my four little children will one day live in a nation where they will not be judged by the color of their skin but by the content of their character. [cheers and applause]

to do thank you very much ladies and gentlemen for coming. our topic today is medicare the largest health care empire of the american system a huge and growing federal entitlement. a little more than 10 years medicare will increase in

employment from 65 million to nearly 80 million enrollees, a total program spending will double. today roughly it's $1 trillion in 10 years it will be nearly $2 trillion. at the same time medicare is rapidly changing the today roughly half of all senior citizens aren't rolled in medicare advantage, the system of private coverage which is the leading alternative to traditional medicare. medicare advantage is a defined contribution system and what that means is at the government makes a contribution of although half of thee beneficiary to the beneficiary's chosen plan. given current trends in medicare advantage send be the dominant form of medicare coverage. the question before the house and before the nation is a very

big one. that is how do we provide high-quality medical care to a huge and rapidly growing older population at a cost that is affordable not only to seniors but also to american taxpayers? in our new book "modernizing medicare" from johns hopkins university press, a dozen of our colleagues in the health policy community have provided very specific answers tot that question. three of them are with us here today. brian miller is a practicing physician and assistant professor of medicine at johns hopkins university and a fellow at the american enterprise institute. john goodman is present at the goodman institute. dr. goodman is a prominent health care economist and is widely known throughout the united states is as the father of health savings accounts.

douglas holtz-eakin is president of the american action form and a former director of the congressional budget office. now with the debt limit facing the country you can expect to see douglas holtz-eakin on your national television shows giving the debt limit and all the other problems that are connected with it. with that ladiesd and gentlemei would like our guests to come up and join us. we will have a discussion about medicare. brian i'm going to start us off. right now as you know millions of senior citizens are voting with their feet and in polling in private medicare advantage plans which a defined benefit

program, medicare advantage as opposed to traditional medicare which is a defined benefit program. you deal with this in chapter 6 ofr the book published by hopks press.ity what are the inherent problems facing seniors when they had to make a decision on whether to enroll in the original medicare or medicare advantage. >> first of all thank you for having us and for the program. medicare today is two different programs traditional medicare andme medicare advantage. when youk are in the employer market and you pick your health benefits you are signing up for health plan either self-insured health plan or you're purchasing a plan product but when you end up in medicare are or replace things are a little different. you turn 65 and you develop

end-stage ring of the essays are out aosc qualify for medicare you sign up for traditional medicare its hospital benefits in physician benefits then you also have two pick a prescription drug plan and the traditional medicare program has no catastrophic out-of-pocket limit. then you pick supplemental coverage so you've made three choices but the alternative of course is picking medicare advantage where you have one choice. you're getting traditional coverage. you're getting supplemental coverage or medigap coverage and 90% of plans include the prescription drug plan and you get supplemental benefits in your plan. some have vision and hearing. if you think about it you are 65 years old and entering medicare and you have three or five chronic conditions you are on a fixed income, you have a limited number n of assets. you don't have an incident. you can't spend m all that you

want to so making one choice and getting into greeted health benefits packager sounds like a bunch of gobbledygook but for the average consumer it's much easier to make that choice. that choice has financial protection. they don't have the make as many choices in the. off of course is there a catch? or size a cost of the cost of beneficiary is the except the network. they can see the doctors in the health care network so if you are working for 30 years and you have health insurance with your employer and you have health insurance exchange you had a network. you didn't see any single dr. so that. off for today's retirees is nott so scary and there is utilization review and access controls. it's a trade-off that the beneficiary says i'm going to get more benefit a more financial protection. i can have limitations on how i use that.

>> richer benefits and more convenience and frankly it's easiero to choose because you ae making one choice is a three choices. >> the other offenses there is so many plans. it's more affordable in many cases. >> it's moreca affordable to the beneficiary because if you do purchasese traditional medicare and pay premise for that in the up to pay plan premiums than medigap premiums and good luck being 70 or 80 or so the turn to get vision dental or hearing coverage in the private market. you can get it in the private market to your medicare advantage plan. >> john in 2003 republicans in congress enacted the medicare modernization act which created medicare advantage programs a system of private plans is the alternative to traditional medicare. a feww years later congress with

the support of president obama enacted the affordable care act and obamacare created a system of private plans state-based health care exchanges. on paper job they look very similar. they seem very similar but you make the argument that in fact they are quite different that medicare advantage works much better than the health insurance exchange. can you explain why that is true? >> yes they are similar on paper. they are different in practice and that's why 50% of seniors are in the medicare advantage plan and in the obamacare exchanges the non-subsidized part of the market was going away becausebe no one was buying until congress can long an added on subsidies from people making half a million dollars a year. what's the difference?

medicare advantage is the only place in our health care system where the doctor discovers a change in your medical condition and he can forward to that information to c the ensure and get a higher premium for his client. that's why in medicare's today you have special plans with specialized diabetes and heart care and other illnesses and what attracts people with these problems it's the only place in the health care system where this is happening. there is no employer plan in this country that was employing high health care costs. there's no commercial ensure and there's nobody in the obamacare department. they are all trying to attract a healthy and run away from the sick. in regular traditional medicare 10,000 things that medicare pays doctors to do and not one of those 10,000 has as its

objective that your job is to make the patients healthier or cure disease. inic the medicaid advantage problem -- plans, plans lose money if they don't make people healthier. this is george halverson former chairman and ceo of kaiser who says in the regular medicare plan 20% of diabetic patients get put on alternatives and 20% of those turn into amputations. this country is spending eight a billion dollars a year on amputation. over in the medicare advantage plan by contrast in the moderately successful once they have half as many ulcers and a third as many amputations. now they do things that are probably not on the list and things that regular medicare pays for so one of the ways you prepare for an invitation or alter you make sure your patient

is dry socks and dry shoes. i don't think these are things the traditional medicare pays for. blindness and a problem with older diabetics and again we have much higher rate in the medicare than the regular and advantage plans cost $100,000 a year for an affectation and $30,000 a year for blindness canvas just -- congestive heart failure a significant differenci in outcomes in medicare advantage than traditional medicare. so these plans act differently. they are financial incentives are different. halverson says the death rate for dualat eligible patients is 40% higher than medicare advantage. i will say one thing if you read what george halverson says any read articles in health affairs

you would think we are describing two different worlds. my only problem with halverson's description as he calls the medicare fee-for-service and calls medicaid advantage decapitated. our best plans are planned fee-for-service but the distinction is how the doctors pay. over here we have an integrated coordinating care with the objective of keeping people healthy ander over here it's not integrated and not coordinated and people make more money when the patients get sicker and require more treatment. >> thank you very much john. in chapter 12 of your contribution to the book you do cost estimates that show that a comprehensive defined contribution often referred to as premium system driven by consumer choice in a rather robust competition would result in major savings for both

medicare patients and also taxpayers. your focus chapter, your chapter focus is primarily on taxpayer and beneficiary savings. i think the question though for a lot of americans is the need or the desire to move into a premiumon support system for comprehensive defined contribution system. it's the desire to reduce health care spending the only reason for moving in that direction or creating a premium support system for medicare? >> absolutely not. i focused on the beneficiary because -- you told me, very good. [laughter] >> it's nice to tell the ceo what to do.

>> nice tie, paul paid the most important part of the story is the lessons we have learned in other settings. the power of having competing plans and supplemental benefits. what things in addition to care will allow them to stay in better health improve their outcomes look at the medicare part d program where we harnessed private negotiation between pharmaceuticals and the plan fosters to deliver robust competition and let individuals pick among those plans to get the formularies that match their needs the best and the outcomes that they preferred and in that process we get extraordinarily high beneficiaries gets us -- the m satisfaction. 80 to 90% are extremely happy with where they are and it's way

cheaper for them in the taxpayer when we scored it in 2003 so we have learned that we can infused into the health care programs for the federal government to respect for individual values. they get to find what they think is important in the robust competition of the private-sector to serve the taxpayer and the beneficiary think respecting the values in the competition are the important things in way more important than the dollars saved on the federal budget although i would say we need to. fun facts that you should not use it cocktail parties because you will have no friends. the medicare program by itself is one third of all health care. this is a program that was never designed to be financially stable and we want to get that

under control of behalf of future generations and we want to serve medicare beneficiaries better and there's a way to do that. senate that's an important point because because medicare aside from the fact that spends so much money and as you point out this contributing to our national debt medicare is governed by a very powerful regulatory regime. the medicare bureaucracy referred to as the center for medicare and medicaid services cns and for years of course this bureaucracy sets prices as john pointed out sets prices for 10,000 medical procedures and over 3000 -- trapped in that state frankly doesn't do a really good job of that that medicare advantage and the coming of medicare advantage basically introduces a new dynamic into the system and that has an effect on the medicare bureaucracy.

i was going to ask you brian as a medical professional dealing with senior citizens and so on how this medicare advantage as a system this competitive system of private plans change the role of cms and the lives of their patients? >> i want to respond to something doug said about beneficiary choices. i had a patient who had six doctors and a bunch of meds and she was a pretty smart old lady. her medicare advantage plan modifications to her bathroom so she could get in and out of the bathtub and a chair so she could go up and down because she had a two-story house and was on a fixed income. she was on a dual eligible plan. she was medicare and medicaid dual eligible pay to remember

talking to her and she was going to get her teeth pulled and get dentures and i i asked her how e did that. she said i took the one plan that would let me do that and i said okay but what about your doctors? she said i picked a new cardiologist for this year and next year after i get my teeth fixed when open enrollment is, and again i pushed back to my other plan with mild cardiologist after she got her teeth fixed. beneficiaries can be pretty smart in a good way. she beat a multi-million dollar company and while it was fun for me to see as a physician when you think about that if we improve the plan finder and give beneficiaries better choices we show them how they can shop for the comprehensive package and m.a. plus medigap plus part v which he talked about.

we can empower consumers to make those choices and dried beneficiaries. your question about cms is very much focused on levels began will cycle rolled all these roles, one of them was 1500 pages recently and all that does is it favors people inside the beltway and analyzes it for the appropriate stakeholder. you have that usual cycle of medical. shows up around the time and there's a stream of people going into the various buildings of the capitol capitol. cms focuses on payment levels so you have all these payment levels where everyone on the former secretary said you don't have the transition from volume to value. that allows the potential for

cms to stop focusing on riding 1500 page roles instead focus on the application and focus on plan regulations and which is what i think both parties want in the medicare program. >> to benefit seniors. smith can i express a concern? i don't think cms understands there's a fundamentally different delivery platform than traditional g. if you got a plan with a quality standards in your providing the defined contribution and we talk about making both of those better why do they need to know what happened in the counter? they are trying to micromanage the cma plan in a way that is at odds with what it's trying to accomplish which is to deregulate the system to get

better outcomes. i worry about the future of mma. >> a good point. john goodman and the private-sector and you were largely responsible for this in many ways as a result of your work with congress many years ago promoting relentlessly the idea of a health savings accouna so people could make money, could make tax-free contributions to build up an account where they could use that money for routine medical services and protect themselves against him for saying health consequences. we have millions of americans today in employment health -- employment-based health insurance but we don't have them for senior citizens; senior

citizens have health savings accounts? >> here's something leather people don't understand. the health savings account for non-seniors is the' best savings account there is. it's better than an eye or a better than a 401(k) and the reason it's better is because during your working years you can save in at the time you reach 65 and enroll in medicare you can use your health savings account deposits to pay your part v in part v prams. you can't do that with an ira or a 401(k) and even if you are healthy for all your working years you will probably exhaust your account paying those premiums during your senior years and still never pay taxes at all. with when congress created this account they realized if we allow seniors to get a tax deduction for deposits to the health savings account and they turn around and pay their

premium with it that's the equivalent of lettingth them deduct their part v premiums and we are already giving so muchoro seniors and they were not in the mood to get another tax deduction to this group of people. that's why seniors were allowed to do this but there's a solution s and i call it the roh health savings accounts and the idea that you don't get a tax production for making a deposit. you put after-tax dollars and then it's tax-free but in this way we have an account that's not very expensive from a budget point of view and it will allow the third-party payer to put money into this account for the chronically ill. you might say to a diabetic if you manage some of your care will put money in an account for you and if you stay away from emergency rooms and that money is for you and if you are not compliant to go to the

emergency-room annual bear the cost so you get the benefits of your good decisions in a bear the cost of your bad ones. seniors need an account it just needs to be a roth account and not the traditional account. >> doug, proponents of this concept of defined contribution comprehensive pre-defined contribution has a way to refer to as premium support have often demonized this is boucher rising medicare. i've heard this over and over anagain and frankly going all te way back to the 1990s with the thomas proposal and so on. how do you respond to that criticism? >> well one if it gets you something really good and vouchers are fine but more to the point they think at the time

of the discussion 15 or 20 years ago the dominant medicare program was the traditional fee-for-service program in the defined contribution was radically different and unfamiliar it was easy to scare seniors with vouchers and privatizing and all the things that have worked everywhere else in the economy. now with medicare advantage you have a subsidy from the government and a private plane and you get to pick the one you want is the most popular form of medicare. morean than half of the enrolles beginning next year so it doesn't look all that different -- all that different people have boucher iced it and we are trying to improve the quality of what they get for the decisions that they make. >> the thing that is remarkable

about this the democratic national convention a couple of conventions ago there was a lady who got up and address the country basically saying the republicans were goingng to give senior citizens a certificate, a voucher where they'd have been negotiate with the private health insurance company. that was a demagoguery. and that always i remember i got into a rather spirited debate with somebody in the media and asked them well i want to ask you this. do federal employees get a voucher and of course the answea is no. this is thing going on for a long time in the point about the psychological. it was to scare senior citizens that they would be left alone somehow. >> the oldest thing in policies is to t get there first and convince him that your idea is good and their ideas bad and

people still use the term trickle down economics. i have no idea what they are talking about is just a word they pick to signify their -- the most important part is one that joined -- john pointed out. if you are sick or you get one in if you need c or care to geta good quality and come the system provide you with more resources and that's far from making it the certificate that everyone gets. that's tailoring it. >> if i may it's interesting that private medicare produces health benefits which is not an oxymoron it'ss not something you see on a tv commercial for the movie office space. it's the real thing. you go back to the 1980s and you look at private medicare plans medicare fee-for-service

didn't have a prescription drug benefit could something like four-fifths of private medicare plans did in the 80s when we had the reporter: cell phone. if. it's delivered by the private marker place that's as 17 year delay in the recent debate we had over adding progressive colors wanted to add dental vision and hearing to traditional medicare. that came from private competition in the marketplace where the benefits are already available. one of the things in the future of medicare for beneficiaries in market competition is something that will benefit them. >> let me ask you this. we think is the source of this intense opposition to this movement in it like to ask all three of you themi idea of

transforming medicare and took competitive market? what is the real guts of this opposition? in other words what is the motivation. >> it comes from the idea that self-interest is a bad thing and health care. if you've ever heard bernie sanders say there should be no profit motive anywhere in health care and he really believes it and he's not the only one. i think that's the biggest problem. they don't like markets and they don't like poor frog -- for-profit businesses and i think that's it. >> it breaks down to payment silos. everybody every health care sticker is all for change. so that's the big thing. >> i would say something

different. the annual payment cycle the fee-for-service you know when that's going to come out. there's no full game hundreds of pages of comments of every possible stakeholder that has a financial stake in that and then there's the final one and they are familiar with that. that's a centralized authority that they can go one argue with. if we take that away or treated as one of many options which is bunch more likely and more practical than they lose that power and the world as they know it has changed. so the i end of the dramatic change. the loss of control basically what you're talking about is a radical reduction in the armies of lawyers lobbyists and consultants. >> it really is. my generation will be able to afford a house in d.c..

i will say the loss of control is not necessarily a bad thing because it puts control in the hands of the beneficiary but the whole point of the medicare program is to give health benefits for the beneficiary and not for corporations or doctors or bureaucrats of cms or lobbyists it's for the beneficiary so we do work these changes slowly over time essentially it's good for the population. >> it's interesting you mention that because our colleague always used to refer to medicare as the buyer centric system and the patient's centric system. all the activity in the house and the senate is openly trying to figure out how to rejigger the payment formulas to get the right formula. and their colleagues have a

different specialty. i want to follow-up with you brian on something that is preoccupied doug and that is the whole question of fiscal responsibility. you know a number of us who are watching the state of the debt limit and extending it in so one and are looking at what seems like spending and the spending threshold and i know i'm showing my age but the idea of an annual trillion dollar deficit is stunning really. it's just incredible and we are developing as doug pointed out, we we are looking at a situation where we are having accumulating a large and dangerous debt. her friends dug up the sepia talk about the potential of a fiscal crisis which i don't think americans understand the gravity of. ii don't know how far way we are

from it but in the case of medicare advantage zeroing back to the medicaid -- medicare advantage program brian following up with what doug raised and that is the framework and the way medicare advantage is structured is the way it programmatically organized how do you see that contributing to the promotion of long-term fiscal sanity? >> it would i be a nice change d something we don't get very often,ou right? the medicare advantage program, we need benchmark reform that something i had been incidentally involved and in great detail. that aside. >> the benchmark reform so people people understand refers to the basis upon which the federal government makes contributions to a plan.

>> right. that's something that needs to be addressed and policy will address that medicare advantage is like putting your house on a budget. we have our mortgage that we pay pin our grocery bills address and an amount that we pay every month. medicare advantage is structured the same way. it's a risk adjusted for health and paid per member per month in per beneficiary per month. that's a good framework for budgeting. we can debate about what the appropriate decapitation return debate about the risk adjustment methodology and we should have that debate. everyone isdv having those debas right now i'm medicare advantage. their articles about risk adjustment. the general principals of having a population-based budget for the medicare program is something that could allow us to potentially budget for medicare for maybe the first time in a

thoughtful fashion ever. >> doug you have some observations on that? >> number one think that the single most important thing you can do for medicare from a fiscal perspective. they behave accordingly and providers of for device manufacturers and pharmaceutical manufactures and beneficiaries realize there's a finite amount of money available to do good things so getting them on a budget by some mechanism is incredibly desirable. there's a lotout of agreement i on this across te aisle. i don't think they realize it. on the left you hear a lot of talk about how we act to create the medicare program a bundle. the hip untilbu in need bundle d a set of services and there's a bundle and quality outcome. that's putting services on a budget and on the right you medicare advantage.

it's onee big bundle with metrs with decapitated contribution. there's an agreement about how to do this. this is more comprehensive and neither is perfect. there's a great deal of improvement for sample that i think would come from better quality metrics and the most important is a consumer willing to buy your service that they don't have anywhere. so that's the advantage of doing this that there's not much disagreement. it's the scale. >> is the scale. that's pretty remarkable. you think there's a bipartisan way? >> i didn't say that. i think there's hope. >> the level of policy design there's an agreement about some of these benefitsse and that's what you see going on. at the level of selling reforms in getting legislation through congress there's a lot of work to do.

>> allowed that the seniors are choosing for us because they medicare advantage market penetration the programmer at-large has increased. >> every year for the past decade and recently surpassed 50%. spezza kaiser family foundation came out with their report which is 50% now which is quite remarkable. what's even more remarkable is her friends to write the medicare trustees report every year have always underestimated the growth of medicare advantage which looks interesting. john i have a question that i wanted to askk you about. your provocative proposals in theze book "modernizing medicar" most people think when you sign up for insurance you should sign up once a year and that's it and

basically the argument is the course we want market stability and we want stability in the market and you have an enrollment season people make their decisions andons they enl they get their coverage and that's's it until the next seas. we have been doing that in private health insurance for forever. we do it in huge federal employee health benefits programs and we are doing it with medicare advantage. you however john want to change that. you want to have a situation where people can make a decision to enroll in a different plan when they think they should enroll in a different plan. imagine some of her friends in the insurance company would be very nervous about this. and i would like to hear your argument. i think other people are listening to this program especially on youtube and they'd like to hear why you think there

ought to be a continuous open enrollment. >> not continuous. close to it. we have a strange asymmetry here. if you are chronically ill whether you are an obamacare exchange or medicare advantage you look at the networks of different plans and you can choose from among them and you will choose plans based on what doctors are in that plan. basically after you've made your choice you are stuck for the next 12 months. the insurance company on the other hand after you've made your choice and after the open enrollment period and they can change their network and this is happened and they are a tragic consequences this happening where people have been denied access to a cancer specialist for example that they thought they were going to have access to. you are right the insurance industry says we had continuous open enrollment that would be

disrupted although i'll point out we used to have in the individual market continuous enrollment. what i propose you'll be stuck with the planh you choose unles your health condition changes and you have a new health condition you get a heart condition for example you should be old to go immediately to the special needs of heart care and assimilate to the diabetic plan. change in health condition change in the network that you have access to especially if there was a doctor trading you and now that doctor is no longer doing that work that ought to be in the plan. and let's call it partial enrollment. i think that would benefit everybody. >> let me ask you this. how do you respond to folks in the insurance industry and elsewhere who might say well john that sounds great that you

are really promoting adverse selection system and we want more instability in the market and as a result of bad that will jeopardize the viability of a lot of the plans if we had that kind of a system. how would you respond to that? >> the asymmetry is unfair. the insurance company can change its network at the drop of a hat that the patient can't make a switch. i think senator wyden announces staff found on these aren't good once. several of themwo their networks doctors in the claim that when the network worked there. that would be -- we need to make themhe possible -- possible for people to switch plans especially when their health is at stake not because they happen to change their mind on a whim

but for serious health care reasons there ought to be a way to do this and the whole idea behind medicare advantage is you have risk-adjusted premiums and when your health condition changes your plan is entitled to a different premium above way a higher premium and that's the way this works and that's why it works the way her well and plan. we have a special >> let me follow up on this a little bit. >> during the special enrollment period you have your medicare advantage and your six week period and you have a feel months where you could make a change. beyond that you can't change plans until the next open enrollmentol period. >> it sounds like what you're proposing is for exogenous things that happened special moment period to allow people to switch. >> yes but it needs to be, it

needs to be close to supplemental. it's when the event happens. you've been get four weeks to sign-up for a plan. >> effort if you're health condition or your provider method changes or they lied to you. >> insurers are granted discretionary medical care. i'm trying to agree with you. it's not like me. [laughter] >> remember we are talking about somebody who used to tell congress what to do. >> in the exchanges for example in virginia a couple had a daughter with a rare cancer and they had one clinic and the only

clinic that dealt with this cancer and they chose the plan and after the open enrollment closed the plant kicked the clinic out of their network and by the way in the obama exchanges if you go out of network, this family was mistreated. .. i mean we're talking about you know, we're talking about continuous enrollment and it brings up another question, it's not another whole which is somewhat controversial with regard to medicare advantage. and that is the way in with regard to medicare advantage. that is the way in which we have a risk adjustment operation. a risk adjustment system and medicare advantage. some of thees arguments that are being made, especially by some of our friends in health affairs is the risk adjustment is so

flawed it's such a fundamental flaw in the system that it basically is an argument against the system. risk adjustment is a complicate area. it is an important earth medicare advantage and medicare advantage going forward. doug, jimmy thoughts about how we should improve the risk adjustment? what haven't the most important thing will be to stop developing the risk measures on the service population. you ought to delete risk adjustment on the ma population. risk adjustment is different than forecasting the particular procedures a patient is going to get. starts going down that road and you are in a mindset. i have a a characteristic of an individual. they have aids, then identified

pre-existing condition. married, unmarried, take this characteristics and then you just do that. you don't pay attention to what goes on inside their care. what is the outcome in terms of cost of care for quality? do that math it's just math that does that. they have a service mentality. what's happening is they're comparing the medicare advantage plan to traditional medicare. the problem with those kind of comparisons doctors know or should know they're going to get more money if they have real medical problems. he very careful with the

document. there is no extra payment to get everything down on paper about patients. a recent article in the "new york times" made a big deal about among the marriott medicare advantage plans some find more heart disease and some find more diabetes or complications than others. the implication was these are finding a lot of problems are making it out. i think it's the other way around. it's in their financial interest. i don't think they're making up those numbers. the best plans keep people healthy. you don't wait untiled the foot needs to be amputated. these are not all equally good. fifty-one overall improvement

that needs to be made in a medicare advantage needs to be more competitive. they ought to go out of business. they are not doing what they should do. the problems in houston if you have diabetes and make insulin free. to make the trip to the doctor free. and it is free because it pays a pretty keep the patient out of the hospital and you make money. the more competitively make this market the better quality of care.ad >> i agreed you, john. traditional medicare you don't have an incentive toen code all the diagnoses. i have my iphone in my pocket there is an app on it which tells me of my diagnosis coding i get anal alert isaac diagnosis

codes.s. doctors ignore that. they ignore the mentorship and ignore the phone. i would say it's definitely under coated. we see in health fair articles as we pick confusion pete cap coding and coding intensity. coding for something that is not usually there. coding intensity is what we are talking about. finding the diagnoses that are there that have not been accounted for or specifying more complications or just adding clinical specifically. adding clinical specifically is good for a clinical for clinica. socially market regulator if plans are finding more diseases or coding more diseases and coding the complications it is uncommon upon policymakers to

give up land incentives to do something with that information. i'm not angry at health plans necessarily atng finding if you are finding more we should give them an incentive to use that information help the beneficiary. rather than eliminate the incentives to code appropriately. >> it seems like we are going forward on risk adjustment and payment we have got a lot of work to do in terms of crafting some performance for medicare advantage i'm right about that is that correct? is that's right,nk doug? there is aan bipartisan -- could there be a bipartisan interest in reforming medicare advantage?

or do you think there is hostility? quicksand is an interesting question. you have to understand the democratic mind. don't like a medicare advantage those are for-profit firms. they really like medicaid. i'm not sure they realize most medicaid patients are being taken care of by for-profit managed-care companies. but if they could get over that of course the two could come together.ha a lot of their constituents on the heavily concentrated urban areas that are easier to serve. absolutely.

so you are right. at 72% of medicaid advantage care. for the irony they are of not liking medicare 50-point to% rtmedicare advantage. you talk about competitive bidding whatever you want to call i it. the federal health employment benefits program which we have talked about many times it's a premium program of the weighted average. the exchange is also a premium subsidy. what is c wrong with thinking about how we can beat more be morefiscally responsible for medicare? creating a better platform future generations or my generation has access to medicare benefits? this is an important question. it's a simplee question. we have already answered it and

away. we want you to expand on this a little bit. moved from system, premium support is to harness the power of consumer choice to basically enable people to bring choices for them. and not to drive efficiencies in the healthcare system. but here is the issue. you hear it over and over again. if you're talking about a population that is older, 65, 70, 80. is it really a sensible strategy for older americans should make these kind of choicess effectively? if you really look like all the back to the 1990s the basic argument against moving in this direction is the complexity off healthcare was so overwhelming ordinary people could not make

these decisions and experts could only make these decisions. doug, you talked about this. >> we are not asking for with everything ing their lives. we are asking them to make important choices with trusted advisors and family members and does mean they can't do that. and healthcare alone there's some really complicated sins. it's a red area and not the reality. we make, located decisions a lot. we do not understand the technical aspects of them. how do they work? we don't know, right question what you have advisor networks.

and financial markets we do that in product markets but we do this everywhere in the economy. they are making the same decisions i'm still not sure why my 9-year-old mother needs a cooper many but she's got one, right? they are participating other places there is a philosophy of respecting their ability to make choices and giving the help they need to make h that. everyone said though never be able to this is too hard for seniors. it has worked very, very well. perfectly, no but very, very well. looks john? >> the most natural person proceeded to turn to for advice about health care plans as senior's primary health care physician. we have really muzzled these guys. during the obama nears a

physician could not tell they had the same as the medicare advantage plan. even under trunk there's been deregulation. a doctor cannot encourages i patient to join a medicare advantage plan that he is a member of. we need to un- muzzled the doctors who have come up by the way, the most information about plans and how they work. what would be good for the patients they are treating. i was improving the plan. they go look for a house looking.com, kayak.com, airfare, hotels, you cannot you even use air b&b to reserve a house. we make complex decisions all the time with help from others. but for writing appropriate information. create a structured passion but we can ando should do that for medicare thought about premium

as part of premium support is tracing treating purpose and putting them on an equal playing field, right? what is said about risk adjustment five starting ratings for traditional medicare?re none of this should be a handout orar subsidy. the viable public option and preserve it for the future but that is a conversation i don't think the policies have had the progress of the vitally important point. we are all participating many complex sectors of the economy.g for example like retirement and financial planning and so on. mostrt of us have limited expertise in these u areas. we rely upon advocates. we rely upon family, friends, so on in order to make these decisions. i am told by the economists, you

guys there are market leaders in many cases or get 10 or 12% of the entire demand a site of the equationch will actually determe the direction in which things go. it seems in this case medicare etadvantage seems to be doing pretty well with regard to the rather massive increase in enrollment over the last several years. ladies and gentlemen who think we are coming to the end of our program. i would say this. over the next 10 years were going to spend a lot more on medicare that we do today simply because the sheer size of the senior population and with rapid medical technology, the cost of delivering medical care on the per capita basis is also going to increase. so thehe issue is not so much hw much meese we spend the ultimate issue is are weakening the best value for our medicare dollars?

higherfo quality of care at an affordable cost? higher quality care i think our view would be higher quality of care is not a product of bureaucratic central planning. our colleagues who have contributed to this wonderful effort i've made the point choice and competition in fact work. it is demonstrable. if you are interested in the details of how choice and competition can work improving the medicare program check out our new book modernizing medicare, harnessing the power of personal choice and market competition from johns hopkins university press. all good things come to an end. and so is our program at its end. please give our panelists a hand. [applause] thank you all very, very much for joining us.

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