[inaudible conversations] [inaudible conversations] >> good morning. we have a remarkable panel here today to help wake you up with your coffee. today we're talking about-- well, first of all, i'm associate professor at school of public affairs here at

american university and am delighted to moderate this panel. today we're talking private insurance, risk adjustment and adverse selection. changes -- prior, i'm sure as everybody in this room knows, prior to 2014, the private insurance market, the individual market was like the wild west. people would buy health insurance that was wholly inadequate and often extremely expensive. on the other hand you had people with employer-based insurance who were very, very happy with it, as such goes the model. if you like what you have, you can keep it. so aca was focused on changing and improving the private individual market, but preserving the employer supported insurance market. so today we'll hear from four experts with unique and intricate knowledge about the development and implementation of insurance in the individual market and elsewhere. so you have bios, i certainly

won't read their list of expertise. but first we have joe michaels, he's a partner at mcdermott will and emery and adjunct professor at sandra day o'connor school of law arizona state university. >> good morning, everybody. what i thought i'd hit are some of the issues that really affect insurers and how they view the market. and let me just make sure this all is working. so, the-- here are some of the major themes of why insurers who are used to having predictability in the way they write coverage and cover their benefit plans and their rates. it's been a marketplace that has been anything, but predictable, and a lot of that is driven by legal and policy changes, and just a whole discussion that's evolved on capitol hill. will the affordable care act be repealed. will it be replaced?

if it's amended for how long, that's only a short-term gap measure to appeal. with are is it going. and what's the process to implement changes to the affordable care act, is it through executive order, is it through an agency policy change? is it through formal rule making or statutory amendments? i must say that the ease in which former policies were made through various channels, you ma i see some of that revisiting in reverse with the way changes are made through the law now, so, process, rule making, some of those protocols may be put to the side as changes to laws, the policies are implemented. as we've seen with such things as a dramatic cutback in agency marketing funds and the like.

then the courts, what impact will the court decisions have on certainty and what we have is conflicting court decisions in many issues at least affecting insurers. a good example of that is the risk order litigation, 22, 23 cases, the courts-- the federal court of claims has come to different outcomes whether the monies are owed to insurers or not. we'll see once the issue is up before the federal circuit court of appeals, maybe the supreme court, how that's ultimately resolved. and then consumer understanding. you know, and this, it's a tough enough law to understand and interment and figure out what your obligations are, but how do consumers understand all of this legal uncertainty? do they understand when they hear the idea that oh, there's an association health plan alternative coming, and that's by executive order, but it's

ultimately an invitation for rule making which has a potentially long tail to it. will consumer just sort of sit back and say i heard about the stuff and the president said x, y and z and hold back and not purchase insurance through the traditional markets for the time being. and then what does this mean to the health insurers themselves? you know, at what point do you finally say, i knew i wanted to be in this market at one point, but all of this uncertainty is much too much, i need to be able to be more predictable since i'm publicly traded, to my stock holders, and move out of the market until it's legally more consistent and more clear. and family foundation had some interesting data just recently. in 2017 there were 4.3 issuers per state on average. in 2018, that number is down to 3.5.

then they -- the critical question for a lot of insurers particularly in the beginning of the program was issue of premium stabilization. could i be sure who i'm going to get and what protections does the law provide to me as an insurer in making sure many' not going to take a massive loss when these individuals hit the market for the first time? and as i mentioned before, the risk quarter features were one part of that program, but when you look at it, a lot of insurers right now are standing in line, haven't received those risk quarter payments and these are significant amounts of money, in terms of what if means to some of these insurers, one piece of data that suggests the shortfalls amounted to 4% and 7.5% of premiums for 2014 and 2015. so, this is far from chump change. these are significant amounts of money that were due these

insurers. there's also some question, at least one point, during 2015 and 16, whether the reinsurance payments were-- would be in jeopardy. there was legislative activity up on the hill. questions about the issue of appropriation and making sure that so much of the collections from the reinsurance premiums were allocated to the treasury, and so far, that-- those payments haven't been disrupted to the insurers, but it did create some unease. and then, there's this whole issue of the risk adjustment process, and for lawyers, you better get used to risk adjustment because there's going to be a lot of legal questions going forward as there already has been with this process not only in the commercial insurance markets, but also in medical advantage. it's a formula, a concept that's subject to a lot of adjustments, a lot of data changes and it has an amazing financial impact as well as impact on marketing and unrollment. and then, i would say the other

thing is, when you look at all of these issues, the stabilization, all of the uncertainties and coupled with the recent decisions to cut back csr payments, is it really unreasonable for health insurers to look at the program and say do i have a reliable partner that i can count on when it comes particularly to any kind of cost sharing responsibility under this program? i mentioned risk adjustment impact, you know, the idea at one point was that there would be these new start-up co-ops, they would be great and actually it's the smallest of the new start plans that had the most difficulty with risk adjustment and many found themselves with huge bills to pay back to cms on risk adjustment, the risk adjustment formula and they were on the

brink of insolvency if they went ahead and made those payments so they went into federal district court, they tried to get an action to enjoin cms from collecting these monies and the outcome was that the contracts weren't going to hold back the enforcement of the risk adjustment approach, and in at least three cases, the evergreen plan in maryland, the minuteman plan in massachusetts, i think the new mexico plan, these are plans that all brought litigation challenging the risk adjustment formula. two of the plans have gone down. the third is, i think, trying to negotiate a buyer to prevent the insolvency from occurring. the other is it's not just new start plans, but also provider sponsored plans. a number of health systems saw this as a great opportunity, when the law was passed, to get into the insurance business. well, it's a lot more complicated than one things. and the idea of how you master

risk adjustment was really new to a lot of the plans and particularly, plans who are undergoing rapid growth and had no experience with the enrollment. they really did not know the health status of the individuals and if you don't have good mechanisms in place to capture the health status of those individuals which triggers these payment obligations under risk adjustment, you could find yourself on the short end of the stick and that's exactly what happened to northwell's connect, they announced in august they're withdrawing from the markets, that was after a loss of 157.8 million in 2016, and another 59.9 million in the first half of 2017, and these are systems that have the resources so the withdrawal from the market will be very painful as opposed to letting the plan go through receivership. >> so, what has the government done? it's not like this has been a total absence of attempts to

stabilize the market. there was a market stabilization rule that was developed and released on april 18th, an effective date of june 19th. it did some things that i think the insurance industry would favor. for example, when you look at the question of adverse selection, when we talk about that today, there's a way it look at it from the consumer approach. what i mean is, are there-- i'll call them gaming of the system, that consumers can engage in, to time when they buy health care coverage? and that is a form of adverse selection. and so, with the very liberal, i'll say grace periods for premiums that were due under the program, a lot of games were played about not paying your premium, enrolling in another plan, getting another grace period and so forth, so on. so these rules tried to avoid that and also special enrollment periods, they became an abuse, potential for abuse

for individuals to wait until they needed the coverage and through special enrollment cycles, enroll during that cycle so these rules tightened up those particular provisions so that it would be harder to have this gaming of the system. but-- and there are other provisions in the rule, too, these are the ones i think had the most direct correlation to adverse selection. some people would say, well, how about the shortening of the open enrollment period and also this recent cutback of marketing and advertising funds from the federal agency. the speculation is that, too, might have an impact on adverse selection. in other words, who is going to be the most focused on getting health care coverage in a period of uncertainly, the people who have health status problems and need coverage, they'll be right on it. but the healthy, the younger folks, they'll probably remain passive and not actively enroll so we'll see if that's how this

plays out during this open enrollment period. and there's this question of the individual mandate. is it to be enforced or not? and there was this executive order, i think last january, the president put out, you know, which in essence, you know, gave the signal that they could waive, defer, grant exceptions from or any of the required from the affordable care act and the speculation at the time was, oh, this is a signal that the individual mandate would no longer be enforced and there were some things going on at the irs at the time where, you know, they were not collecting certain information about other coverages that people started to interpret with some form of a policy to suggest that this idea that the mandate didn't exist was now being carried out by the irs. i think at the end of the day, that was more confusion than it was reality, and the irs, you

know, believed appropriately that it had an obligation to collect the information and enforce the law as it is, and that's pretty much where we are today. but, in a rising premium environment and in light of all of this uncertainty. what impact does the individual mandate have son people's purchasing decisions. again, keiser family foundation report says that most are unaware that the individual-- most are aware that the rid is mandate is still in effect, but for intent unaware, unsure about the individual mandate. so then, i think the next question is what's going on with other executive orders and this issue of choice? and i think the question here is when you give people choices

about coverage options, it can potentially have an adverse impact on the risk pool, depending upon what those options are. and this issue of choice has a history, it didn't start with this current administration, it had a history with the transitional plan exceptions, president obama's statement, if you like your plan, you can keep it. thats with a the beginning of maintaining coverage options outside of these marketplaces, that at least insurers would say, would adversely affect the insurance pool. well, the current administration has come out with some other ideas, some new executive orders, one is to expand short-term limited duration plans, which were-- have historically viewed as accepted benefit plans and not covered by aca's requirement. and they were narrowly defined and by the prior administration, why? because by granting this kind of benefit choice more

flexibility, the concern was it would take over, weed out more of the better risk selections to these kinds of products. the other thing was an association health plan idea that the executive order just recently put out, and this will again take time. it, too, will have arguably the same effect of draining off the petter health risks. why in because if you are in an association health plan and rather than taking the current view, which is i'm not going to look at the association, in the aggregate, it's employer group members, i'm going to look at each employer group member that's a member of that association, you get very different results in terms of premium rates and in the case of an association plan, where it's not aggregated, the premium rate limitations of the affordable care act would apply. and this, by the way, there's an awful lot of confusion about

these association health plans, are we talking about insured association health plans? is there a real insurance policy issued? yes, there would be requirements of state insurance law and features of the affordable care act would apply or are we talking about self-insured association health plans which would have the reach to go across state lines without worrying about state insurance laws and as a result, be free of a lot of the requirements of the affordable care act in the process. i know i'm running short of time. in fact, i think i've almost expired my time. maybe the last point here is, you know, as we look down the road, the bipartisan approach to deal with some of these issues, one to take out the ambiguity on the csr's, to create definitive amounts for

2019 and forget 2018 at this point. expand access to catastrophic coverage and when you look at those particular approaches, and you say, why isn't that a tremendous dilution of the risk pool. you're talking about the policies being part of the same risk pool and would be subject to many of the same aca applicable requirements in terms of guaranteed availabilities and mow pre-existing conditions and the like and the last is reforming the state waiver process and permitting greater latitude to states to reintroduce insurance. when you look back on premium stabilization, the risk quarters were a financial problem. risk adjustment has been in upheaval. the one piece that ind coo dnd kind of piece that seemed to work is reinsurance, and that's expired. to give them ability to stabilize the markets to a

reinsurance feature is probably a good idea from an insurer's perspective. i'll stop at this point. >> thank you so much. we'll hold questions for the end. we'll do questions for all panelists. next we have jean lambrew, at the foundation, former deputy to assistant to the president for the health policy for president obama. >> thank you very much. i'd like to switch gears and pull bag up and talk about why the affordable care act especially the health insurance marketplaces have endured as well as how they can be improved and i do that because when you think about all the trials and tribulations of the aca over the years, i think that pundits thought a year ago that the aca would not survive a year later yet we're headed to the fifth open enrollment period and there's still a marketplace and people are signing up and in large part it's working with improvements to be made. but i would like to discuss three factors about why the

marketplace is-- have continued to operate despite what some people call sabotage by the administration. first is the statutory design. when you look at the design of the affordable care act, it was drafted learning the lesson from state-based reform including massachusetts, including state experiments with insurance reforms, and it was, in short, designed to bring in three different groups of people. first, people with preexisting conditions. people who were prohibited or barred from insurance because of practices that insurers use like denying coverage for people who have preexisting conditions, medically underwriting the premium. having annual and lifetime caps that affected them and selective coverage with benefits or the benefits that would expensive and needed by these folks were excluded. those were prohibited by the affordable care act and second, premium tax credits and

subsidies, to the low income, uninsured because who were out because they couldn't afford it and into the individual insurance market. third, to help the high income uninsured people who didn't care for coverage, but in this new world could get it whenever they needed it, we have the individual share of responsibility requirement if you can afford health care coverage you should have it or pay a penalty if not. those three groups of people came together in this way to form the health insurance marketplaces and despite claims when we were entering into that first tumultuous open enrollment and claims now where we're entering the fifth and actually also tumultuous open enrollment given the policy changes there is no death spiral in the system and there can't be by design primarily because how the tax credits are designed. the premium tax credits are linked to costs. when premiums rise, tax credits rise and when they fall, they

fall. what that means if premiums are pulled up by having sicker people in the individual insurance markets, so, too, are the premium tax credits which brings in more low income people stabilizing the system. if you look at 2017, a year ago, there was all sorts of reports about the high premiums, they're skyrocketing and this could be the end of the marketplace. we now have data from the first couple of quarters of 2017 that show that despite over 20% premium increases for 2017, the monthly claims costs have increased by only 2.7%. suggesting that it wasn't just sick people who came in. we didn't lose a lot of healthy people, the marketplace is still a decent risk mix and that's a new study that came out by brookings institution. second, if premiums are forced up because of cost sharing reduction payments as joel mentioned, and stock outreach and the individual mandate they rise as well. we're seeing a new report of

average premiums going up over 30% in part because of the policy changes i mplemented by the administration, in the coming days as people dig into the data this week, i think you'll hear a lot of people with subsidies and premium tax credits being able to buy plans for free. they get a bigger tax credit which could, again, drawing in more young and healthy people contrary to the expectations. that's structure ever the affordable care act. second is careful regulations, we use every tool we have to engage experts, stake holders, state officials, consumer groups, that included white papers, conferences, requests for information, advance notices, guidance, you name it because we wanted to have a very robust and learning process to make sure we implemented things and changed over time. some argue that created uncertainty and it also created adapttivity.

so most recently, we tightened up rules for 2017 and this risk adjustment program we made changes requested adjusted for parties who may or may not be healthier, created a high risk pool which we have a certain type of reinsurance program paid out through risk adjustment for people with claims over a million dollars, and again, looking at the early performance, 2017 will be our finding again, is that these systems may be working. the keiser family foundation looked at gross profits for the first two quarters of 2017, and found that compared to pre-aca, profits dropped in 14 and 15. in 2016 about the same as they were before the affordable care accurate and now they are for the second quarter twice as high as they were before the affordable care act and brookings announcement, had there not been the cost shaving, we could see single

digit premiums next year. and third, i think you attribute some of the stability in the marketplaces to the fact that it actually is working. some cliche there are many successes and in this case the old administration is gone and the new administration is there, our new defenders of the marketplace are people at the insurance commissioners. historically they can attest to this, spent time complaining about the burden and the complexity and all the things that we were imposing upon them. yet, in september when there were bipartisan hearings on aca, they were the star witnesses saying don't get rid of the affordable care act, improve it. and here is the way to do it. and did not support passage and every step of the way in implementation, i will personally say last fall when the premium increases, the sky is falling may have contributed

to the debate this year about imploding obamacare marketplace, yet, in the last couple months, they, too, have used their voices and influences to say you know what? we think this is working. don't get rid of it, improve it and coming to the table with concrete suggestions. and i think the most obvious reason that we think these insurers are-- bought into the marketplace this is a place where the nation is covered and offerings next week when open enrollment begins partly because insurers recognized that there is something to be said for this marketplace. ...

>> but i am cautiously optimistic that also could be captured until people sign up during the open enrollment. there's effort going on to figure out how you can raise awareness about what's available to people and that might yield some counter to the uncertainty and confusion that consumers face going into open enrollment. i will stop and say my former boss, my former team were always quick to say at the start always through the end of course no one is perfect, of course it can be improved. we learned along the way and as much legislation that could be embraced to make things better. and from the start, for example, we thought that tax credits could be more generous. they were cut off at a pretty low level. there were middle income

families the can't quite afford coverage. deductibles were often a barrier to access to health care. most economists say $1000 is good. $2000 and higher in the marketplace. you could change that with higher cost sharing reduction pins are linking tax credits to the gold rather than the silver plan. you could target young adults and more efficient ways. bump up tax credits. the rand corporation did and else's this it if do a $50 add-on to premium agreement tas for young adults you can get 1 million more adults. that's a policy that's not the trade-off we've been debating getting and people and by raising premiums, that's just saying let's invest in young adults, get them in. everybody wins when they come in. they went and the older adult, do, when premiums go down. reinsurance programs, every major insurance company in this nation through stoploss insurance, reinsurance, reinsurance is when most well functioning insurance works.

i will say it's hard to talk about these constructive improvements when the real catch root of the day is do no harm. joel talked about the partners in health care stabilization act or benefit is preventing a step backwards. it protects the payments for at least two years, restore some of the outreach money at least for two years. thus at some of the other policies joel mentioned, yet all that positive should be enacted could be undone dependent on the rules that come out of the executive order. so if short-term limited duration plans which are old policies from the pre-aca days, pre-hipaa a days and they can 86, they are policies people bought for three months or between jobs, issuer started filling them 3064 days a year a year and they're not regulated.

that's not long-term duration. that's getting around the regulation. they are trying to sell to people who otherwise could be underwritten and a positive way that could undermine the marketplace. that's a short way of saying we had to keep our eye on all these executive actions because the congressional advances could be set back by for the regulations. but i will end by being cautiously optimistic. i think if you historically had bet on what people of prognostic it would be happening with the affordable care act, it should've been a much bigger disaster and people, that it actually is even going into this open enrollment. so i do think trying to focus on positive improvements, the steady state, the things that have not been undone is equally important. think you very much. >> okay, thank you. and next we have bill schultz who's a partner at zuckerman

spader. >> thank you. i want to stop a couple emitting american university on this conference. the affordable care act was the culmination of 25 or 30 years of work by people on the hill, in the executive branch, just dedicate to this test. one of it is jeanne lambrew who you just heard from but you managed to sort pulled altogether in a single conference, and you managed to do it every time way. what could've been a better time than right now than to do this conference? there is an article in the "washington post" this morning about a woman who is trying to navigate her way through the complexities of buying insurance. i was just thinking as i is listening, little does she know how comp lex he can be.

at least she doesn't have to understand the difference between risk corridors and reinsurance in order to purchase insurance. i was asked to talk about cost-sharing reduction, so a sort of single piece that's been the subject of a lot of news lately. from his first day in office of president trump, , the interest industry, the health care community, and everybody sort of cares about the affordable care act, have been holding their breath. because there was one thing that everybody thought the president could do if you wanted to destabilize the insurance markets, and that was to end cost-sharing reductions. or as we call the csr. it didn't require regulation. it didn't require an order. all he had to do was decide he's going to stop defending a lawsuit that was in federal court. i'll explain that as we go

through this. but first let me tell you how cost-sharing reductions work. as you know the affordable care act provided insurance in two ways really. one was through medicaid, through expanding medicaid, and the other was through making subsidized private insurance available to incomes, the individuals who otherwise couldn't afford it. and what we are talking about is insurance, and ensure truly had two different types of subsidies here when was the tax credits that jeanne just talked about. and that gives assistance in paying premiums, and how much assistance depends on your income, but for anybody below 400% of poverty they had available to them some assistance in the forms of tax credits for paying their premiums. but the second forum which really didn't get as much

attention is cost-sharing reductions. and these are available to some of the people who get tax credits, namely those below 250% of poverty, if they buy a specific plan called the silver plan, sort of mid-level plan. they can get cost-sharing. and cost-sharing helps pay co-pays. this is what you pay your doctor or you have to pay when you go to the doctor. the insurance company pays the rest, but also deductibles and coinsurance. now, tax credits are paid for, by the united states. so when you buy insurance on the exchange, when you pay your premiums you pay part of it and then the united states treasury pace of the insurance company the rest. and it's all reconciled at the end when you file your tax returns. cost-sharing, on the other hand,, is paid for by the insurance companies. so when you go to the doctor you may pay part of the cost-sharing or maybe none of it, but the

insurance company will pay the rest here and this is important because even if the insurance company doesn't get reimbursed,e cost-sharing, it has to pay it. the law says the insurance cup has to pay it and that's what if they don't get reimbursed come all they can do is raise premiums in order to make up for that. congress envisioned that the united states would pay the insurance companies every month for the amount that they paid in cost-sharing. but in order to reimburse the insurance companies the administration had to have the money to do it. and that comes through appropriations. now, this is something i really wasn't aware of, a lot of things i wasn't aware of it before i went to work as general counsel of hhs but this was sort of what event. there are two kinds of appropriations. there are one's will think about, the annual appropriations every year, congress

appropriates the money for the food and drug administration to pay the salaries to its employees, afford to pay the rent for spellings and for the defense department to pay for missiles. w those appropriations are paid and off its is kind of a tense time because in recent years it always has mature whether congress would appropriate the money and if it doesn't than the money has to close down because someone is appropriated there's a second kind of appropriations called permanent appropriations and those that have to be made every year. congress just as different. for example, the tax credits, not just the affordable care act tax credits but all tax credits. there's a permanent appropriation. congress doesn't have to figure it out every year. it just, as said, you can count on that. medicaid is another example what is a permanent appropriation. and the issue with the cost-sharing is with permanent

-- when the affordable care act went through, it's pretty clear everybody assumed is going to be permanent. just like the tax credits. tax credits are permanent. these are all kind bound together. the congressional budget office, whose job it is for any legislation to figure out what the cost is going to be, they scored this as permanent. when the affordable care act was paid for, congress had come up with the money through tax increases, medical savings and other ways to pay for the affordable care act. and they paid for a permanent appropriation in terms of cost-sharing. but as happened with all laws really come but happen with this law more than once, the law wasn't as clear as it could have been. and congress, once the administration, the obama

administration began paying cost-sharing, the house of congress brought a lawsuit in which they said we don't think you have the authority to make these payments. we think this could only be paid if there's an annual appropriation, , and guess what, we didn't appropriated. there are lots of issues of what he could even bring that kind of lawsuit, but in the district court, in the first level trial court level, the judge ultimately ruled that the house could bring the lawsuit and ruled in favor of the house, that there was no authority to make these payments after an annual -- absent an annual appropriation. that got stayed so the payments have been made through the obama administration come and actually through the trump administration until now. but that lawsuit was bending on january 20, 2017, when the new president came into office. and the question was what would you do.

because this is something the insurance industry really cared about. if it was really going to be stuck with paying for cost-sharing, it was going to have to raise premiums, and probably more important, it just was going to really add to the instability of the whole situation. the one thing that i learned, and i think we all probably know, , everybody in this room knows, is the insurance industry cannot live with uncertainty. their whole job, their whole existence is on predicting. they are predicting how many people will get sick, how much are they going to have to pay. it's really hard to do. but when you add other kinds of uncertainty that we've seen in the last year, it's destabilizing. this was a big piece and the big question. since january 20 the rep been conflicting rumors, weekly stories that what was the president going to don't cost-sharing. he was getting advice on the

secretary of hhs, from the cms administrator, maybe from his daughter not to do it, not two and a cost-sharing. was getting advice from his budget director, undoubtedly at the white house advisers and elsewhere. look, you said you want to end the affordable care act. this is something you, you don't even have to issue an order or regulation. you can just do it. just stop it, tell the justice department to drop the lawsuit. well, two weeks ago we got the answer. cost-sharing is going to end. the government will drop its appeal in the d.c. circuit. it will abide by the district court order, and no longer make the payments. now, , as you know there's activity in the hill, the alexander-murray bill which would restore the payments for two years. 19 states attorney general brought a lawsuit challenging e president's decision. but on wednesday of this week the federal court at least initially rejected a lawsuit.

it said we don't think there's really enough harm for the court to get involved. the judge was a very optimistic about how to use going to rule on the merits either. and this brings us to a really odd feature of cost-sharing, which has to do with the interplay between cost-sharing and tax credits. because you would think that if the federal government is no longer going to pay cost-sharing, it has to be that's going to save money, right? appropriations cost money every time the congress appropriates, it's spending money. that's what appropriation is. and so if congress doesn't appropriate for a program, if it ends that program, then sure the government is saving money, but that's not true. in fact, the opposite is true. this has to do with the interplay between the tax credits and cost-sharing and

insurance premiums. because as cost-sharing goes down, the tax credits are going to go up. and, in fact, it's going to cost the federal government more money. jeanne alluded to this, but if you limit the cost-sharing as i said, the insurance companies have to pay it themselves. people still get cost-sharing if they buy the sewer plant and their eligible for it, under 250% of poverty. the only difference is the federal government doesn't pay the insurance industry pics of the insurance industry raises the premiums, and as tremont alluded to, the tax credit score. tax credits are tapped. they depend on your income and the way the law works, you only have to pay a certain percentage of income for health insurance. so if you already paying that percentage and you are in this category, it doesn't matter to

you how much the premiums go up because you don't have to pay the difference. guess who pays it. the federal government. and so we eliminate cost-sharing and we save money on that, but we spend money on tax credits. in fact, and this is a killer, we spend more money on the tax credits then we saved on the cost-sharing. the cost-sharing has been costing about $7 billion a year i think, and cbo estimated that the increase in tax credits for income cost-sharing i think the estimate of $200 billion dollars over tinges, so about $20 billion a year. so do the math. it's not saving money. it's actually costing a lot of money. more people are now going to be eligible for insurance. so there will be more people, i be eligible for tax credits. there would be more people getting the tax credits and in the long run if you put all the turmoil aside, you could argue

this is it really such a bad thing. this was one of the strongest arguments in the case in house versus burwell, one of the strongest arguments the administration had that it had to be that this was a permanent appropriation. because it can't be that congress intended to do this annually and leave itself in a situation whereby not appropriating it would be spending more money. that makes no sense. i don't know that there's ever been a statute like that. that's exactly the kind of argument that the administration had wanted the supreme court and other aca cases and who knows how this would come out, but i'm not sure it's going to better. so where does that leave us? that they concerned about a limiting cost-sharing, i would be interesting to see what other

panelists think that the concern is it will contribute to destabilizing the market. going to lead to less certainly by the insurance industry and increase the risk that insurers will exit, although the number that jeanne gave you are encouraging. we lost insurers, that's not a good thing, but we are still alive and have at least one insurer in every place that sells insurance. and, of course, the aca won't work unless the insurers stay in. and so went to look at the risk pool i look at the destabilization there are a lot of factors come how much hhs spins on ads, the expansion of the association plans, exemptions from the aca. this is going to be a piece of it, and so this matters but maybe not as much as everyone has said. i personally don't think ending

cs ours will have a consequences many predict. it will make it more challenging to keep the industry, it it's going to be one of a number of concerns we need to have but may not be the backbreaker everyone predicted. thank you. >> okay, thank you. and next we have brennan maher. >> i'm going to turn on my microphone. good morning or i'm going to

talk about a potential reform proposal involving adjusting the regulatory hurdles to people are currently employed purchasing insurance on the exchange. the core idea is for the claim the exchanges moved many but not all the reasons we might prefer using employer-based insurance as a mechanism to deliver health insurance to people. the suggestion is we modify the regulatory hurdles to keep 150 million people locked in eb implement-based insurance world and added the exchanges will not throw it out the good parts of employment-based insurance. the idea was conceptus mostly before trump was elected. and so that reflects a certain assumption about how policy is made and infiltrated enemy very well be that in this environment, let's say this is not a congenial environment for nuanced proposals. so that said, you know, i'll proceed perhaps quixotic like.

so the idea is generally that there's some good stuff for social important goods we want to plant like health insurance in the markets on their own don't get enough of them, don't give us good enough quality of income don't distribute improperly. on health insurance is a good example to the government wants to intervene, to improve things. they have regular tools they might use. one of those regulatory tools is what i call an employment-based intervention was was a government-based intervention, a government intervention that regulates the inclusion of some socially desirable health insurance with the aim of improving good x, better quality, quantity, distribute more fairly. the intervention can vary in the manner and magnitude of what it is comprised of. now, why might it make sense to use an employment-based intervention as a mechanism to improve health insurance availability of quality, so what is so forth?

we have the first ask, what are we comparing the intervention to. i'd imagine it were were evelyn insurance on the open market. if we imagine that world, there are few, offered recess to white employment-based insurance make sense which like i call sophisd actors, group leverage. as it turns out these apply to any socially desirable could you attach but they are fairly easy to see how they apply to health insurance. if i was the powerpoint i think i would object as well to being used in this fashion. when this is over, i'm sure they will send the cease and desist letter, so the idea is that employers are more sophisticated in the connection of purchase and connection with purchase incompetent goods like insurance been our employers. it's a because they're been educated, more capital, they can specialize so to polygamist agents is likely to improve outcomes.

the other benefit of using the employment-based approach is when you have a group and that's the purchasing unit, that allows you to drive down the cost of insurance, allows you to get over adverse selection problems. this is a fairly well-known benefit of using the employer group as the purchasing unit rather than the individual. i guess i'm having -- okay. the third one is i think less recognized by a lot of people. it's a behavioral fulcrum argument, which is humans are imperfect decision makers. we have trouble focusing our attention on committing resources certain types abood's because her complicated, contingent, goods that will come due in the future. and so if you connect insurance to the paycheck, it brings it to your attention. if you connect insurance to the delivery of pay like the employment-based system does, that's an initiative convenient

time segregate resources for the purchase abood's and to install commitment devices that make it such that he don't end up buying the good, you lose some of the comp. for example, when you get health insurance property to the workplace if you don't accept it generally speaking your pay is not grossed up. and then lastly the labor deal is an organic fulcrum for behavioral adjustment, the use of defaults, the use of choices were so it is presented by the employer with different insurance options as opposed to going out of their own a look at a big infinite choice world and be paralyzed by the choice process. now, the flipside though is that if we think about why would like employment-based insurance, we also start to realize that its attractiveness is limited, inmate in fact, in some cases not be attractive at all. it's not that they will deploy that sophistication in

particularly use wasting connection with the perch of interest. although there are more sophisticated than employees they are not as of this good as insurance companies and they may not be so good at striking deals. second is maybe if they are sophisticated a might use that sophistication in a way that's adversely and entrances of the boys. one of the ways this materializes is the owners and managers of the business have certain moral preferences of what should and shouldn't be included in an insurance policy. if we're going to involve employers sophisticate actors will have to regulate them heavily to make sure that what they are doing is using their sophistication in a way we think it advances the overall entrance that will be delivered to the employee. the next problem with employment-based insurance is that employers are not in the business purchasing insurance. there in the business of producing widgets. to the extent they provide insurance and they have residual

administrative or liability obligations, that means they the must be some set of rules that governs their behavior. if there's some set of rules, the more onerous that becomes, the more likely the employers are going to push back and say wait a minute, don't make this to our force of we both stop doing it. the alternative is a world where people can buy health insurance on their own. regulars will face a real difficult problem, which is it's going to be tough for them to insist employers follow particles because they will be met with the credible threat of ask. -- x. another point that became very clear about the limits on an opponent base entrance the main stream discussions of affordable care act and hobby lobby. as an economic monitor the price of interest include a form of compensation. that's essential and employee wage pygmy people describing the insurance as being paid for by the employer.

that's not so. there's two negatives of that. the first is often employees did not appreciate what the actual price of insurance was. when the price of something is the sale yet, that interferes with ideal decision-making. the second is people assumed many cases the employer giving them insurance was providing gratuity. if you suggested to some let's move away from the employment-based system and to think employment-based system has a gratuity of insurance, moving away means to them you are taking away a gift. because employment basis without particularly good at making clear who is paying for the insurance of what the price of it is, the capacity that is not conducive to people making choices noticed a cold appreciating the merit alternative. so let's talk about the affordable care act and want to talk about the affordable care act does with respect to the individual market because we will compare the individual

market and exchange market and employment-based system. everybody knows what it did. into the demented, health benefit, exchanges that make the choice of insurance intelligencer in short that fixes the individual market but keeps it locked what do i mean by keeps it locked? there are two locks. the first is if you're a a lare employer you have to offer insurance. if you to offer insurance, the employer mandate, the rationale is different than the individual mandate. the employer mandate was install because of fear that employers which change the behavior, that would be undesirable politically. employers to drop coverage, people would be upset. alternatively more sophisticated criticism like well, employers may drop coverage and not raise wages because the theory of equilibrium wage differential says if you drop one form of benefit, another form should increase to offset it.

so the worry was that you would destabilize the system and they're not being increased wages because some workers would lack market part. the employer mandated one day -- one way to preserve the status quo. it's a simpler set to provide health insurance. the second is the use of the tax system. employment-based system is paid for pretax dollars, except for the cadillac tax which will be delayed indefinitely. .. ask yourself if there are two

systems, doesn't make sense to have the locks on the employment -based system? let's think about whether we like the exchange based system compared to the employment -based system. the group leverage advantage is largely dealt with in the exchanges. it might be the case because there's community rating and pooling emma but it might be the case that better insurance deals are lost because the pool of people in the exchanges is smaller and sicker than insurers and employers and they lacked negotiating agents but it may be that the creation of the individual market solves some of the group leveraging problem but not all. the second is, this sophisticated actor benefit of the employment -based system is reduced when you have intelligible marketplaces where people can make constraint choices and not be overwhelmed by the decision to purchase insurance, which in

the wild, can be very difficult. lastly, by using exchange -based systems, there is not an opportunity, generally speaking for other sophisticated agents to get involved and take steps that are adverse to the interests of people buying insurance. so, one thing about the individual exchanges that is significant, in terms of the difference is that the behavioral fulcrum associated with employment -based systems is not there. in an exchange -based system, if you moved everyone into the exchange there'd be no connection between their paycheck and insurance and there's no default of employer selection or constrained compensation. you may also lose the fact

that employers have a superior understanding that if you just send people into the market to act on their own. skip regulatory fragility. it's probably much better to have people buy things on the exchanges them through their employer to the extent that writing a check for the cost of something is the single best way for people to appreciate exactly what it costs and exactly how their bearing it. >> what reforms might we consider and also use the exchanges to have an incremental path forward that improves outcomes for everyone. the animating idea is to convert the employment mandate into a funding mandate that has given employers the option that instead of providing insurance come the option for funding all full-time employees with an annual statement equal to the amount

set by the employer but no less than minimum value tied to a meaningful value on the exchange. if no policy is purchased by the individual, then it returns to the company. if a less-expensive policy is purchased then you treat the difference between the policy price and the statement as taxable income to the employee. if a more expensive policy is purchased it's paid with after-tax dollars. the arguable benefits are many. although it obligates employers to pay, it frees them from meaningful administrative and residual legal obligation which, under erisa and the affordable care act, are considerable. for companies offering employee -based insurance it's money that would've otherwise been paid to an insurance

company. it would make it more salient to employees and it would ensure that the collective forgone wages used to buy health insurance were down to the benefit of all employees equall equally. lastly, if the employer mandate was ever lifted, companies that the client to offer would face. [inaudible] next it ties the insurance fortune of labor to management while discouraging management to be stingy because the lower statement would deny all employees a tax advantage when purchasing a more generous policy, and that tax advantage means the most to highly compensated employees such as management. that would incline them to set the purchase account with some care. third, this is constrained

compensation. i reach the end of my time. it's constrained compensation because there are forfeiture and tax consequences of an employee choosing to purchase a less generous policy that is going to come back in inclination to under insure or not insure at all. it still allows worker choice in a constrained setting which is the exchanges. finally, this would undoubtedly swell the ranks of the exchanges and make it much more likely to attract insurers that would want to offer better and more policy options to a bigger and healthier pool. the enormous influx of employees into the individual exchange might do a lot of work to solve some problems we have about the viability and sustainability of exchanges without other measures that attracted considerable attack. it's conceivable but unlikely that a large enough shift of people into the individual exchange could reduce the need for having an individual mandate.

i don't think that will happen myself. i think it mandate is necessary. maybe in interest of federalism there is space that would want to take that approach. thank you. >> thank you. we have about 25 minutes for questions. i will take moderators privilege and start with a couple. first the follow-up question for brendan. i think one surprising result from the affordable care act is the popularity of medicaid and, as we talked about with employer-based insurance is quite popular among people who receive it. i was wondering, in light of your proposed changes, which are really interesting, how much public opinion may play in. >> public opinion it's a very interesting thing when we talk about insurance and benefits in general. there is overwhelming evidence that people do not appreciate existing mechanisms that

provide things they like a lot. for the example, someone saying get government out of medicare. it's people referring to the idea of the employer paying for health insurance so maybe the employer should really be making all the decisions about what the health insurance consists of which totally lacks depreciation of economic reality that it's forgone wages. and so, one of the benefits of being a policy nerd is that i frequently have no advice whatsoever to offer people if they have messaging questions. i don't know, i think being direct is a good idea because even though they will be paying in the short term, people will eventually learn, i understand the system better, maybe i still prefer to have less government involvement, maybe i still want to get it through the system, but at least i want them to have a complete understanding of what is actually happening now before they reject changes in the future. finally, in my filibuster of an answer to your question, i would like to just point out

that this idea was just an effort to get a conversation started. i actually am not this person who will say it's better than any alternative i could possibly think of, whether it's medicaid buy-in or single-payer for all these other proposals that are thoughtful and interesting. but this i just thought might be an incremental way forward that might attract attention that could be part of a larger discussion. >> thank you. whenever anybody brings up the discussion of the tax policy that's extremely regressive but it's extremely popular. it's obviously a challenge in this space. secondly, i want to return to the issue of csr's. yesterday there was a panel that discussed this issue as well, but also really tried to put in context of how many people are affected by csr's, it's a relatively small proportion of the population.

the subset of that that would benefit from the csr. were also elaborating on how this refusal of payment and the increase in premiums and the adjusted increase in tax credits could be a good thing in the long run. one thing that was talked about yesterday was how insurance companies have increased their premiums and also may benefit from the restorations and essentially have increased premiums and tax credits and restored cost-sharing. they might end up being in a good place. i also, if you could reflect on the people who aren't receiving premium tax credits, those are the ones hurt by the increase in premiums. a small subset, but. >> i don't know that that's true because the increase in most states, it's just for

what are called the silver plans so it's just for a single type of plan, and if you're not getting tax credits you are free to go by one of the other plans, and i don't think in most states, there is no logical reason there should be an increase. in fact they don't think there is. the other thing is, 80% of the people on the exchange receive tax credits so they're the ones that are really fully protected from the increases. >> i just might add, this issue about the premiums, 42018 that have built-in, what happens if congress appropriates the funding for 2018, the bipartisan bill, the alexander murray bill did build in rebates and the idea would be to say the state insurance commissioner could do a number of things. they could say provide monthly

rebates to consumers during the year, a lump-sum rebate in 2018 or lump-sum rebate after 2018, or just let the regular medical system return the money to consumers because it does about with the important change being that it also requires insurers to return some of that amount to the federal government which is why the bill itself mostly saves about $4 billion. >> i was going to add that i heard the remark yesterday about this idea that if no legislation is introduced and credits are increased, rates are increased, and, yet health insurers would still have the ability, as the legal matter to come back and claim the unpaid csr payment. i haven't done the analysis of the law, but from a public relations perspective, it wouldn't be a great position for most insurers to be in.

where i would worry about it more might be insurers new entrance on the brink and if they saw this as a potential source of funding, maybe seeing it's worth trying to get a court to agree with them that they might make that effort. i do think state insurance departments would also have a problem with the idea of jacking up rates on one-year on the premise that the cost-sharing was absent, the payments from the feds, and then at the same time trying to recoup those monies as a legal matter from the federal government later on. >> the idea that a lawsuit would be that the statute said the federal government owed the money and it didn't pay it so it's what's called the taking, and making going to court and recover it. i think it's impossible to know how that would come out. >> if i may, joe said something that was interesting and i wanted to comment on.

>> one of the things that insurance people will tell you, assuming you can stay awake long enough to hear the end of their sentences, is that good risk pricing and good risk pooling leads to good policy. they want to be able to price risk and get good pool. anytime there's some sort of proposal by anyone who will operate to undermine those two things, their ability to price or their ability to ensure pool pools, 2d segment pools, and away, that undermines their ability to write policies they have confidence in, you're going to do damage to the ability of a private player to ensure, in a stable way. one of the frustrations about some of the proposals i have come out over the last six months is that there does not appear to be an appreciation for certain approaches or the association plan are really nothing more than a way to undermine pools.

and so that worries people who know what happened when you undermine pools, not because anybody has an objection to thinking outside the box, but because, if you destroy a pool, even because you think it's going to cause competition or prices will drop or, i don't know, unicorns will deliver healthcare, that is why sometimes experts heads explode because it's almost as if we have to relearn that when we are trying to figure out what path forward we are going to follow. one note of caution that a lot of people believe, i don't know if i do or not, but if you don't paid close attention to how private insurance does work and you have rules that make it not work, that will make the stage very welcoming to a non- private insurance approach, which some people are very much in favor o of, but many of the people who are suggesting the rules will undermine the system are not

going to be in favor of it. there is an irony and how policy might evolve in the world that we currently live in. >> i was going to add, if you are trying to create and maintain a good pool, then you need to create incentives for younger folks who are good risk to stay in that pool. if the rating methodology isn't flexible enough to accommodate that economic interest, then they will find appealing alternative pools, alternative products which may be available road. when you start to talk about how to improve the singular pool, the better health risk pool, one is the community rating methodology in a new there was proposals to try to move it from a 3 - 1 racial where it is now two of five to one ratio and arp and all these other folks started coming out thing he can't do that so it's difficult with some of the existing constraints to make improvements to keep good healthy pool together with the principles of rating that are

in place now. >> i will mention jean's idea about increase premiums for younger people. right now, students, students up to age 26 can stay on their health insurance of their parents and that helped removing the young people from these risk pools. having incentives to get them back on. >> i just want to add to the debate as the solution for young adults, the same study that talked about rinsing what will be the impact of keeping 3 - 1 age rating and bumping up the young adult tax credit found it covered as many young adults without losing older adults from the higher reading increase at a lower cost to the federal government because, if you increase the premium for the older adults, the premium tax credit goes ouup because of the design of the system but i think we should all use this moment to

look at alternatives. it seems easier to say deregulate but actually, like pulling the plug on the csr, and up costing more than alternative ways. >> thank you. i would like to adopt to audience questions. i believe there are microphones. here's one microphone. >> if you don't mind, please introduce yourself. >> michael cook. i'm a healthcare lawyer. one of the major issues that will arise, though i agree with you one 100%, some people have taken a look at it, the sky isn't falling with the csr on november 1 if you are a member of the public, you will see blowing up there these astronomical premiums that in

fact, probably won't hit you and we got 90% of the money pulled on providing resources to reach out to folks. so obviously, you look to possibly get the governor or somebody in the state to start doing public service announcements, but that's when the real issue. just as a quick comment, i actually raised the idea of getting rid of the employer-based insurance at one point in one of the campaigns and even before that, i promise you, i have been absolutely promised that you will pick off every interest group imaginable if you do that. >> my mom thanks it's an excellent proposal. >> said why. [laughter] >> i will just say three things in response. having lived through many open enrollments including last

fall which was brutal and not as brutal as this one will be with 24% last year end 34% this year, the public impact and scare value of the number that would affect probably a couple million people is just a tiny fraction of the u.s. population but way outweighs the impacts which is why i don't agree with that but some people say don't restore csr because premium tax credits are bigger. you have a trade-off. higher premiums and i'm personally for the more targeted setting for that reason, but i would say, one thing i didn't mention earlier that this reminds me of, part of our challenge is to keep insureds, they are monopolies. they can charge whatever they want to charge including tax credit rises with it which is a flaw of the current design. people are looking at ideas like can you limit the

monopoly providers that paid to providers but we do have a problem without competition and some of the role virginia counties for those premiums are way too high. >> we almost lost, as you know, but for the extreme extraneous work of our governors, we almost lost that. >> matt lawrence. i have a hypothetical. a year from now or to when we are in the nonappropriated equilibrium where there is silver loading and lots of places and subsidies are recalibrated to be more generous for people who get the credit but less generous for people who don't. can you talk about that hypothetical world? is that a world where insurance say don't fund this because you create more uncertainty. is that a world, how do the

politics of that wind up playing out? other people saying don't fund it because i want them to stay more generous? what does the world look like? >> i think insurers right now are reeling from the current dilemmas and haven't thought too much about what this means for the future. if the idea, at the end of the day, is to have consumer engagement regarding the cost of healthcare, having the issues of premiums being resolved through the tax credit may not be the best way to get there. i think a lot of insurers believe that if you're going to really reform the cost of healthcare, you need three pieces. one is the access piece which is the affordable care act, the other is changing the way providers are compensated in the third would be, how do you

engage consumers so they are interested in the cost of care, and these policies going forward, hopefully will consider all three elements. >> i think it's a raging debate right now which again, one could design the affordable care act with having the csr is paid for through premium cra tax credits or design that looks like the outcome of this. if you read the tro, the decision by the california judge, he actually weighed in on this pretty sad part of the reason he didn't want to disrupt what is going on right now is he thanks that predominantly low income people and that's a social equity issue are better off under this loaded silver plan premium than they would be should he intervene and csr be paid to the normal way. i think it's a state in economic debate and an insurance debate as well as an equity debate. >> it's a great question and i

think, as you can tell, nobody really knows the answer. i do think what we are hearing here is that perceptions are really important so this perception of rising insurance rates is a killer. even if it doesn't apply to anybody but a very small number of people, it's a killer. arguably, if csr's were put back in, the insurance rates would come back down, that's probably not such a bad thing as a public relations matter. it's a different question sort of as a policy matter in terms of coverage. >> michigan state university. want to come back to brennan's very interesting presentation because i think both in terms of saving some aspects of the individual market, it would be nice that employees could shift over because in many

small states, the insurance pool is simply not large enough in the individual market to guarantee decent competition. having people, employees going into this individual market would actually strap lies these markets. the other thing is when you talk to the economist, it's no secret that employer insurance decreases mobility. you go to any large institution like my university where the technical workers won't ever go to a smaller employer simply because they get their insurance for the whole family through this large employer. there are these negative impacts of employer-based insurance that we rarely talk about. >> yes, i think again, part of

the conversation about the approach the united states should take to deliver health insurance to people has to be broader than any 15 minute panel visitation could consider because every suite of tools you will use will have some problem that another sweet might not have, but you all have a different set of problems. it just so happens that most of the countries have considered this question in the side of the tool with the least amount of tools is heavy government involvement. it's not clear to me that is the path forward in the united states, not because i object to that approach, but because i think there's a lot more serious conversations to be had in advance of taking that step, and for many years now, the national conversation has been locked in what i perceived to be not really serious discussions about ways to solve the problem, more yelling and posturing and

casting something as diabolical or do divine depending on who's mouth it came from, whether or not there is merit to the idea. >> i will follow up on that with the medicaid buy-in question. it's been debated and needs more attention in the news back in 2009, 2008 there was talk of a public option. it was more of a medicare buy-in or another kind of entity. in nevada, it almost went through but the governor vetoed it. >> i will say as a political matter, it's exciting that for the first time there is buy-in and that's a result of the fact that in the throes of the repeal and replace bill when medicaid. capita was put on the table which is not affordable care

act than the expansion would been repealed, people began to understand and talk about medicaid in ways they had not previously been spoken about which i think is fascinating and enriches our public dialogue. i'm thrilled with that alone. i think the genesis of these options, the flipside of what we were just talking about, the monopoly in virginia where the fear of counties without any insurance plans, all your long and the limited competitions in these areas has led to private insurers won't fill these gaps, why not look at medicaid. there's a proposal for the people to buy into the members of congress plan, there's the medicare buy-in, state employee buy-in's, these are partly to fill those gaps but also partly reflecting that people think that medicare is not as expensive as the private insurance plan going up by 20 or 30%.

i think it's being driven by the gaps in the system, both gaps for insurance as well as the price and affordability gaps. whether or not that can be well-designed, and trust me, in 2009 it was not easy to figure these out these proposals to do the level playing field. the complexity is a lot greater than anybody thanks. all that said, i'm not too surprised given the flashpoint of these current debates of the ideas resurfacing and it probably won't happen again with this administration, but it will be interesting to see if any state -based reform. >> i am sarah with the healthcare news division. do you have any sense of what the difference in cost would be to the government from allowing people to buy into medicare or medicaid as opposed to the subsidies provided under daca?

>> that's a great question. there hasn't been a lot of research and microsimulation done. it was a rich debate in and around the affordable care act and they did do estimates in the affordable care act and in their annual budget. the challenge right now is we don't know whether the marketplace plans look more like medicaid manage player plans or commercial plans. when you think about it, it looks a lot like a managed care plan. it's rates may be out or below medicare. if it looks more like an employer-sponsored plan, it may be above medicare. i think we need to learn more about what exactly is going on in these marketplace plans before people can analytically answer that question.

>> one observation i was gonna say is people with medicare advantage, maybe other federal programs there are some good models with the federal government helping to facilitate the market and create competitive markets among the insurers where consumers can make some informed choices and where the affordable care act, in many markets, hasn't succeeded in being this model of competition for a variety of reasons, to take some of those lessons and some of those proposals i've heard about is also maybe trade-off, if it's not that attractive for an insurer to enter a more rural market, if you want part of the bigger market, that may be one of the quid pro quo. i think that would be useful as far as what lessons can we learn from the affordable care act to date in terms of competition. what are good examples of

competition in the federal health benefit program, and can we borrow anything from those examples? >> thank you. i think that is just about time. i want to thank each of our panelists for a great discussion and thank you all for coming earlier. i also want to thank washington college of law for hosting us. i believe we have 15 minute break prior to this. thank you. [applause] [inaudible conversations]

[inaudible conversations] >> when this conference resumes, former health and human services secretary sylvia burwell will make her first public comments on public policy. she will be speaking in ten or

15 minutes. we will have live coverage on c-span2. this conference is expected to last all day. it brings together health law, policy and economic experts from across the country to talk about the condition of healthcare here in the u.s. the morning got underway with a discussion on the judicial order of the denied request to force the trump administration to continue to make cost-sharing subsidy payments. we will show you a portion of that discussion during this break. >> some of the issues that really affect insurers on how they view the market and, let me just make sure this microphone is working. here are some of the major themes of y insurers, who are used to having predictability in the way they right coverages and their benefit plans and the rates, it's been a marketplace that has been anything but predictable and a lot of that is driven by legal

and policy changes, and just the whole discussion that has evolved on capitol hill. will the affordable care act be repealed? will it be replaced? how long because that's only a short-term gap measure to full repeal. all of those questions, just in terms of where legislation is going creates this atmosphere of uncertainty. then the other question is what is the process to implement changes to the affordable care act. is it through executive order? is it through an agency policy change, is it through former rulemaking or statutory amendments. i must say, the ease in which former policies were made through various channels, you may see some of that revisiting in reverse with the way changes are made to the law now. process, rulemaking, some of those protocols may be put to the side as changes to the

policies are implemented, as we've seen with such things as a dramatic cut back and agency marketing funds and the like. and then the courts, what impact will the court decisions have uncertainty? what we have is really conflicting court decisions in many of the issues, at least detecting insurers. a good example of that is the risk corridor with their cases. the federal court has come to different outcomes as to whether those monies are owed to insurers or not. we will see once the issue is up before the federal circuit court of appeals and how it ultimately resolved. and then consumer understanding, this is a tough law to understand and interpret and figure out what your obligations are, but how do consumers understand all of

this legal uncertainty? do they understand when they hear the idea that there's an association health plan alternative coming and that's by executive order, but it's also an invitation for rulemaking which has a potentially long tail to it. will consumers just sit back and say well, i heard about the south, the president said this i'm just can hold back and not purchase insurance through the traditional markets for the time being. and then, what does this mean to the health insurers themselves? at what point do you finally say, i knew i wanted to be in this market, but all of the uncertainty is much too much, i need to be able to be more predictable, if i'm publicly traded, my stockholders, and so i'm just going to move out of the market until it becomes legally more consistent or more clear. kaiser family foundation has some interesting data. just recently, in 2017 there

were 4.3 issuers. state on average. in 2018 that is down to 3.5. the critical question for a lot of insurers, particularly in the beginning of the program was the issue of premium stabilization. can i be sure about who i'm going to get and what protections does the law provide to me as an insurer in making sure i'm not going to take a massive loss when these individuals had the markets for the first time. as mentioned before, the risk porter features, one part of that program, but when you look at it, a lot of insurers are standing in line, they haven't received those risk corridor payments and these are significant amounts of money in terms of what it means. some of these insurers, i saw one piece of data which suggested this shortfall of

premiums. so this is far from chump change. these are significant amounts of money that are due to these insurers. there's also some question, at least one point during 2015 and 16 whether reinsurance payments would be in jeopardy. legislative activity on the hill and questions about the issue of appropriation and making sure that so much of the collections from the reinsurance premiums were allocated to the treasury, and so far, those payments haven't been disrupted but it did create some unease. and then, there's this whole issue of the risk adjustment process. you've got to get used to risk adjustment because there will be a lot of legal questions going forward, ar as ari has been with this process. not only in the commercial process but also in medicare advantage. it's a formula, a concept that

is subject to a lot of adjustments, a lot of data changes and has an amazing financial impact as well as impact on marketing and enrollment. then, i would say the other thing is, when you look at all of these issues of premium stabilization, all of the uncertainties and coupled with the recent decisions to cut back the csr payments, is it really unreasonable for health insurance to look at the program and say do i have a reliable partner that i can count on when it comes to any kind of cost-sharing responsibility of this program? i mentioned risk adjustment impact. the idea was that there would be these new startup co-ops and they would be great and consumer owned and actually, it's these smaller plans that had the most difficulty with risk adjustment and many of

them found themselves with huge bills to pay to cms on risk adjustment and they were on the brink of insolvency. they went into federal district court, they tried to get an action to collect these monies, and the outcome was that courts were going to hold back the enforcement of the risk adjustment approach, and in at least three cases, the evergreen plant in maryland, the minute maid plant in massachusetts and other plans have gone down. the third is trying to negotiate a buyer to prevent the insolvency from occurring. the other is it's not just new start plans but also provider,

sponsor plans. a number of health systems saw this as a great opportunity when the law was passed to get into the insurance business. a lot more complicated than one thanks. the idea of how you master risk adjustment was really new to a lot of these plans, and particularly, plans who were undergoing rapid growth and had no experience with the enrollment. they really did not know the health status of the individual, and if you don't have good mechanisms in place to capture the health status of those individuals which triggers these payment obligations under risk adjustment, you could find yourself on the short end of the stick and that's exactly what happened in august, they announced they were withdrawing from the market after a loss of 158 million in 2016 and another 59.9 million in 2017. these are systems that have the resources and so the withdrawal from the market will be very painful as

opposed to letting them go through receivership. >> what is the government done? it's not like there's been a total absence of attempts to stabilize the market, there was a market stabilization rule that was developed and released on april 18 with an effective date of june 19. it did some things i think the insurance industry would favor, for example, when you look at the question of adverse selection, when we talk about that today, there's a way to look at it from the consumer approach. what i mean is, are there gaming of the system that the consumers can engage in to time when they buy health care coverage? that is a form of adverse selection. with the liberal grace periods

for premiums due, a lot of games were played about not paying your premium, rolling and getting another grace period and so on. these rules try to avoid that. also, special enrollment engine periods became an abuse, potential for abuse for individuals to wait until they needed the coverage and then through special enrollment cycles enroll for the coverage during that cycle. these rules tightened up those particular provisions so would be harder to have this gaming of the system, but there were other provisions in the rule but these are the ones that probably have the most direct correlation to adverse selection. some people would say how about the shortening of the open and enrollment. , and also this recent cutback of marketing and advertising funds from the federal agency. the speculation is that too might have an impact on adverse selection. in other words who will be the most focused on getting health care coverage in a time of uncertainty?

the people who have health status problems who need the coverage will be right on it, but the healthy, younger folks, they will probably remain passive and not actively enrolled. we will see if that's how this plays out during this open enrollment. it then there's the question of the individual mandate. is it to be enforced or not? there was this executive order last january, the president put out that in essence gave the signal that they could do for grant exemptions or delayed the prevention of any requirement of affordable care act and the question, the speculation of the time was this was a signal that the individual mandate would no longer be enforced. there were some things going on at the irs at the time, they were not collecting certain information about other coverages that people started to interpret with some form of a policy to suggest

this idea that the mandate didn't exist was now being carried out. i think at the end of the day that was more confusion than it was reality, and the irs believed appropriately it had a obligation to enforce the law as it is and that's pretty much where we are today. in a rising premium environment, in light of all this uncertaint uncertainty, what impact does the individual mandate have on purchasing decisions? kaiser family foundation report says that most are unaware that the individual, most are aware that the individual mandate is still in effect, but for intent of uninsured are unaware or unsure about the individual mandate. so then, i think the next question is what's going on with other executive orders

and this issue of choice? i think the question is, when you give people choices about coverage options, it can potentially have an adverse impact on the pool depending on what those options are. this is -- this issue, president obama's statement, if you like your plan you can keep it, that was the beginning of maintaining coverage outside of these markets that insurers would say would adversely affect the insurance pool. the current administration has come out with some other ideas , new executive orders, one is to expand short-term limited duration plans which have historically been viewed as excepted benefit plans are not

covered by, and they were narrowly defined by the prior administration because by granting this kind of benefit choice more flexibility, the concern was it would take over and weed out more of the better risk selections to these kinds of products. the other thing was an association lan idea that the executive order just recently put out and this will again take time. it to will have the same effect of draining off the better health risk. why? because if you are an association plan and rather than taking the current view which is i'm not going to look at the association in the aggregate, i'm in a look at each employer group member that's a member of that association, you get very different results in terms of premium rates. in the case of an association

plan where it's not aggregated , the premium rate limitations of the affordable care act would apply. this also, by the way there's an awful lot of confusion about these association health plans, are we talking about insured association health plan, is it a real insurance policy issue, or, are we talking about self-insured association health plans which would have the reach to go across state lines without worrying about state insurance laws and as a result, be free of a lot of the requirements of the affordable care act in the process. i know i'm running short on time in fact, i think i've almost expired my time. maybe the last point here is, as we look down the road, the bipartisan approach to deal with some of these issues,

one, to take out the issue of legal ambiguity, to create definitive amount marketing in 2018 and 19, expand access to catastrophic coverage, and when you look at those particular approaches and you say why isn't that a tremendous dilution of this risk pool, why doesn't that create adverse solution, you're talking about those policies being part of the same risk pool and being subject to many of the same applicable requirements and guaranteed availability, and then the last is reforming the state waiver process and permitting greater latitude to states to introduce reinsurance. when you look back on premium stabilization, the risk corridors were financial problem, risk adjustment has been in a people.

the one piece that kind of seem to work pretty well was reinsurance and yet that's now expired. giving states the ability to stabilize the market through a reinsurance feature is probably a good idea from an insurer's perspective. >> thank you so much. we will hold questions for the end. will do questions for all the panelists. next we have jean who is currently a senior fellow at the foundation and a former deputy assistant for president obama. >> thank you very much. i'd like to switch gears a little bit and pull back up and talk about why the affordable care act, specifically health insurance marketplaces have endured as well as how they can be improved. i do that because when you think about all the trials and tribulations over the years, i think most thought a year ago that daca would not survive a year later, yet we are heading

into the fifth open enrollment. and there still is a marketplace, people are still signing up and in large part it is working with improvements to be made. i would like to discuss three factors about why the marketplace has continued to operate despite what some people call sabotaged by the administration. first is the statutory design. when you look at the design of the affordable care act, it was drafted learning the lessons from state -based reform including massachusetts and state experiments with insurance reform and it was, in short, designed to bring in three different groups of people. first people with pre-existing conditions. those are people who are prohibited or barred from insurance because of practices that insurers use like denying coverage for people, medically underwriting their premiums, having annual lifetime caps on benefits and having selective coverage of benefits so the benefits that were expensive

are needed were excluded. those were prohibited by the affordable care act so people could comment. second, we included premium tax credits and subsidies to help low income uninsured who are out because they couldn't afford it. >> my name is camille nelson and i'm honored to be the dean of washington college of law. it is my great pleasure to welcome you to the washington college of law for this exciting session of the next step in health reform, 2017 conference. this year, in partnership with the american society of law, medicine and ethics, and with the generous support from our cosponsors, we are thrilled to have expanded the event to a three-day conference attracting speakers and attendees from multiple disciplines, the academy and practice.

importantly, this conference is also timed with the launch of our new health law and policy program. i know that our faculty and our students will be partnering with you on your very important work in the areas of healthcare, law, and economics. thank you, and please join me in welcoming american university provost doctor scott who will introduce our american university president sylvia matthews burwell. thank you. >> thank you dean nelson. good morning to all of you. it is my pleasure to introduce the next keynote speaker sylvia matthews burwell, the 15h president of american universit university. president burwell is a visionary leader with varied

and extensive experience in public and private sectors. her career is a testament to a lifelong commitment of advancing solutions to some of the world's most pressing challenges. her vast government experience includes positions such as the secretary of health and human services, director of the office of management and budget, deputy chief of staff to the president of the united states, chief of staff to the secretary of the treasury department, and special assistant to the director of the national economic council. in the private sector, she served as chief operating officer and president of the global development program of the bill and melinda gates foundation. she also has served as presiden president. [inaudible] in response to today's session on healthcare, i would like to take a few minutes to highlight her accomplishments and expertise in the health

sector. in a recent role, as secretary of health and human services, she helped shape the vision which is to ensure that every american would have access to the building blocks of a healthy and productive life. to this end, she had oversight in management of the departments agencies and programs which included, among others, the centers for disease control and prevention , the centers for medicare and medicaid services, the fda and the national institutes of health. she oversaw the implementation of the affordable care act which, as this audience knows, represents the most complete overhaul of the healthcare system in our nations history. daca ultimately helped more than 20 million americans obtain health coverage.

it made improvements to bend the cost curve. when she assumed leadership of hhs, prior to the second open enrollment, one of the first priorities was improving service delivery of the healthcare.gov website. as a result, enrollment in aca, which was previously cited as stumbling block for the program success became more efficient and smoother. during her tenure at hhs, secretary burwell oversaw the domestic and global response to to unexpected major health crises, the ebola epidemic and the spread of the zika virus. this response included working with other nations to slow the spread of ebola in west africa, building a system to identify high-risk individuals entering the united states, establish a network of hospitals across the country to serve as treatment centers,

and investing in the research and development of and ebola vaccine. similar, she let hhs work to aggressively detect and respond to the zika virus including research development and testing of the vaccine. through her leadership, she has had significant impact on the safety and services provided for the well-being of americans of all ages, abilities, and socio- and economic background. perhaps the work that was closest to home for her, while at hhs, was her implementation of the early childhood program, headstart's largest revision in nearly 30 years. sylvia burwell had her early education beginnings at headstart in west virginia. she cites this program as

barking her love for learning, a foundational tool, and she has carried that throughout her career in public service. this community is excited to have such an outstanding an accomplished public servant at our home. she earned her bachelor's degree in government at harvard university and a ba in philosophy, policy and economics from the university of oxford as a rhodes scholar. her work has touched and improved the lives of many in terms of health, safety of millions of americans. please join me in welcoming president sylvia burwell to the podium as she shares her insight on the future of healthcare. thank you. [applause] >> thank you for those kind words and your leadership here at american university.

also, we would like to thank you for your advice and guidance in these few months as i have joined this american university family. i want to thank the society of law, medicine and ethics for bringing together such a great group of people and speakers. i also want to thank american university washington college and the health law and policy program. : : >> it was not one, but two lawyers who fail to warn me that once confirmed, all court cases switched to my name. the first, the burwell family council, my husband, stephen burwell. the second, the 44th president

of the united states of america, and i'm just saying, a little headset would have been nice. my transition to american university is interesting, exciting and challenging. i have joint at passion campus, community, thinking, learning and doing, things about the world's most interesting and important problem. one of those we're talking about here today. and i've taken on a new title without ever having gone to a diner in iowa. rather than look back, i am pleased that this conference is looking forward. our nation's health care system has come a long way in the past seven years. we've helped more people access coverage and care. we've improved the quality of health care coverage for american families and we've started to bend that cost curve, freeing up resources for today's

working families and for future generations. when i say we, i mean our nation as a whole. this isn't the work of government or business alone. it's the work of policymakers and physicians, advocates and attorneys, patients and families. as this conference bruise, they are not slowing down. when i started planning for these remarks, i looked very closely at the agenda, and two things came to mind. first, jealousy as my team reminded me that no, i actually could not block opportunities on my schedule and come and listen to all the sessions. but second, and appreciation for the in -- that yin and the yang prepared in american health care. care. there are very few areas of policy that are at once so complex and actually so simple. today's agenda speaks well to the complexity from payment incentives to federal and state

coverage of young children to the challenges facing payers and providers. this conference dips into the vast ocean of complex legal, regulatory and moral questions that churn evident in our health care system. but this complex system is grounded in a simple reality, in moments of joy like birth, or paint as in a sprained ankle, or fear and uncertainty as in a fight against cancer. we all count on the system to care for us and for our loved one. when i worked at hhs, the complexity surrounded us. we spent late nights and early mornings wading through reams of briefings and studies, thanks all the academics in the room producing those. we spoke with over 100,000 providers to get their input on rulemaking. we worked to try and understand how the system was working, whether opportunities and how we

could use our short time at the helm of this ship to deliver meeting and back to american families. and to this colleagues are still at hhs today, career public servants who deliver impact for the american people through transitions and transfers of power, to those career staff let me say it was an honor to serve alongside you, and our nation is stronger for your service. [applause] >> at hhs impact was our northstar. our goal was to gather our conversation at our analysis to fax, to experience, and to the reality on the ground. one sees this railed every day at hhs. you see it on the campuses of the national institutes of health where our nation's top medical researchers are crossing the next frontier of our understanding of diseases and

tears through things like precision medicine. on the campus of the fda, where our nation's safety and innovation are front and center. you see it in the fearless men and women who pack their bags, left their own families to say families in west africa from ebola, and always ready to make that perilous journey whenever they get called. you see the reality in as provost bass mentioned head start classroom for young minds of the day have a chance to become both our scholars and our leaders of tomorrow. and use it in the health care professionals, some in this audience this morning, who are out there trying to build a better health care system. this is the duality of the complexity of our nation's health care system, and simple outcomes that everyone is working towards. today i want to focus on a simple frame on our complex system, one that orients our discussion on where you want the future of health care reform to

go. i want to talk about how we improve the access, quality, and affordability of our nation's health care system. i want to highlight how leaders in washington, our nation's businesses in the american people can maintain the progress. first access. in november of last year are uninsured rate has dropped below 9%. the lowest it had ever been. between 2010 and the first quarter of 2017, the uninsured rate fell from 16% to 8.8%. that's the story progress. the largest decline in uninsured since the launch of medicare and medicaid. but it still leaves more than 28 million americans who are uninsured. connecting these people with coverage is a problem of will, not strategy. we know how to maintain the progress we've made and move forward. nearly half of uninsured adults say that the cost of coverage is

prohibitive. our nation can take steps to help them. we need to actively get the message out that coverage is available especially to communities where those messages don't often reach. we also need to raise awareness and potentially financial assistance for people who shop on the marketplace and make sure more people know that the financial assistance is there today is actually available. last year eight out of every ten people shopping on the marketplace qualify for financial help. most could find a plan for summer between $50.100 per month. more awareness and more assistance would lead to more enrollees and, therefore, more access, which reminds me just for old times sake, it's about to be november 1. first. the start of open enrollment. encourage your friends, , your family, even your random twitter and facebook followers to go to healthcare.gov or call 1-800

318-2596, for those of you who are spanish speakers go to -- [speaking spanish] and shop around. old habits die hard. the affordability of our health care system is intricately tied to people getting coverage. since the law passed, the share of americans who can't afford needed care has fallen by more than one-third. but affordability hasn't improved for just the newly insured. or the 157 million americans, that's most of us, who have health insurance through their employer, family premiums have grown at an average rate of 4.5% since 2010, down from an average of almost 8% over the previous sticky. affordability extends to what taxpayers spend as well. medicare spent $473 billion less on personal health care expenditures between 2009-2014.

thanks to the lower rate of cost growth. and in the context of the budget conversations that are going on, thinking about the $473 billion number can put it in context. and finally the third way we can measure our progress is quality. hospital-acquired conditions like adverse drug events, infections and pressure ulcers, declined by 21% between 2010-2015. and by linking those accomplishments to mortality statistics, that decline prevented 124,000 deaths. before the law most health care plans in individual market didn't cover maternity care. one-third didn't cover mental health, and almost one in ten did not cover prescription drugs. and under the aca there is coverage. and while the law is in perfect and there are many ways that it can be improved and changes will make it better, there are indeed

some benefits that are reality. and a very clear and simple reality for many american families. another reality is the direction that our health care system is moving. while we often talk about delivery system reforms separately from the discussions of the aca its import reflect that it was a part of the act. some of the most important changes in models were using to move forward on affordability and quality come from provisions in the aca. like the center for medicare and medicaid innovation and the ability to support accountable care organizations. they also stem from other laws like the medicare access and chip reauthorization act, i probably didn't need to say that here, macra would've done, that was passed with overwhelming bipartisan support. these changes are part of and support the change that is occurring throughout our entire

health care system. our health care system is undergoing what i believe is a historic change. many of you are well versed in these undercurrents of change. you have researched their implications, you've eradicated -- advocate for them. some of help set the policy did clear the path for them. whatever your perspective is, it's clear our nation's health care delivery system is entering into a new era. while i serve the hhs we develop a three-part strategy. first, change the way we pay for care so that payers are rewarded for the quality of care rather than the quantity of the services. second, change the way we deliver care by promoting coordination and prioritizing wellness and prevention. and third, unlock health care data and information. so doctors to make the most informed decisions, and patience

can be active participants in their own care. at a cheap as we implement this strategy with a simple philosophy where we need to lead we would lead. where we need to convene stakeholders we would convened in. and what we need to get out of the way, get out of the way. hhs we committed to 50% of medicare payments go through value-based contracts by 2018. when we left we were ahead of schedule. at the same time commercial insurers were venturing into value-based payments on their own. in january of 2016 we estimated a quarter of all health care spending was an alternative payment models. the delivery system reform movement crosses ideologies. art administration advocate for as democrats and republicans like my predecessor who started some of these efforts, former secretary mike leavitt, and former senator bill frist because a few my colleagues

recently wrote in a new england journal of medicine piece last week, the delivery system reform effort is what they called quote and empirical learning approach to health reform. it's based on experiments, evidence and careful observation in learning. as they concluded quote, it is essential for this approach to continue to meet the nonpartisan goals of better care, smarter spending, and healthier help y. delivery system reform requires persistence, and i'm hopeful this, as the new administration settles in that they will see the same value in alternative payment models that we did. it's an opportunity that leaders from both parties have recognized. it will be important to keep moving forward, supporting programs like bundles and ato's the report providers for better care at lower cost. it will be important to fully expand programs that are proven

to reduce risk cost and improve health care like the diabetes prevention program that we model. and it would be vital that offices like cc in my -- cmmi can continue to innovate and find ever new ways of providing better health care while bending that cost curve. many policymakers and private sector leaders are, in fact, moving forward. i've been encouraged by the bipartisan efforts of a a numbr of governors and people like senators lamar alexander and senator pattern -- patty murray, their bill and the process to which it came together represents the way that we can get things done. together with more than 20 cosponsors across both parties, they had the opportunity to make improvements on top of the basic measures of access, affordability and quality. i've been encouraged by entrepreneurs and private sector leaders with step forward on delivery system reform. while i was at hhs we start a group that was called the health

care payment learning action network. and it was a public-private partnership to encourage the adoption of alternative payment models. more than 6500 people joined, including 130 organizations that actually set their own goals in this space. i know after i i speak you will hear from friend and colleague daniel hilferty and and a you a long who is also step forward in this space. today in american health care, there's no shortage of complex, complexity, change in news. but to all of this complexity i think a simple reality remains. that simple reality is actually why i'm so honored to welcome you to american universities campus that it was a little over a century ago in 1895 that he young aspiring attorney asked a

woman to apprentice her as a student of law. these women like countless other women of that era had been denied admission to a number of law schools. legal professions for the women who did manage to study law were few and far between. so they hosted the first session of the women's law class and they enrolled to more female students. that barriers bested between vision women and success in the legal field were numerous and quite complex. but they believe in the simple truth. the system needed to change and it would start with them. so three years later in 1898, washington college of law was founded and it became the first law school in the world to be founded by women. the first law school with a women being, as we now have two,

in the first law school to graduate and all field the all-female law class. as she said, the keynote of success is readiness for opportunity. the simple reality of america's health care is our opportunity is now. and so for years and for decades we've had conferences and events like this to discuss the complex challenges that stand in our way, but with the leadership in this room and across the nation, i believe we can overcome those challenges. and i know that our nation will be successful at building a better health care system. because like ellen and the pioneering women that came before here at our law school, we are ready. thank you. [applause] >> well, good morning.

for those of you who are you early i will repeat my introduction. i'm a senior fellow at the foundation but also the former deputy assistant to the president for health policy, and i'm privileged to be today to call you not madam secretary but madam president which is fun. but i'm here in part because i was able to witness your leadership and skill and tenacity at managing the lead agency for health policy. that gives you length on this debate that few others have. i want to begin my questions for you with a main focus of your remarks, which is delivery system reform. i know that that was jumpstarted when you arrived. we all love to know how did you develop that strategy? who was involved and how did you get results that quickly? >> before edge of the question i do just want to say something about gene because a modest

person who i've had the opportunity to work with gene from the 1990s forward on issues of health care. and you will not find a person who knows the issues more in depth across the whole range when one is which at hhs and it had from omb time to policy time, i just an incredible wealth and incredible dedication to the kind of change that i was talking about at the end of my remarks. [applause] >> i will star in terms of the question putting together the delivery system for strategy and safety thinks about strategy making general and then the specific example. in putting together strategies at different places and different organizations that i've had the chance to begin i think about three circles. what is the problem, what is the solution space, what every good at? and get myself the objective is to get yourself where those three things overlap. and so important and a strategy

process to think about being clear about where is it you're trying to go. that is a big part of what the father is a better i think the other thing and it had the opportunity to learn from different types of organizations at the bill and melinda gates foundation very heavily strategy focused in terms of whether core strengths. at walmart where i was, execution of one of their core strengths. what i find it strategy is you have to think about both of those at once. the one without the other one that actually achieve the results. big picture files. with regard to the specific issue, when i came to it there was the realization that we had a short time, but as we're moving forward implementing parts of the affordable care act that we were so focused on access part, that affordability and quality we needed to defocused and we needed to do in a strategic way with priorities that we could move forward over a limited time. so bringing together a number of

different parts and pieces, we were fortunate at hhs at that time to have patrick conway, whom many of you know, and karen disalvo, who are partners in leading the effort if you talk come looking sit any of the team that was part of this, they will tell you it was a process because to get to that strategy and do it quickly and the engagement of our white house colleagues. so jeanne and others were engage from the beginning of that was important because when you get to the other in you want a strategy that is been former all the parties and the players. being informed by the real-world was a very important part of the strategy. but they were practicing physicians in addition to the roles they had. they brought a number of perspectives and what we tried to do was get a number pieces and perspective around them. for those of you work with me they know i prioritized in terms of actually work in threes. so getting this to the three

things was a process any think it's probably fair to say there were five iterations in terms of what we did, but that was at bringing the people together, working off of where we had been, and a lot of work have done previously before we got the a different approach in terms of how active we would be occurred, but then we decided to put together the strategy. as we did and you will probably remember when you got the folk of a set of what is that the medicare goals, the idea that we're going to set goals that i was going to commit the federal government something on a deadline was not necessarily a common thing to do during and administration, but there was complete support and buy-in for doing that. and it was important. when i look back at the strategy, having the three pieces of the strategy, but thae action was important because it did two things. it was very important signaling of the commitment we were making

that we were coming to the table. table. the federal government wasn't just think okay everybody, you all go do. this was us and that we would have to meet it. that kind of skin in the game i think is indicative of we are here and we're serious. the other thing is it indicated direction. for everyone on the outside, i i know that's a report think about that in terms of certainty, predictability, where are things going. if you're running a business, if your provider, if your consumer, that predictability as much as we can. >> that was a choice you made as you look at the array of priorities and problems facing a secretary. you had your first day here at american university. what were the challenges you faced not by choice but by necessity on your first as secretary of hhs? >> there were a number of them. the first day actually i went and met, i was confirmed probably around noon and then

went straight to meeting with -- for the insurance groups. and when they had conversations with them because one of the immediate things that we were facing and that i would face in the next few days was making decisions on the technology. in order that do, but in order for us to do end-to-end testing which i i was insisting that we would do for the marketplace i had to make the technology decisions. my predecessor was great in that she wanted those to be my decisions, felt is appropriate if i was going to be responsible i needed to be able to function of those decisions. so immediately need to make decisions on the technology and what were going to do in the marketplace. at the same time actually within ten days of the little decision hobby lobby versus burwell. you may have heard of it. in that same time smallpox was

discovered in a refrigerator that fda and nih shared here like somebody had not checked it for 50 years and i'm there for ten days? [laughing] and then within 20 days i stood up the command center, it was still up for almost all of my anti-time as secretary for ebola. and then not even a month later, over the children pouring across the border and what i could meet people don't realize, there were tens of thousands, over 40,000 that year children under 18, across the border. children as young as a fighter what many people don't connect is at hhs. most people think it's a dhs because it's the border. dhs within 72 hours has to have those children with us because we care for them in till we can place them in a place that they will be safe and cared for until

the other immigration proceeding. and so for me it was the volume of crisis, the number and the volume of crisis was the first day challenge for one expects and one walks into knowing the things around the affordable care act, that was a very open i think what it was at the number and volume i think that was most challenging. >> the administration is looking for the new sect of health and human services as we speak. if that person you she were sitting in this chair today, what advice would you give to that person? [laughing] >> run? >> i was going to say run, but that's me. >> know, went into the fire. he is actually my very strong belief. i would start by saying first and foremost, understand the incredible people that at this organization. career civil servants, dedicated

no matter what, which administration, what . if you, through faxon substance. first i would just say no that you're walking to the place where there are incredible resources. number two i would say it's very important to be aligned with your president. understanding your president and having to be able to know you're able to go along a path and diplomat, and whether that was mike's great at omb, my experience at hhs. that kind of alignment really does contribute to, , and if you're not aligned, figuring out how you can access and work through issues i think is another very important part. the third thing i i would say,s much as you could, get out. it's hard but it's a large department you're managing, your money, but the more you can talk to whether it it's head start

kids or visit the tribe, that is an important part of you really understand what you're trying to get done. >> looking forward what do you think the stealth issues are facing health reform? we know some of the issues about open enrollment and the rulemaking of the challenges of the environment. what else might be on the horizon that this team should be on guard for as well as the audience as they're doing the work in their various fields? >> i think it's actually instead of a specific issue, it's a category of issues that he think his stealth and not always recognized, which is the change we are talking about, when we get to five, ten, 15 jacinda and our health care system looks differently with the consumer at the center and the way we do it very carefully, it will happen because of true behavior change. i think that's hard because whether you're in an

organization, your first answer is okay, let's change the structure for your second edges maybe let's change the people. the last thing because it's the hardest thing is changing behavior. this is going to take change behavior of consumers. you're going to be more knowledgeable. you are going to get permission, it will have to be a change for provider people have to be a change for buyers, and shares. it's going to have to be a change for pharmaceuticals. it's going to be a change for everyone and i think that's the stealth issue that doesn't come up because we speak about the change. we speak about things in specific terms, what we need is we need to pay in this way. but but i think one of the hardt issues is to make that change there has to be behavior change and i think that's hard. >> it's a related question, which is most of the discussion around affordable care act is about the access component and

not necessarily affordability work that you did. which do you think is harder, expanding access or improving affordability? >> i think both are harder, both are very hard. both are very hard but i do think with access we understand a single, very important lever, and how you go about fixing that matter, the lever of cost, terms of the access issue, for those who don't have any access at all, at least there is that that you can focus on anything that's why when one looks at the progress of the affordable care act against the three measures, i i think our best progress was against that one. because it could be targeted and focused. the affordability and quality i think are sometimes harder because the levers are more diffuse, and the other thing is i think we do struggle with

measuring quality, which is related to affordability because you don't just want affordability. he really did want to say one without the other. i think quality is hard to measure. >> turning more to kind of the job and what his audience can learn from it, what was the biggest surprise? you have any government at a think you've helped so -- if held so many incredible positions in the photograph and the private sector once or something uniquely surprising about being secretary of health? >> i would say two things in one goes back to your first question, which is i was prepared, when i arrived at omb in this administration it was, this was this a question which is the permitted. the day i arrived at omb was an alternative sequestered a so most of the staff was gone. i arrived in crisis. some might say i'm a guy in the

peanuts that the cloud kind of follows. not the guy but the cloud. so crisis was something i was used to. but i will say that the volume of crisis was extreme. i mean, the ebola, that was, wow, the kids the border. your fourth of july try to figure out how to place four, five, six year olds whose parents thought it was better to send them 1000 miles across mexico than to have been stay with them. like, and you are trying to find a safe place for those little, and they are alone. i tried to keep asking, you, i have a 10-year-old etiquette asking, they can't can't be alone. have to be with a sibling. like, no. so the crisis, but the second thing was the joy of the breadth and depth of incredible things going on in the department. at hhs is something called the idea of -- that is a place where

ideas and innovation we were encouraging that both within our department and without her department and by the time this was started by my predecessor, kathleen sebelius. by the time i got there the conferences to people from around the world in terms of how to use technology or other innovation. those kinds of things were going on, or the incredible things like the story of individuals on the centers for disease control and prevention who rode canoes in liberia up rivers to get ebola samples to figure out if those people actually have ebola. and so that i knew it but like seeing it is surprising. it's uplifting and it's great to see the positive things that are going on every day in huge department that's that large. >> thank you. we are mostly and a congress of lawyers and i also am not a

lawyer but it can devalue them. describe a little bit of the role that lawyers play in health policy in the health department. >> an incredibly important -- i would start with in the clinton administration i had a saying, and lawyer a a day keeps the subpoena away. [laughing] it did necessarily keep all the supreme court cases way, but what i believe is engagement with your attorneys, i have always viewed lawyers, and actual i'm not a lawyer but i have even been given the gift of a lax law dictionary when i left the department monusco because i so engage with lawyers because i believe your lawyers are your business partners. i believe lawyers actually have two functions that are quite important. they need to tell you the law and in issues like health care and health care reform it is extremely important, whether that is in rulemaking or

implementation or on a day-to-day basis. extremely important that they tell you the law. but they are people that see all your issues. your legal department is one of the most cost-cutting departments in your entire organization wherever you are. having them join as business partners, and it's not complicated. they can tell you when they are saying this is the law. now let me tell you through experience and knowledge what i think will happen if you implement that way, or if you read the law that way. i am here to give you legal advice but i'm here to give you broader advice. i thought our attorneys, and at omb, one of the most, people probably never reflect on it, but some of the most complicated and best lawyering i've ever seen was during the government shutdown.

you are operating in an unnatural state that doesn't happen with questions every day from can you, the coast guard, first time in three years, a coast guard death that needs to be flown back. what do you do for the family? appropriations law, everything all coming together. and then is it legal or is it assisting funds to have someone else -- you could return in a minute to get someone to pay for something out there. of course in one phone call, but was that legal? your lawyers and what the deal is crisis and then under day-to-day just in government and in policy in general extremely important. >> we have scholars here because as you mention the american general law ethics of producing an issue out of this conference. how did evidence inform your policy? >> every day. every day to i'll bring up an

issue that continues today, opioids. and as a put together our opioid strategy, again it was three parts, as we put together that strategy, it was extremely important. the research on medication assisted treatment as one of the key approaches to deal with those who do have addictions in the opioid space. it was the research that guided those priorities. the question of does naloxone which is the drug that you give to save someone's life, doesn't actually cause more addiction or not works these are the questions that, they are scholarly questions that are analyzed and studied across the academy that inform your decision-making every single day. research on e cigarettes, as a look to make rulemaking in the

tobacco space at fda. in addition to the research itself, withdraw from the academy, richard frank who is now back in the academy. maria who is at the administration for children and families build all of the modeling that we use to try and predict the flow of children. drawing from our colleagues at the department of homeland security and the state department. she built the modeling. academics and scholarly work used literally every day. >> my last question is, will the drama about health policy ever died down next is health reform a lifetime appointment? >> i would say that health care is a lifetime employment, but i would try to change the beginning of that. and i would change it because there's always going to be opportunity in the space. there's always going to be a place for us to go, , move, ando

better because it is something that impacts everyone's life. every day. and so, therefore, i think there will always be incredible opportunity, and i'm glad that so many people are engaged and focus on this issue. i think you hear my optimism about getting to attack the place. you can start to see it and i think we will get there. thank you. >> take you so much. [applause] -- thank you so much. [applause] >> i am pleased to introduce the next session which is entitled

hitting health care right. now, i might be biased but i think that we brought one of our esteemed alums to campus to speak on this issue, and dan hilferty is a a perfect persono lead this session. as so they mention dan is a present chief executive officer of independence blue cross, what of the nation's leading health insurers. since he became ceo in 2010, the number of people in discovery and its opponents have served has tripled the nearly 8.5 million in 24 states and the district of columbia. he has more than 25 years experience in the fields of health care, government affairs and including leadership positions at organizations such as amir health, keystone mercy, and blue cross blue shield association among many others. he is dedicated to the transformation of health care in america seeking innovative

technologies in new models of care that will both increase quality and a lower cost. i think that something we can all get behind. he is a sought after speaker on issues of leadership, health care and will of technologies in the data. he he's appeared in the "new yok times" the "wall street journal" on msnbc and other national media. he is among a very select group of nonperson health care leaders called upon often to inform government leaders and advise them on and limiting health care reform. i'm so pleased to have him back here on campus today, and of what you do please join in welcoming him to the stage. thank you. [applause] >> good morning, ladies and gentlemen. it is still mourning for the mormons, but good morning and

thank you for having me. dean nelson, congratulations to you on this incredible silty, this incredible program. and lindsay, i can't say enough about the work that you and think you do on regular basis, so thank you. it's my fate to follow great speakers. it we were in the well of the senate or the house of representatives i would definitely have exceeded my time to president burwell. jeanne, the two of you had so much fun over, we didn't always have fun will be met with you but you two had a lot of fun. [laughing] so again good morning. getting health care right is the challenge of our time. i believe this is the most important task before us as a society, similar to what sylvia said. and there's no better place to talk about it than with this group in this venue. because the key issues of health reform land right on the

intersection of the american society of law, medicine, and ethics. it's where you live. over the past eight years the american people of seeing nearly constant struggle over how the g should interact with medicine. and looming over the struggle of the most basic ethical questions. is health care are right for a privilege? is it acceptable for our leaders to turn health care into a political football? and how do we find a path forward from here? there's no turning back. i've been sharing my thoughts on these issues as a ceo dieter with them every day, as well as a concerned citizen, and we should be concerned -- dealing with them. frankly it is essential that your voices be heard, that your voices be heard on these important issues. this debate will not end,

because to build a sustainable system that gives argument access to high-quality affordable care we will need input from every area of expertise represented in this room from both academics and industry and from the public and private sectors alike. future generations are going to judge us on whether or not we got health care right. we are not doing every good job of it right about now. health reform has been the dominant legislative debate for eight plus years. that's five congresses and two administrations dealing with these issues. and yet we have less clarity over the past year than we had at any point during that time. the economic stakes are huge, 18% of gross domestic product picks him thinks that some think it's between 20 have 25% if

unchecked. the public health stakes are just as high. we spend far more on health care than do i economic peers peers around the world. we all know the statistics. we have the greatest clinicians and health systems anywhere. yet by some measures of outcomes lag. in the big picture, how we organize our health system will determine how effective we respond to crises like cancer, diabetes, opioid addiction as a crisis. or a potential major pandemic. we find ourselves in a self-perpetuating crisis, if we can't fix it, people get sicker and then they need more care and the system becomes even more costly, even more expensive. jeanne, you and your team should be so proud, the statistics show the increase in health care costs really slowed over your time in the white house. hour window is closing to

preserve the gains in and accee saw under the aca while getting control of costs. which makes this a bad time to be unable to agree even on the basic foundation of federal legislation. but i still believe a sustainable solution is within reach. this is why we work on this every day with our colleagues in health insurance come at the blue cross blue shield association with our hospital and physician partners, with legislators and community leaders, and with our members. let me take a step back. before i talk about what the solution looks like, let me tell you and will bit about my perspective and how it was shaped at home. it seems i've always been involved around big policy questions in the health care industry. i'm very comfortable at that intersection between politics and policy. in large part i can trace that

comfort right here to american university where i got my masters degree in public administration. i know i don't look this folder. maybe i do, 1981. anybody from the class of 1981? you are all too young. i came after graduating from stn philadelphia answered for nearly two years as a jesuit volunteer in the inner city of portland, oregon. i came here with great confidence and a promise in our democracy. i was honored to work on the hill from our my hometown congressman and witness the conservative republican president ronald reagan, and a liberal democratic speaker of the house tip o'neill bridge the ideological divide come to move america forward. i love every chance i get to come back here. i get that nostalgic rush of a different time in our nation's history. thank you to the washington college of law, the school of

public affairs and everyone at american for providing a venue, again, sylvia said, for this critical discussion. and, frankly, for bringing it back, rekindling my optimism, it's hard to be optimistic most days, on our inherent goodness as a people together, we can change our collective history for the better and it starts with health care. president burwell is such a pleasure to welcome, it was such a pleasure to be able to welcome her to my university. her incredible service as secretary of hhs, the leadership of our country so desperately needs and deserves. frankly, we need american university to be at the center of this effort and you are off to a good start. this is an incredible program. thanks again to test a focusing on health reform and thanks to all of you for taking the time

to participate. so there is a somewhat logical progression in my career path, even though it has played out over 36 years between my time at american university and the thin circle building and my role as ceo of independence. independence has been people in the philadelphia area for over 80 years here we are coming up on 80 years. overall, as vicki said we touched more than 8.5 million lives in 24 states and the district of columbia. to our blue ranted products and our american health subsidies, independent blue cross, our flagship brand serves 2.5 many people in greater philadelphia. we are the only insurer in southeastern and sylvania on the commonwealth exchange. and new jersey, we are one of two. and by the way, we are not going anywhere. they can keep throwing change at

us but we're not going anywhere. [applause] in total we cover over 300,000 people to the aca exchange. and by the way, i thought this was relevant to what i feel i d to say this. probably based on the way human talking, i'm actually a republican, but no, it's an important note because we have to change this dynamic. i consider myself a john kasich type democrat. i love every time he gets on tv it talks about the power of the private sector in partnership with government. well, if we pule away all the labels come if we peel away all the political rhetoric, what president obama, what his administration, what they did was create an opportunity, it was imperfect, it still isn't perfect, an opportunity for the public and private sector to work together to make change. and i want to script a little

because it's so important that we realize this is not a democrat-republican issue at all come back to that. independence, we have innovation investments and partnerships across our region and around the country. through our american health subsidiary we serve millions of medicaid recipients all across this great nation. i'm also currently finishing up my tenure as chair of the blue cross blue shield association, and i'm delighted that the work the blues are doing to work on making sure that health is accessible because as many americans as possible. we the blues represent 36 independent insurers covering 105 million people. one people. one-third of the nation's population. our brains is one of the most admired and highly recognized anywhere. so when i think about what a solution looks like, all those perspectives come into play. i'm a big believer in the power

of private sector innovation. of course in partnership with government. i want to see a health care solution that harnesses that power to transform the system. as i work with my colleagues at blue plans around the nation i see more clearly than ever that health care is best delivered at the state and local level, in collaboration with the federal government, guided by the federal government. so i want a solution that preserves flexibility for local health care solutions with federal support, and again, with guidance. i know any solution must start with a bipartisan agreement to do what's best for all americans. health care is not a republican issue or a democratic issue. health care is an american issue. nonetheless, it's complex and fraught with emotionally and politically charged rhetoric. that being said, i was

encouraged by the alexander-murray plant just last week. i know in pennsylvania, for example, we have leaders on both sides of the aisle like senators pat toomey, a republican, and bob casey, a democrat, who i believe, can you imagine, have been in the room with secretary mike leavitt and secretary sylvia burwell and say don't come out until you have a plan next they would get a a plan d. we need that bipartisan, that type of solution. they are not alone though. there are many in the halls of congress, many that represent the district where you grew up and where you live right now who are ready and willing to cross the divide to come up with a workable solution. so let's see if congress can come together, right, left and center about this measure. leader mcconnell, , who i think is a terrific leader, please use these leadership skills, run the

bill, save the affordable care act so that we can move on to it even better program for our country. the alexander-murray plan is aimed at the right targets, short-term affordability, increase flexibility, and the time and stability to transition to what comes next. whether you call it repeal and replace, whether you call it fixing the aca, it doesn't matter. from my perspective whether it's a tax break for subsidy, as long as we get people into the system, let's move forward with it. and i hope we can use it as a supreme court to comprehensive solutions for the long-term. because under our framework, for getting health care right, in a process must do three things. stabilize, , transition, and accelerate. number one, stabilize the system that is very precarious right

now. i can't tell you the number of calls, the interactions were having with 300,000 people, not all of them, but a strong number of them who don't know if they really can sign up on november. are not sure how, that's how it was in year one. we should be well beyond that. number two, manage a productive transition to whatever next iteration of health care reform is. and number three, accelerate innovations in care delivery and payment models to great true sustainability in the law. you just heard that a few minutes ago. none of that can happen without a bipartisan agreement right now. we should demand it. whoever you can talk to, demand that they sit around the table and get it done. one of the key elements of stabilizing our system, let's start with the millions of newly insured americans since the aca. burwell didn't really helped it

enough. according to the national health interview survey, there were 20.2 million fewer uninsured in 2016 and 2010. the truth is i like to look at it this way. when you look at the numbers of those have joined the exchanges, somewhere between 12 12 and 13 million by our count, and those have been part of medicaid expansion, somewhere around 16 million, give or take a few, 28 million americans today have coverage who did not have it prior to 2014. 28 million americans. [applause] >> thank thank you, and you guys deserve that. for all the sustainability issues, and these are real, 28 million covered is pretty exceptional. if you don't come if we don't have these folks in the system, what does it mean? will be a game show up in emergency rooms? we are on the cusp of turning back the clock.

we can't do that. we can't let it happen. short-term stability also relies on finding consensus on csr payments. these critical subsidies to the consumer have been used as a political concho. with the aca envision a long-term transition to a market-based solution that will cover more people and hopefully bend the cost curve. the csr as were part of that transition to bring some of the most vulnerable people into the system. and they've been part of our business calculations to set premiums at a maximum number of people can afford. for an audience of legal and ethical thinkers, the csr situation should raise an obvious question. is a contract the contract? we have to live up to our

contract contracts with our members and our customers and our vendors. shouldn't the government live up to its contract? shouldn't this debate be long over? just living up to that contract would be a huge step in reestablishing stability. once we do that we can talk about the logical transition to whatever comes next. that includes finding the balance between key trade-offs like federal uniformity versus state flexibility, a focus on subsidies versus a focus on tax credits and where the financial burden of reforming the system falls. the aca health financial burden of where it falls, the ac health insurance taxes waived this past year, this year, but will be reinstated in the future. this add-in another element of instability. this tax aims score at one stakeholder in the competition landscape, reduces our building to drive innovation and payment models in care delivery, but i

have to say this debate now on the floor of the senate at the time what of the senate bills failed, the ray number of senators who talked about we are not going to bail out the health insurance companies. the truth of the matter is if you look on 2014-2016, i may be off by a few billion dollars but not much, our cfo, forgive me for three numbers around, the insurance companies contribute 35, roughly $35 billion into the system but it wasn't the insurance companies. it was consumers of all elks hoop through their rates, supported the affordable care act pixel makes my blood boil when this comes down to we're not going to do a health insurance bailout. it's not been at the health insurers. it's making the system sustainable by giving consumers the break they need. shouldn't there be a fun thing process that brings all

stakeholders to the table, providers, pharmaceutical compass coagulant? what the next iteration looks like, there also needs to be a transition that gives everyone time to plan and keep continuity for people who need health care. it does the victims of a chaotic transformation are not insurance companies, even though which figure how to operate in an unstable terrain. they are not the legislators of one party or another trying to defend their seats. the victims are people who lose coverage or have inadequate coverage if we cannot find a comprehensive solution with a reasonable transition. the issues of stabilization and transition are difficult and critical and free only establish the baseline for long-term sustainable reform. now the good news. the good news, the next step, which we call acceleration actually makes me excited to

come to work every day. our goal is to accelerate the transformation of how we pay for and deliver health care in america. they key to long-term sustainability is not anything that congress does. they key is a collaboration and innovation by private stakeholders actually on the ground in health care, insurers, doctors, hospitals, the pharmaceutical industry, device manufacturers, and tech companies. we must work together, all of us, on new models to pay for and deliver care. the insurance industry this is what we put our energy every day, integrating innovations that promote quality, affordability and sustainability. ..

we are doing it in partnership with healthcare providers which is critical. partnership is critical. we can't do it alone, they can't do it alone. we have to move into this world together. companies have put value -based models at the heart of our business. we combined our contracting, health services and informatics into one function we call facilitated health networks. we build that function on principles of disruptive innovation. if you are familiar with the work of clayton christiansen, he drilled it down to three

principles and applied it to healthcare and his book. in order to disrupt how it's provided you need all three principles. the new business model backed by new uses of technology and a new type of network called a facilitated network. in our world we call them engage and enable and empower. it's a creation of new business model and healthcare payment. we are implement in that model at the most basic level, our contracts with providers. we are going to the largest health systems in our market, places like the universe of pennsylvania health system and jefferson health. as their contracts come up for renewal, we are telling them we cannot keep paying these accelerating rates every year. we have to control the base rate of reimbursement. these are the same type of

conversations that we are having with other pairs around our managed care products. when our pennsylvania senator, pat toomey, talks about capping the medicaid expansion at cpi urban consumer price index rather than cpi medical, these are conversations about the business model. we need to engage the business model with the accessibility and come up with a middle ground that works. at independence we are saying let's put systems together or we pay for outcomes and episodes of care and the transition to value -based care means we share a responsibility for those outcomes. we share the risk. you know what, they all get it. they all understand it. they want to work with us. these outstanding health systems know the economics just like we do. it makes it much easier to move into a value -based world

where we do it side-by-side with providers. in fact, it's the only way to proceed. the enable part of the formula is technology. health systems have electronic medical records of patients. everything that happens at the point of care. insurers have claims data which are also extraordinary powerful. our data tell a story of what happens to our members. every time you see a doctor, every time you have a test or fill a prescription. at the next level, we can link that data to democratic, demographic and financial data. we can get a socio- economic texture. when providers are willing to partner with us on value -based care, we can also exchange data and build a database around both claims data and emr data which is the holy grail.

we are starting to do that with these two organizations. we have an ideal situation to develop this working with pen and jefferson where they also have world-class resources for understanding data. the final, i want to give a quick highlight so we can begin to put an impact on some of these efforts. we have agreed to work toward episodes of care where we come up with a value. here's an example. they are so confident in the partnership that they agreed they will cover any involuntary readmission up to 30 days. i think it is the first in the country. i don't know if anybody else is doing it, one of the first but the truth of the matter is, we calculated the impact. the impact is roughly

$20 million a year in the savings to the healthcare system. one hospital, one episode of readmission, but think if you extrapolate that across the entire system, the billions of dollars in savings that we could find from various episodes where we agree to partner between payer and provider. i got excited about that one. i'm sorry. i might be repeating here, but the formula is technology. health systems have already done that. in the ideal situation, i talked about the company right up. this is how we think o make sure this business model and all this data have an impact at the point of care. it means building a

facilitated network which is a network of networks. it means connecting the primary care provider, the specialist, the nurses, social workers, healthcare system around the consumer. we link all these components by technology and we are building that technology with these two provider systems. our chief medical officer chairs the health information exchange for southeastern pennsylvania. under health information exchange, no matter where you wind up getting care, what hospital work doctor, your medical records can travel with you. we also have clinical care transformation teams and helps them implement the very collaborative model called for by our healthcare networks. they are coming to the table

to understand episodes of care, to understand how we define outcomes and pay for them. as i said, we are out in the real world doing this, doing what the president talked about. we had pen and jefferson, to the most outstanding systems up for renewal this year. both those partners are now contractually committed to principle the value -based payment and data exchange and clinical collaboration. our teams are exploring exactly what the value -based models look like as we go through implementation. with jefferson, they are a dynamic, innovative system that has grown quickly. they are working on new ways to treat diabetes and population. they are expanding the telemedicine and biometrics

for remote care. new approaches to prostate cancer. there are great ways to integrate a value -based model into these products, and we will find them, but the university of pennsylvania are really raising the bar for shared risk. talk about the program we are doing about readmission. this agreement, the jefferson agreement starts by lowering base rates and paying value for value. only when it's achieved to we pay. it comes together to share data at a real time. we have some of the most innovative american health systems in philadelphia that's why i am so optimistic, even with the legislative side of healthcare reform is not settled. if we can just get that basic foundation built and stable than the private sectors, insurers and health systems,

all the stakeholders have the ability to collaborate on a system that works. that is my perspective and i remain excited and committed to tackling this challenge of a lifetime. i'm also lucky to be in this room of passionate experts, researchers and thinkers. i would like to open the floor for your comments and questions and learn from you, but before i do, allow me to offer a brief call to action. to begin with the same thing i tell everyone i speak with, we must demand of congress they reach a bipartisan agreement on the issues in front of them. your opinions carry a lot of weight. please make your voice heard. beyond that, keep doing what you are doing. keep putting the focus on healthcare reform, that it fits in the context of our legal system. how'd affects the health of

populations, how it reflects the moral compass of our nation and how all of these things are interrelated. through everything you can to inspire, encourage and support innovation and let us together build partnerships that will make our society stronger and our population healthier. thank you very much. [applause] >> any questions? i know we are little overtime. this is good. we will get to lunch pretty soon. >> are you participating in any multi- payer demonstration and what are your thoughts on trying to merge incentives. >> obviously health insurance is a very competitive

environment, but we created an entity called hand i'm health a few years ago and what we do, we are going out to independent primary care practices and we are giving them the tools and the technology to build an inner relationship with their patient and with the health systems they interact with. we've decided that we wanted an advantage for a period of time so it's just participating through tanned time. coming this year, we are opening it up to other insurers so that it will become agnostic. we believe the truth of the matter is, these have patients from all insurers. i don't know that we will let everybody on but it will be a multi- payer system and we are very interested.

this is something that would be unheard of a few years ago. when we first, when they acquired our then pbm, i said to our team, how soon can we move. i received a call from the team and they said give us a chance, come see what we do. we were so impressed with them that we will keep them. i think competition at the high-end will continue and we will fight hard and they will do the same with us, but when it comes to the back room, the tools that we need to use through everything i tried to say in this talk, it's no reason it can be agnostic. our philosophy is we will go down that pathway. >> thank you. >> thank you very much. have a great rest of the conference. [applause]

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to today by your cable or satellite provider. >> spokesman sarah sanders will answer reporters questions about the partial release yesterday of kennedy assassination documents and a number of other issues facing the administration for that will be live at 230 eastern on c-span. supreme court justice ruth bader ginsburg will be at an event for equal justice works. live coverage starts at 4:00 p.m. eastern and available online at cspan.org or listen with the free c-span radio app. coming up tomorrow, hillary clinton, amazon ceo jeff and billie jean king will attend the human rights campaign annual dinner here in washington. live coverage beginning at 7:00 p.m. eastern on c-span. also online and with the free c-span radio app.

>> this week on q&a. >> they were shoving. i was a little bit behind him and it kind of intensified. it looked like he was gonna fall to the ground and at the time he was a 74-year-old man so i just did what any decent human being would do when you see a man on the verge of falling, i grabbed him by the arm to make sure he didn't fall, but also i was afraid, i don't know how many but i was really fearful from being separated and left behind so i took his arm. when i did that, that's when it's all turned on me. summary pulled my hair and body slammed me from the other direction. >> college professor discusses a violent protest on the campus last march following a scheduled lecture by charles murray. watch allison 80 stern on c-span q&a.

a live picture this afternoon when the american university conference on healthcare policy continues, former congressman will join a discussion on the future of the pharmaceutical marketplace. they cosponsored a law that inspires drug companies to make generic drugs. former hhs secretary sylvia burwell on the future of healthcare reform. >> i don't have a law degree myself, though i have more than my fair share of supreme court cases named for me. if i could just log one complaint about my previous job, it was not one but two lawyers who failed to warn me that once confirmed, all court

cases switched to my name. the first, the burwell family council, my husband, steven burwell, the second, the 44th president of the united states of america, and i'm just saying, a little heads-up would've been nice. my transition to american university is interesting, exciting, and challenging. i joined a passionate engaged campus, community thinking, learning and doing things about the world's most interesting and important problem. one of those we are talking about here today. i've taken on a new title without ever having gone to a diner in iowa. rather than look back, i am pleased this conference is looking forward. our nation's healthcare system has come a long way in the past seven years.

we've helped more people access coverage and care. we've improved the quality of health care coverage for american families, and we have started to bend that cost curve, freeing up resources for today's working families and for future generations. when i say we, i mean our nation as a whole. this isn't the work of government or business alone. it is the work of policymakers and positions, advocates and attorneys, patients and families. as this conference proves, they are not slowing down. when i started planning for these remarks, i looked very closely at the agenda and two things came to mind. first, jealousy, as my team reminded me that no, actually could not block off two days on my schedule and come and listen to all of the sessions. but second, and appreciation for the yang and the yang an

apparent in american healthcare. there are very few areas of policy that were once so comple complex, and actually, so simple. today's agenda speaks well to the complexity from payment incentives to federal and state coverage of young children to the challenges facing payers and providers, this conference gets into the vast ocean of complex legal regulatory, and moral questions that churn every day in our healthcare system. this complex system is grounded in a simple reality, in moments of joy like birth or pain as in a sprained ankle , or fear and uncertainty as in a fight against cancer, we all count on the system to care for us and for our loved ones. when i worked at hhs, the complexity surrounded us. we spent late nights and early mornings waiting through reams of briefings and studies, thanks to all the academics in

the room for producing those. we spoke with over 100,000 providers to get their input on rulemaking. we worked to try and understand how the system was working, where there were opportunities, and how we could use our short time at the helm of this ship to deliver meaningful impact to american families. to those colleagues were still at hhs today, career public servants who deliver impact for the american people through transitions and transitions of power, let me say it was an honor to serve alongside you and our nation's stronger for your service. [applause] at hhs, impact was our north star. our goal was to tether our conversation and our analysis to fact, to experience, and to the reality on the ground. one sees this reality everyday

at hhs. you see on the campuses of the national institutes of health where our nation's top medical researchers are crossing the next frontier of our understanding of diseases and cures through things like precision medicine. on the campus of the fda where our nation safety and innovation are front and center. you see it in the fearless men and women who pack their bags, left their own families to save families in west africa from ebola and are always ready to make that perilous journey whenever they get called. you see the reality as the provost mentioned, in headstart classrooms where young minds of today have the chance to become both our scholars and our leaders of tomorrow. you see it in healthcare professionals, some in this audience this morning who are out there trying to build a better healthcare system. this is the duality of the intricate complexity of our nation's health care system in simple outcomes that everyone

is working toward. today i want to focus on a simple frame, one that orients our discussion on where we want the future of reform to go. i want to talk about how we approve the access and affordability of our nation's healthcare system and i want to highlight how leaders in washington, our nation's businesses, and the american people can maintain the progress. first, access. in november of last year, our uninsured rate had dropped below 9%. that is the lowest it had ever been. between 2010 and the first quarter of 2017, the uninsured rate fell from 16% to 8.8%. that is historic progress. the largest decline in uninsured since the launch of medicare and medicaid. but, it still leaves more than 28 million americans who are uninsured.

connecting these people with coverage of the problem of will, not strategy. we know how to maintain the progress we've made and move forward. nearly half of uninsured adults say the cost of coverage is prohibited. our nation can take steps to help them. we need to actively get the message out that coverage is available, especially to communities were those messages don't often reach. we also need to raise awareness, and potentially financial assistance for people who shop on the marketplace and make sure more people know that the financial assistance that is there today is actually available. last year, eight out of every ten people shopping on the market qualified for financial help. most could find a plan for somewhere between $50.100. month. more awareness and more assistance will lead to more enrollees and therefore more access. that reminds me, just for old times sake, it's about to be november 1, the start of open

enrollment. in courage your friends, your family, even your random twitter and facebook followers to go to healthcare.gov or call (#18)318-2596, and for those of you who are spanish speakers, go too. [inaudible] and shop around. the affordability of our healthcare system is intricately tried to people getting coverage. since the law passed, the share of americans who can't afford care has fallen by more than one third but affordability has been improved for just the newly insured. for the 157 million americans, that most of us who have health insurance to their employer, family premium sat down at an average rate of 4.5% in 2010. that's down from an average of almost 8% over the previous decade.

affordability extends to what taxpayers spend as well. medicare spent $473 billion less on personal healthcare expenditures between 2009 and 2014. that is thanks to the lower rate of cost growth. in the context of the budget conversations going on, thinking about that $473 billion number and put it in context. finally, the third way we can measure our progress is quality. hospital acquired conditions like adverse drug events, infections and pressure ulcers , declined by 21% between 2010 and 2015. by linking those accomplishments to mortality statistics, that prevented 124,000 deaths. most healthcare plans in the individual market didn't cover maternity care.

one third didn't cover mental health. almost one in ten did not cover prescription drugs. under daca, there is coverage. while the law is imperfect and there are many ways it can be improved and changes will make it better, there are indeed, some benefits that are a reality. a very clear and simple reality for many american families. another reality is the direction that our healthcare system is moving. we often talk about delivery system reform separately from the discussions of daca, it is important to reflect that it was part of the act. some of the most important changes in models that we are using to move forward on affordability and quality come from daca. like the center for medicare and medicaid innovation, and the ability to support accountable care organizations. they also stem from other laws like the medicare access and chip rea reauthorization

act. you probably didn't need to say that here. it was passed with overwhelming bipartisan support. these changes are part of the change that is occurring throughout our entire healthcare system. our healthcare system is undergoing what i believe is a historic change. many of you are well-versed. you've advocated for change, some even cleared the path for them. whatever your perspective in this room is, it is clear our nation's healthcare delivery system is entering into a new era. while i serve the hhs, we developed a three-part strategy to support our healthcare system in making progress. first, change the way we pay for care. payers are rewarded for the quality of care rather than the quantity of services. second, change the way we

deliver care by promoting coordination and prioritizing wellness and prevention. third, unlock healthcare data and information. doctors need to be able to make the most informed decisions and patients must be active participants in their own care. at hhs, we implemented the strategy with a simple philosophy. where we need to lead, we lead. where we need to convene, we would convene and where we need to get out of the way, get out of the way. at hhs, we committed to have 50% of medicare payments go through value -based contracts by 2018. when we left, we were ahead of schedule. at the same time, commercial insurers were venturing into value -based payments on their own. in january 2016, we estimated one quarter of all healthcare spending was in alternative

payment models. the delivery reform movement crosses ideology. our administration advocated for as democrats and republicans, like my predecessor who started some of these efforts, former secretary mike leavitt, and former senator bill frist. as a few of my colleagues recently wrote in the new england journal of medicine piece last week, the delivery system reform effort is what they called and empirical learning approach to health reform. it's based on experiments, evidence and careful observation and learning. as they concluded, it is essential for this approach to continue to meet the nonpartisan goals of better care, smarter spending, and health your people. delivery system reform requires persistence, and i'm hopeful as the new administration settles in that they will see the same value in alternative payment models as we did. it's an opportunity that leaders from both parties have recognized. it will be important to keep

moving forward, supporting programs like bundles and aco's that reward providers for better care at lower cost. it will be important to fully expand programs that are proven to reduce cost and improve healthcare like the diabetes prevention program that we modeled and it will be vital that offices like cmi can continue to innovate and find ever new ways of providing better healthcare while bending that cost curve. many policymakers and private-sector leaders are in fact moving forward. i have been encouraged by the ba bipartisan efforts of a number of governors and peepers like some senator alexander and patty murray. their bill and the process through which you came together represent the way we can get things done. together, with more than 20 cosponsors across both parties, they have the opportunity to make improvements on top of the

basic measures of access affordability and quality. i have been encouraged by entrepreneurs and private-sector leaders will step forward on delivery system reform. at hhs we started the group called the healthcare payment learning action network. it was a public-private partnership to encourage the adoption of alternative payment models. more than 6500 people joined, including 130 organizations that actually set their own goals in this space. i know after i speak, you will hear from friend and colleague who is the ceo of independence blue cross and an au alum who has also stepped forward in the space. today in american healthcare, there is no such shortage of complex change and news, but through all of this complexity , i think a simple reality

remain remains. that simple reality is actually why i am honored to welcome you to american university campus. it was a little over a century ago, in 1895, that a young aspiring attorney named sheldon jackson asked a woman to apprentice her as a student of law. these women, like countless other women had been denied admission to a number of law schools. legal professions for the women who did manage to study law were few and far between. they hosted the first session of the women's law class and they enrolled two more female students. the barriers that stood between these young women and success in the legal field were numerous, and quite complex. they believed in a simple truth. the system needed to change, and it would start with them.

three years later in 1898, the washington college of law was founded. it became the first law school in the world to be founded by women, the first law school with a woman dean, and we now have two, and the first law school to graduate and all-female law school class. the keynote of success is the readiness for opportunity. the simple reality of american healthcare is the opportunity is now. for years and decades we've had conferences in advance to discuss the challenges that stand in our way. with the leadership in this room and across the nation, i believe we can overcome those challenges. i know our nation will be successful at building a better healthcare system, because like alan and the pioneering women who came before, we are ready.

thank you. [applause] >> good morning. i am jean. i'm a senior fellow at the century foundation, but also the former deputy assistant to this president of health policy, and i am privileged to be here today to call you not madam secretary, but madame president, which is fun. it has a nice ring to it. i am here in part because i was able to witness your leadership and skill and tenacity at managing the lead agency. in that perspective gives you a lens on this health reform debate that few others have. i want to begin with my questions on a main focus which is the system of reform. i know that was jumpstarted when you arrived.

we would all like to know, how did you develop that strategy, who was involved in how did you get results that quickly. >> before i answer the question, i want to say something about jean because a modest person who i had the opportunity to work with her from 1990 on in healthcare, and you will not find a person who knows the issues more in depth across the whole range when working at hhs and had omb time and policy time and just an incredible wealth and dedication to the kind of change that i was talking about at the end of my remarks. [applause] in terms of the question of putting together a delivery system, i will say a few things about strategy making in general and the specific

example. in putting together strategies at different places and different organizations that have had a chance to be in, i generally think about three circles, what is the problem, what is the solution space, what are we good at, and the objective is to get yourself where those three things overlap. in a strategy process to think about being clear where is that you are trying to go, that is a big part of what the problem is about. the other thing have had the opportunity to learn from different types of organization organizations, the bill and melinda gates, in terms of their core strength and walmart where execution is one of their core strengths what i find is you actually have to think about both of those that once because one without the other will not achieve the result. some big picture thoughts. with regards to specific issue , when i came to it, there was the realization that we had a short period of time, but as

we are moving forward, implementing hearts of the affordable care act that were so focused on the access part that affordability and quality needed to have deep focus and needed to do it in a strategic way with priorities that we can move forward over a limited period of time. bringing together a number of different parts and pieces, we were very fortunate at hhs to have patrick conway, as many of you know, and karen balsamo who were partners in leading that effort. looking to see if any of the team that was part of this, it was a process because to get that kind of strategy and do it quickly and the engagement of our white house colleague, jean and others were engaged from the beginning, and that was important because when you get to the other end you want to stretch strategy that's informe informed. being informed by the real world was a very important part of the strategy.

they were practicing positions in addition to the role they had. they brought a number of perspectives. what we tried to do was get a number of perspectives around the room. those who worked with me, they know i prioritize and i generally work. [inaudible] getting this to the three things was probably a process and there were probably five iterations in terms of what we did but that was about bringing the people together, working off where we had been, and a lot of work had been done previously before we got there. a different approach in terms of how active we would be occurred, but then we decided to put together the strategy. as we did, and jean, you will probably remember when you got the phone call when i said i wanted to start them out care goals, the idea that i was going to commit the federal government to something on a deadline was not necessarily a common thing to do during administration, but there was complete support and by an for

doing that and it was important. when i look back at the strategy, having the three pieces of the strategy, that actually was important because it did three things. it was very important signaling for the commitment we were making that we were coming to the table. the federal government wasn't just saying okay everybody, you do it. this was us and we would have to meet it and that kind of skin in the game is indicative of we are here and serious to play. it also indicated direction. for everyone on the outside, i know that's a very important thing and we heard that in terms of where are things going. if you're running a business, if your provider or consumer. >> that was a choice you made as you looked at the array of priorities and the problems. unit recently had your first day here at american university. what were the challenges you faced, not by choice but by

necessity on your first day of secretary. >> there were a number of them. the first day i went, i was confirmed and went straight to a meeting and had conversations with them because of the immediate things we were facing was making decisions on the technology. in order for us to do and to end testing emma which i was insisting we would do for the marketplace, i had to make the technology decisions and my predecessor was great in that she wanted those to be my decisions but felt it was appropriate if i was going to be responsible, i needed to be able to have ownership of those decisions. i immediately needed to make decisions on the technology and what we are going to do in the marketplace, at the same

time actually, within ten days, there was a little decision, hobby lobby versus burwell you may have heard of it. in that same period of time, smallpox was discovered in a refrigerator that the fda and nih shared. summary hadn't checked it for 50 years and i'm there for ten day days? and then, within 20 days, i stood up the command center, it was that up for almost my entire time of secretary for ebola. then, not even a month later, over the children.across the border and what i think many people don't realize, it was tens of thousands, over 40000 that year. children, under 18 coming from off the border, children as young as four or five. what i think people don't connect is that is hhs.

most people think it's dhs because it's the border. dhs, within 72 hours, has to have those children with us because we care for them until we can place them in a place they will be safe and cared for until they have their immigration proceeding. and so, for me, it was the volume of crisis, the number and the volume of crisis was the first day challenges. they walked into knowing the things around the affordable care act. it was the number and volume that was a challenge. >> as you know, the administration is looking for the new secretary of health and human services. if that person were sitting in this chair today, what advice would you give to that person? >> run. no. run into the fire.

>> it's actually my very strong belief. i would start by saying first and foremost, understand the incredible people that are at this organization. civil servants dedicated no matter which administration, what point of view, through faxon substance. first i would just say no you are walking into place where there are incredible resources. number two, i would say, it's very important to be aligned with your president. understanding -- >> my name is aaron, i am an associate professor of medicine at harvard medical school. i run the program on regulation therapeutics in law which is an internet engine in her disciplinary program between pharmaceuticals and laws and regulations and clinical outcomes. we arehe