly and i think that is complement to that person. it is really important to acknowledge that there are millions of veterans in this country who rely on the virginia and congress needs to be held accountable to. you summit budgets, legislative priorities that allow you to do

your job for the veterans. it is our responsibility as members of this committee and members of the u.s. senate in the same thing on the house side, to carefully consider those requests and to deal with them as elected representatives to do what's best for the veterans of our country. when that doesn't happen it hurts the folks that are sitting here in the audience has veterans. before you know it the entire virginia system is called into question and mr. secretary, you are the front of the attack when in fact we share more than our share responsibility. do you believe that accountability is a two-way street? >> i certainly do. i provided today one of the most hard-hitting, i think opening statements i could. i was saying that we are in the process of transforming the virginia, we are seeing effective results. if we are to continue this we have to have a budget and we

have to get the legislation we have been asking for four years. >> we pass the veterans for stacked in this committee unanimously 125 days ago. we have to deal with that on the floor and it sounds to me like we are going to be leaving town next week which is crazy. i will just tell you, crazy. if this is something we can get on the floor within two days i bet we can get it out of the united states senate. we are are where we are. i talked to veterans all the time. i know you talked to more of them. some love the va, some not so much. would you agree that we have some work to do to get the faith and trust back of many of our veterans out there? >> we do. in fact, we measure it, in fact in fact i just got the measure this morning. one of the things we measure, and this is very common in hospitals where people provide customer service or veteran services, we measure the effectiveness of the experience,

the ease of getting the experience, and the emotion of having it. i have a chart here that shows we have made progress. we are not, obviously these are lower numbers than we would like, but we have gone from 47% trust in december 2015 to 59% in april through june quarter. we are measuring this every quarter. i'm not. i'm not happy, nobody's happy with 59%. but that shows that at least we're making some progress. we have a lot more to make. >> in terms of greatest concerns identified by the commission, things like leadership vacancies, staff shortages, culture of risk aversion, what are some of the ways the virginia can improve those issue areas? >> of our five transformation strategies, the second strategy of improving the employee experience, training employees and giving them the tools they

need, right now we have our top leaders off-site at our national training facility where we are training them in tools like human centered design, leadership, we are moving to one consolidated leadership model across the enterprise which is what great organizations do. we are training them in lean six sigma. we are providing them the training they need and then we give them training packets that they take back to their locations and they trained their subordinates. we cascade the training through the organization. that is how you change the culture and that is what we are in the midst of right now. >> okay, as you note we have talked about staff shortage, leadership vacancies, effective montana has a temporary director, we color acting virginia montana director. i like her, she is doing a marvelous job. but when i had a conversation

about her about two or three weeks ago and she holds people accountable very well. one of the things she talked about was that if we are going to get good people in the va, due process has to be withheld. this is a management person that understands that if people look at the virginia and say i have no due process rights somebody can make any accusation at me that they want and i can i can be gone without any argument, that does not help us fill those leadership position also staffing positions in appeals person or whatever it is, could you talk a little bit about when you talk about accountability, you come from the private sector, you understand that if you have deadwood on your staff it cost you twice as much money as you are paying for them. can you talk about how we hit that sweet spot? so that people want to work for the virginia.

it's a pretty good outfit. yet, understand that if something, if they make a call, if call, if they go against the culture of risk aversion then somebody has their back. >> we are training the organization and what we call value space leadership rather than role -based leadership. we are trying to inspire them. i think we are being somewhat successful given the quality of the people we are getting on board. i changed for to do my 17 liters. in two years 14 of 17 of the top leaders have changed. i think we think we're brought in better quality people. part of this and i've done the recruiting myself, as you know we went to the university montana recruiting and i bent over two dozen medical schools recruiting. our applications are down about 78% versus what they were before. so the kind of environment and context you're talking about does have a real impact on the

quality of the people we get. >> i think that is important to know. like i said, the issue that senator maria brought up is unacceptable. that's the way this, totally unacceptable. on the same token i do know from past life experiences that when you have somebody out there who is trying to make the right call and something can accuse them of something and they don't have any rights it goes culture to the whole accountability issues. >> in my opening statement i mentioned that we have terminated 3755 people in the last two years. i also said 14 of my 17 direct reports are new. in my opinion the only issues we have on accountability have been the accountability of the legislation that we need which you mentioned. but also the interactions we have had with the merit system protection board which we all agree that veterans first would fix.

. . >> so, since we'reing about that subject go to senator moran. let me comment on that. for everybody's knowledge and edification in the room this committee did outstanding work over year-and-a-half on veterans first bill comprehensive in it is nature and i think complete in its nature. two questions have been asked, what happens with the choice after august of next year the other question how you deal with the merit system protection board and accountability with the va. there are those people in the news media and some in my party and other places that have criticized our bill for not being strong enough on the merit

system protection board and not making choice permanent. first of all we deal with the leadership of the va in terms of ability to hire and fire and take them out under the merit system protection board which is right thing to do, number one. number two, because you have that accountability it will flow from the bottom up because the top is being held accountable. we've been able to get buy-in necessary to do that all of us want to make sure the choice endures and choice becomes permanent. none of us want it to run out of funds and go out of business next august. but not passing veterans first bill today which provides provider agreements in the states for va would be serious mistake. some people saying they don't want to do that because they want to get choice fixed first. when they come up with $51.4 billion to fix choice first i'm happy to do it. meantime let's expand the opportunity to make the contract agreements and provider agreements and work in the beginning of next year to fix the choice program so it doesn't

sunset in august. instead is perpetuated around the country and improved and perfected. i apologize for horning in on that. i heard my two favorite subjects come up i had to make a comment. senator moran. >> mr. chairman, thank you. thank you for your kindness and consideration of me today, and always, consider me an ally in your efforts on veterans choice first, particularly the legislation we like to see passed. mr. secretary, i will run and vote. this is not, i won't leave this as open-ended question. i'm not trying to get you but as i thought further about your response to my comments and question, one of the things that i think is true, and you could look into is, you indicated that mr. wisener. as soon as va found out about him he was taken away from patient care. as i understand the facts he continued to be an employee after that. he was removed from patient care but continued to work at the va. the day that he was removed from patient care is same day he

admitted allegations admitted he had a problem. admitted he dealt with patients in the way that he did and my point would be, that's a moment which somebody could be discharged, fired and yet the va just removed him from patient care and kept him on the payroll. so to me that again highlights this difficulty in getting rid of, in this case, not just bad actors, terrible actors. >> well, sounds me, like senator moran you have better information than i do. that you met with the inspector general and he has not met with me on this issue. so i need to find out what he discovered in his investigation. obviously if you have the case you fire them. that is why we fired 3755 people. you don't tolerate that kind of behavior. >> thank you, senator moran. i thank members of the committee to be cooperative to move the hearing forward. i think we'll go to the second panel. before you leave, secretary mcdonald, i want to thank you

and dr. shulkin, not just for input and leadership over past two years. amazing progress has been made. we have progress yet to attain. we're here to stand ready taupe had you anytime we can. >> thank you, mr. chairman. >> we'll call our second panel. our second panel are representatives from commission on care. when i got the commission's report just a functioning a put on my desk, i took it home for early reading for lots of reasons. i know there was a lost

thoughtful input and progress made. i wanted to see what the commission had to say. i want to commend the chairman and the commissioner and other members on the work that you did. a lot of people don't give those private citizens who volunteer their time to give us good advice the credit they deserve and we appreciate very much what you have done. we'll hear from both of you today. our two witnesses testify first. is miss nancy schlichting, the chairman of commission on care, thomas harvey esquire, he must be an attorney if he has esquire behind it, right? >> you nailed that one, mr. chairman. >> we appreciate the work that you did and you're both recognized for up to five minutes each. if you have any printed testimony to be submitted to record and it will be accepted and printed as is. >> mr. chairman, thank you for the permission to discuss the report on the commission on care

and support of commission and extension of time you gave us to complete our work t has been a privilege and honor to serve as the chair of the commission charged with creating the road map to improve veterans health care over the next 20 years. for the last 35 years i have served in senior leadership roles in large hospitals and health systems. for the last 18 years, i have been in detroit, michigan, at henry ford health system, serving for 13 years as the president and ceo. my experience in leading henry ford which is a $5 billion, 27,000 employee health system, through a major financial turn around, navigating our organization through the years of massive job loss in michigan, population decline, the bankruptcies of our city and major employ erstwhile still growing substantially, making major capital investments in our communities, and winning the 2011 malcolm baldridge national quart award have prepared me very well for the demands and complexity of the commission's work.

our commission was composed of 15 talented and diverse leaders. we developed several principles to guide our work including creating consensus and being data driven, creating actionable and sustainable recommendations and most importantly our focus on veterans receiving health that provides quality, access and choice. the independent assessment report you commissioned was invaluable as a foundation for our work. it is a comprehensive systems focused, detailed report that revealed significant and troubling weaknesses in vha's performance and capabilities. our work took place over 10 months with 12 public meetings over 2days and we sought the broadest input possible, had intense debate and dialogue but had a unified focus at all times, what is best for veterans. i believe we have produce ad very good report that is strategic, comprehensive, actionable and transformative. 12 of the 15 commissioners

signed the report, signaling bipartisan support. the three that didn't sign had divergent reviews. two thought we had done too much and one had thought we had too little information. there were many glaring problems, staffing, facilities, i.t., operational processes, supply chain and health disparities that threaten the long-term environment of the system. perhaps even more importantly the lack of leadership continuity, strategic culture and risk aversion threaten successful ability to make the transition happen over the next 20 years. transformation is not simple or easy. it requires stable leadership, expert governance, major strategic investments and a capacity to reengineer and drive high performance. some of our commissioners believed in moving va to a payer-only model. they believe, some believe that government simply can't run a

complex health system and that veterans should have the same choice that medicare beneficiaries have. yet, we believe va and vha under current leadership, secretary mcdonald and undersecretary dr. david shulkin are making progress, are aligned with most of our recommendations. we believe vha should be invested in for several reasons. one is the model of integrated care delivery. secondly the clinical quality which is comparable or better than the private sector in most metrics, third the history of clinical innovation, veterans focused research, medical education and emergency capacity. for the, the specialty programs, fifth, the role as a safety net provider for millions of complex and low-income veterans. it may not or could not be filled by the private sector in many markets. as we know even with the affordable care act, access to primary care around mental health professionals across the country is still very challenging. our recommendations fall into four major categories.

one creating a vha care system which fully integrates, vha, private sector and other federal providers including dod and other providers. that vha provide care coordination and vet providers in the networks. secondly is the leadership system and governance. of particular emphasis on continuity of leadership, leadership development and creating oversight through a board of directors. third is the operational infrastructure, focusing on i.t., facilities, performance management, hr and workforce, supply chain and diversity and health care he can quilt. and finally, eligibility. focusing on other than discharge eligibility for health care benefits and eligibility design. we clearly do not want the report to sit on a shelf. we ask for your help to make our report come to life, enabling legislation included that does require your action.

we are mindful that some of our recommendations have cost implications and we worked with health economists in modeling different options. we do not suggest that congress is not already made very substantial investments in the system. rather we call for strategic investments in a much more streamlined system that aligns va care with the community. i would be very pleased to be a resource for the committee as you continue your work on this, these issues and i would also look forward to your questions. thank you very much. >> chairman isaacson, members of the committee, ranking member blumenthal, it is pleasure for me to be here today to address the work of the commission on care. particularly pleasure for five years i sat where tom bowman is sitting behind you as staff director of the committee under senator alan k simpson. in my personal experience the vast majority of va staff at all levels are professional and highly committed to the veterans

they serve. like many of us i was concerned to learn of the issues that came to light regarding the manipulation of wait times for appointments at the phoenix va medical center. i'm happy to have been a part of the effort to the before understand what had gone awry and to find solutions to those problems for today and into the future. service on the commission has been an interesting experience. the commissioners brought their varied backgrounds to this venture with one characteristic in common. all of us were committed to insuring that this country's commitment to its veterans was well-met. they may have differed how best to do that but the good faith of the commissioners was palpable. under the leadership of our very competent chair, nancy schlichting, each commissioner had the opportunity to express his or her priorities and to defend those should they be challenged. the final report contains 18 recommendations. some of these are good ideas. others strike me as unrealistic.

some are included because one or more of the commissioners felt very strongly about them. the whiteouts made it clear to our chair that they would like a consensus report. i signed off on the report in deference to that expectation even though i had some reservations. i had had a full and fair opportunity to express my concerns in open session. among the many things i learned from senator simpson was that in negotiations on matters such as these after all of the give-and-take, you have to be able to take what you can, hold your head high, and declare victory one more time. and that is what i would like to do here. over nearly a year that the commission met we discussed a broad array of problems within the va, many of those were longstanding. we discussed those with senior va leadership who themselves recognized that there were issues that were beyond their ability to address. i like to think that by shining

the light of discussion on some of those we may have provided the impetus to professional staff of the va to raise such issues. some quick statistics regarding veterans and the va. in 2008, there were 26 million veterans. today there are about 21 million. in 2008, the budget of the va was $68 billion. today it is at about the 175 billion. in 2008, va had 240,000 employees. today about 368,000. the number of veterans is in precipitous decline. we lose about five million a decade. the total number of veterans, about a third use the va for some or all of their health care. many just for prescriptions. in my written testimony i highlight some of the specific issues in the report that i had problems with. i would of course be pleased to discuss those with the

committee. what i wish we had done, there are a number of very basic questions i wish the commission had addressed. some of these things are no one wants to touch. why do we have a va health care system at all? this is something a number of people ask me. we need to do something for those injured in training or combat but the fact is most of those being treated in the va system are suffering the same illnesses most of us expect to experience with the passage of time. there is nothing uniquely veteran about those injuries or diseases. in most communities there is ample surplus space to treat them in the community hospital. some say there are some veteran-specific medical conditions such as spinal cord injury, blind rehab, posttraumatic stress disorder and traumatic brain injury. in fact annually automobile and diving accidents create more sci patients than the va treats. in most veterans using the va

system are medicare eligible. if they use the community hospital they can just bill medicare. if we're committed to having a va health care system who should be eligible to use isn't some people assume once you've individual puts on a uniform they're entitled to free health care for the rest of their lives. no need to worry about health insurance ever again. i don't think this is what we want. a system was established a few years ago which said that for those with service-connected disabilities, treatment of those disabilities with the first priority of the va system. priorities also included veterans of very low income. is there a better way to articulate eligibility so that the veteran and as importantly the american taxpayer can better understand what the va healthcare system is trying to do? who it is obligated to provide care for. in the reviewing the materials relating to patient scheduling i was struck by the fact that the gatekeeper for most va care is

primary care physician. the medical education establishment is just not turning out a lot of primary care physicians. that is a bottleneck that is only going to get worse. over the past several years, there have been significant changes in the way health care has been delivered in the united states. that too will continue over the next, the next several years. was the commission a success? several of my colleagues believed we could only count as a success if the administration and the congress adopted the entire document as we presented it. i personally am willing to declare victory with the changes that the va secretary mcdonald, deputy secretary gibson and undersecretary for health, dr. david shulkin and their staffs are now making. thank you, mr. chairman. >> thank you, mr. harvey. in light of the fact that the committee members have been so cooperative shuttling back and forth with votes and other

things compromising our time, i will continue to deviate out of my practice going out of order, not recognizing myself, but recognize senator machine chin from west virginia. thank you, senator manchin. >> thank you, mr. chairman for being so kind as you always are. sorry for not being here. to either one much you or both of you, commission on care recommendation allowing primary provider to be outside the va. i understand it can improve access. it worries that veteran receive veteran care completely out of the va with little or no oversight. in west virginia we have quite a number about veterans as you know. doctors outside the va network can be trained in military veteran culture. i'm concerned many are not equipped with unique needs of dealing with veterans. is a non-va doctor able to spot a veteran with ptsd? are they aware of symptoms of

toxic exposure? do they know veterans may not disclose certain symptoms if they are uncomfortable? these are valid concerns. i'm speaking because i go around to my clinics and i go around to the hospital. i speak to a lot of veterans. what has been done to the veteran in the past is unconscionable, wait time and all the stress. everybody recognizes that. when i talk to the veterans they still want veteran care. they demand -- i asked them, if you can't get, no, no. they take care of me here. they know what i need. they know how to treat me. that's my concern. so in the future how do you severe astriking a balance making sure the see va striking a balance. how do you assure that the va veteran will receive high quality in the private sector? >> one of the things very important about our recommendations that we are not proposing the current system of having a separation between the private sector and the va. what we're propose something more integrated model.

>> who will coordinate that? >> va is coordinating that. >> va is the gait keeper? >> va has to vet the network, select the providers that meet very strict criteria and in the report we include several elements of that, including not only their education and experience and their military competency. 70% of the physicians in this country train in va medical centers. so it is possible that we can create a very well-equipped set of primary care physicians, when needed. we also suggested that every market should be carefully evaluated in terms of access needs. so more primary care physicians in the community might be needed in some markets versus others. where va has adequate numbers to provide for veterans, perhaps they would have none. so the control of this va care system that we're proposing is the va. that includes vetting the networks.

includes having high criteria for participation. it could be different in different markets. >> i have a question for you. >> senator, let me add one another thing to address a different part of your question. can it be, can people be trained to be sensitive to the veteran experience? and the answer is yes. i just turned around to rick wide mann from the vietnam veterans of america. they have a card, foldout card that has number of questions they encourage doctors to ask a person who is a veteran about the experience to elicit some of that. so there is training available. >> sorry to hurry you up. i'm on time. our clock is running here. the commission on care that you all characterized is path that will move va into being more like tricare and i have spoken to a lot of my veterans and everything and they argue when champus and predecessor tricare started offering more low cost insurance to military retirees,

we saw co-payments retract, beneficiaries starting to rise. it is gotcha. they pull you in, get you in on other end make you pay. many veterans concerned shifting care to outside the va will lead less money going to have. a and less services offered and more out of their pockets what we committed to them. 10 or 15 years down the road i want to keep promise we made to our veterans especially those with unique injuries, polytrama, traumatic brain injury and traumatic spinal injury. do you think the va wants to be like tricare is true and what would you suggest congress to consider when thinking about that future of the va health care? >> actually, senator, one of our commission members dissented from the, from the, commission report, largely for that, these concerns. that if, if we do this, is this going to be draining money away

from the va, from the va facilities that are needed. i don't frankly have an a answer to that. without be likely co-payments would increase? >> we can base this on what's happened previously. >> yeah. >> if that is the case i would say yes, our veterans have really reason for concern. they truly should have reason for concern because very well could go down the path. >> if i could comment on that, i do think it is important to see the balance in the report. while we are suggesting primary care choice when needed within that va care network, we are also suggesting significant improvements in the operations of the veterans health system. >> my biggest problem is opiates, okay? if you have a doctor over here suggesting one sort of opiates and va trying to wane off of opiates we give to them, who will coordinate that? >> the va will coordinate that. they have to. >> i'm concerned about that. it is biggest problem i have got

in my state. the biggest problem we have with our veterans. you need a single source taking care of them. if you have a doctor being treated of pain versus a pill versus alternative care you have serious problems. that is what i'm afraid of i truly am. >> va has to have standards for the providers in the va network, that are consistent. >> i am sorry i took more time than i should have. >> you're always timely and to the point, senator manchin. ask one question, make one observation. recommendation number 18, miss shrink tinge, establish expert bod do i to develop va benefit and design. tell me what that means. >> i think the feeling on the part of members of our commission was we did not have the time or the focus on eligibility but many people felt it was time to do a comprehensive review, to really evaluate it as a whole and take

a look at eligibility standards today and there were members of the commission that felt, for example, that some of the lower priority categories were not necessary. that the focus should be on service-connected injury, on lower-income veterans. that is felt it would be something a separate body could take a look at. >> when you say lower-level veterans, bifurcate veteran population some of them being eligible and some of them not? >> there are several priority categories today as you well know and the question is all the priorities essential in today's environment. >> any discussion expanding eligibility beyond just veterans? >> there was some discussion about that as a way helping to make some of the facilities more efficient. one example is that with some of the very specialty programs that exist within va, the volumes are very low and there's potentially a challenge of maintaining those programs, and potentially they could become a resource within community.

so i think there were a number of thoughts about how to best utilize the capacity within va facilities an maintain it and at same time look at total eligibility program. >> lastly and very quickly, with the eligibility for va health care for a non-honorably discharged veteran part of that discussion? >> yes that is one of the issues we raised as part of our eligibility. >> did you make a definitive recommendation? >> yes. >> and that recommendation was what? >> it is included in our findings and it basically outlines for other than honorable, they would be put in sort of a tentative category until it could be evaluated but the idea was to provide care for veterans that often have reasons for being put in that category that have nothing to do with their service and the honorable service they provided while in the military. >> so it would be case-by-case basis? >> mr. chairman, the concern was, if you have a veteran who had multiple deployments, served honorably for extended period of

time, comes back to the states and decides he just had it and, acts up, and is given an other than honorable discharge, not a dishonorable discharge but one of the other categories, perhaps that was in part caused by his multiple deployments, maybe ptsd, maybe traumatic brain injury. it would be unfair to leave him out of the va care system. >> thank you very much. senator sullivan. . . >> with regard to opiates we are having a similar challenge in alaska. i actually want to thank doctor scholl can and secretary mcdonald, we had a big summit in

alaska on opiate challenges and harrowing challenges this summer , we had very top doctors from the virginia come to alaska for that. doctor lee and doctor drexler, so i want to thank both of you. i want to focus on an area that i do not really see in a lot of the recommendations but i know it's in there because it's an important topic. when you talk about delivery of care, the issue that i'm very focused on in alaska is the delivery of care in rural communities, extreme rural communities. mr. chairman i know i'm sorry i missed that and having the secretary and doctor here i know they're still here, the the gentleman be able to chat at one of the breaks or something on