captions copyright national cable satellite corp. 2008 the government's involved in an area, so we've taken competitive -- what's happened in health care? the vast majority of competitive forces have been taken out. and so consequently we don't get a response for efficiency and good allocation of a scarce resource. we just overutilize it. and we consume it inefficiently. right here up front. >> i respect your point of view, but the concern that i have is, how would you guarantee that the folks you labeled the government elites won't be replaced by free market elites?

>> well, the free market -- i guess the only way that could happen is if you didn't have this board that would say, i'm taking away your possibility, and that's why we put this oversight board in terms of what's being offered, but again, i would tell you is that you can still have medicare. you can have it just like it is today, but it's got to be competitive. in other words, it's got to, we have to drive fiefficiency in i. i would tell you that market forces aren't perfect. i would agree with you but they're a darned sight better than any government bureaucracy i've ever seen. i don't know what area of the federal government that is both efficient and effective. because the motivation is you're spending somebody else's money, and so you ask me what our experience is, in the last 230 years in this country.

my experience tells me that we have done much better when we've trusted markets than when we've trusted elites, and where is the virtue of the elites? do you really trust their virtue, rather than yours? and the market forces? why is the average home in the united states 800 square foot larger than anywhere else in the world? why is the standard of living and the wealth of this country higher than anywhere else in the world? how'd that happen? did that happen through government elites managing a part of our economy or did it happen through market forces that allocated scarce resources and people actually making choices that were best for them, rather than what was dictated to them by a government board. when you can't get, if you can't get the services you want, or when the preventative services task force says, i'm sorry,

you're now 75 years of age, we're not going to do a mammogram on you and diagnose your best cancer, because it's not cost-effective in terms of the value of your life. if you want a government bureaucrat to decide that for you, i'd say you should absolutely oppose what i'm saying. i trust american people more than i trust american institutions and i think american people will look out for them and theirs better than any other bureaucratic organization can. >> claudia anderson, "the weekly standard." i'd like to understand better how this financial incentive works. you say the price, the premium support goes into the account for the individual and say the individual has a good health year and there's something left at the end of the year, then that stays in the account, and then the next year they get a new premium support? >> it doesn't even have to stay

in the account. if you're a seen issor, and you bought a health insurance policy for your medicare, and it costs less, you can do with it what you want. the whole point to this advisory committee is not allow the games that are played in insurance to cherry-pick or undermine your health condition. so that we create a real competitive model that does two things. one is it guarantees you cover a a age. number two it drives toward prevention. what do we know, still in this country the first symptom of the vast majority of people with heart disease is what? death. why should that be? why is it when it's a

preventable diagnosable disease. people whose first symptom of heart disease is they drop over dead, so what we want to do is both drive prevention and the management of chronic disease. we don't have health care in this country. we have disease care, and what we ought to be doing is how do we revert that back to health care where we prevent disease or manage disease effectively, so if you have 20 different companies competing for your business, and they know you're going to still be there, then what we want them to do is they want -- we want them to invest based on their own profitability in your prevention of a major disea disease. >> i have several questions, one is for you as a doctor, sir. how do you think treatment changes or differs as a result of medicare and government dictate? >> how do i think it changes?

the first thing i think it changes based on medicare is doctors have no concern right now for what anything costs. there's no penalty for a physician ordering tests that aren't necessary. tell me what it is. if i have a patient that comes into my office that's referred to me that saw a doctor four days ago, and they did blood work, and i look and say well i can get the blood work back right now or i can spend an hour with my nurse trying to find online, i got to first of all meet hipaa requirements, so i got to get everything signed so that i can have your information, because i might accidentally disclose it and they can't trust that i can call them and this is dr. colburn, would you tell me those results because hipaa doesn't allow that anymore because they can't know it's dr. colburn. how do i do what i need to do that's both efficient and

effective? what drives me to do that? blue cross/blue shield knows my profile as well as every other insurer in oklahoma. they know whether i'm an efficient physician. they know whether i order excess tests. they actually have a profile -- every insurance company in this country knows everything about every doctor's purchasing habits. they actually measure each doctor by what it costs them to care for an identical diagnosis. one of the things that's happening to medicare patients, because doctors are opting out, the people who are not opting out of medicare are not the best physicians. the ones that are opting out are the wunones that don't need medicare patients. so market forces should reward doctors who are efficient, and get there. well, who knows that? medicare knows it, too, but you know it's anybody that wants to -- as long as you qualify for medicare, you're eligible, you're going to get paid.

there's no market force on the quality of the physician, but there is, if i'm way outside for blue cross/blue shield, you know what happens next year? they don't want me. they don't want to allow their patients to come see me, because i'm not an efficient or effective doctor. that's one of the things that is really positive. i have another story, i don't have time to go into it but suffice it to say we resisted an insurance company who offered us a contract, my former partners and i, for caring for a large number of people who worked in the industrial plants in my hometown. we told them no, it wasn't enough money, and we said go find out whether or not you think we're efficient. well ultimately they came back and offered to pay us 20% more than they were paying anybody else in town, because we were about 30% more efficient than the rest of the doctors in town in this one large group. so what they did is they looked at the data, and what they found is they want to have physicians that are efficient that don't

overorder tests. we don't have any of that mechanism going on in senior health care because there's no penalty if i overorder tests, and you can't develop a bureaucracy big enough to micromanage that. you'll never do it. you'll spend more money at bureaucracy, just like we do at cms today. >> kerry williams. senator, we know that a disproportionate share of medicare expenditure goes to those in the last several months of life. given the fact that fee-for-service would remain an option, would you see first of all people perceiving themselves better off who are in that condition in fee-for-service, and if so doesn't that leave a significant exposure in the m medicare system? >> the assumption is as they get

older they get out of the insurance and back into that. i think there may be some of that, but again, the biggest problem we have with seniors today, part of it is, is we have two big problems at the end of life. one is the threat of lawsuits. you can have an advanced directive, and a living will, and i've been in this situation a number of times, i've taken care of a patient for 20 years. they come in with a late term event or the hospitalization prior to their late term event, but you know, we're getting towards the end of life, and they have an event that's happening and i'm wanting to follow their advanced directive, and a grandchild or a niece comes in and says, you're going to do everything, and i say, you know, and this happened to me, i said "no i'm not.

i've had a great conversation with your aunt. i've known her for 20 years. i'm not about to do aharm to your aunt." "well i'm going to sue you." i said what you need to do is just fire me as her doctor. i don't care whether you're going to sue me or not. i'm going to do what she wanted. the fact is, most doctors won't stand up to that. they hear the word "lawsuit" and start running. the other thing i would tell you is why is it if in fact that in advanced case there's no connection at end of life with the cost. the key thing i would tell you that's different about our proposal is that medicare has to stay competitive, so we're mandating that whatever this average cost is over here, that's where medicare has to be. and so what we will do is drive it towards that. in other words, you as a patient can't cherry-pick the program, because the program is going to have to stay competitive with

the private market. >> joshua booth and it' it's #seniorschoice. the question i think you'll find this interesting, joshua thinks that your plan sounds like the affordable care act, exchange of subsidies, market forces, is this just extending the individual market rules of the affordable care act to medicare? >> i don't know hardly any market forces that are working in the affordable care act. that's number one. there's no true exchange. what we're doing is there's a lot of real market out there. all we're saying we're going to make sure whoever is participating in that market isn't cheating seniors in terms of quality or actuarily equivalent programs. i feel greatly insulted that's compared similar to the affordable care act. >> my name is blair furlough,

i'm an economic development consultant here in washington and also a member of the no label citizens movement. really appreciate your remarks, senator, and your emphasis on the importance of the budget, informed decision-making choice, accountability and the importance of a robust representative government. i think those of us in no labels, particularly not only are some of our systems broken as you alluded to some of the problems with medicare but congress is broken now, too, and we wish that members of congress were all about the importance of the budget and informed decision-making, accountability and representative government, and i wonder if you could share with us your thoughts. you've seen how sausage is made on capitol hill, and we the taxpayer taxpayers certainly have some skin in the game not only with what happens to medicare but many other important issues. what can we do that could help

fix congress so that some of these same principles you've talked about today could be part of the decision-making process under way so that thoughtful proposals such as the one you've described can be honestly considered and debated? >> that's a good and tough question and it's going to get in trouble and i don't mind being in trouble with my peers. i think the first thing you can do is quit sending career washi. the government we have, american supreme sent the people that are here here, and they're wonderful people and they have great hearts. the fact is, most of them lack a frame of reference about what the real world is like. when you take somebody that has never had real exposure in the real world on real issues that require blood, sweat and tears,

and hard knocks, and you have people without that who have been in a political position the whole time, they're working at a deficit, and the deficit is the real world and common sense, and so if you look at the senate, 65% to 70% of the senate is filled with people who are the exact opposite, ron johnson had no political experience whatsoever, and what's his number one thing? fixing our problems. he doesn't care about the politics. as a matter of fact there's more conflict on our side of the aisle with guys who want to fix the problem rather than politics. the second point is that it hurts decision-making in washington is everybody is think being the next election which means they really like the job, and what we need is people who hate the job, like i do, but want to fix the problem, and so what i would say is, if you want to fix washington, you can do

process reforms, and it will make some impact but it's not going to change until you change the motivation of the people that are here, and it's always the next, the horizon is the next election. we will fix it after the next election. when we're more secure, and that just goes back to human nature. kind of like senior buying medicare. everyone wants to get stroked. politician's stroke is getting reelected. i think what we should do is fix -- you know, we have the capability to fix every problem in front of this nation right now. that capability is there. the problem is if we fix it, we'll all get fired. great! let's fix it and all go home. the point is, is most people don't want to go home. i can't wait to get home. i would tell you is you have the congress you've sent here because you have, as americans, have decided you're going to put

your vote and your vote with career politicians who tell a big story but the action -- they're great selalesmen but thr action is far different to what you've been sold. there's a bipartisan bill, i think 37 co-sponsors called the fast act which will address tons of the fraud that's occurring today in medicare. we worked with cms to develop this bill, why isn't it on the floor and passed and sent to the president? it has nothing to do with medicare and everything to do with the next election. there's hundreds of things like that. there's 27 different jobs bills waiting that have passed the house that aren't going to come to the senate floor, not because the country doesn't need them but because it doesn't fit with the scenario of the next election, so what is the

motivation is, we ought to be americans first and republicans and democrats and independents second, and you see exactly the opposite of it. we can change the process we want until you change who is coming up here and what their motivation is, in terms of being here and getting the stroke, you're not going to change it. next question? >> dr. colburn, i very much appreciate the idea that market forces and consumer choice can really control our health care costs and improve the system but i worry it doesn't operate like a true market not just because of government involvement but because of the imbalance in information between consumers and insurance companies primarily but also consumers and their actual care. i'm wondering if you've considered the patient's senior choice act supports tools to help seniors understand what

they're choosing when they choose their health plan, not just the monthly premium which is probably the clearest thing on your paperwork but also the kind of benefits you're receiving, the care, coordination and other supports you're receiving and out-of-pocket costs you're exposing yourself to. >> i think that's a great statement and a question. we have looked at that. that's part of what this organization is going to be that's going to control this system. we have it right now we have 15 supplemental plans in medicare. we tell them what you can put out, what you have to put out. it's not any different than that, the same thing. the question is, is can seniors navigate that, and up to a point, yes. but i would tell you that my mother died a year and a half ago, and my brother and i helped her navigate what the choices were, when she no longer could do that. so we're talking about a very small group of people that are not going to have family involved, in helping them make those choices. the question is, is how do you keep the bad actors out and how

do you keep those that want to cheat in the system and how do you have enough transparency so you know when that's going on so seniors aren't being taken advantage of? that's the key. i'd go back to the other point is one of the reasons our health care is out of control is everybody thinks somebody else is paying the bill. and you know, i'm the first to admit that market forces won't solve everything, but i'll guarantee you they'll solve it a whole lot better than what we're doing today, and there will be people that fall through the cracks. it won't be be perfect, but the allocation of that resource to actually apply dollars to make somebody have a good health outcome is going to be much better than what we're doing today, because there will be a consequence for a doctor overutilizing something because they'll be being watched by the very people they're contracted with, in a private insurance that's competing in medicare that they're not going to do it

inappropriately, and there's no controls, there's no brakes on this system now for bad behavior in terms of the market, and what we have to have is the question is, can we have great health care for seniors and have it in a way that's much more affordable than what it's going to be in the future? and i think the answer to that is yes, and that doesn't mean we trust markets 100%. that means we let markets work but we make sure we have the controls so when market starts, if we have a bad actor in that, it's identified and they're gone. >> senator we have time for one last question from the audience and one last twitter question. >> okay, right up here. >> you said many times that a big factor is control, you know, finding the physicians that overutilize as a criteria. what are you going to do to

protect against the ones who are going to underutilize testing and that sort of thing so they appear good and score high? >> well, first of all, i think that there are two different aspects to your question. one is laziness. the other is whether or not you have a physician that's committed to your health care, and i'll tell you if you have a physician that's not committed to your health care, it doesn't matter what system we have. you're going to lose on that. i can't see a guy, if you come to me as a physician, if i'm really a physician, and i'm not talking about being a doctor, i'm talking about being a physician, which is what we should want, and i'm going to cut a corner on your health care so i look good? i've already violated my hippocratic oath. the difference is, i can look good and somebody else pay the bill when i overutilize, but you're talking -- and that's the whole point of where we're going right now.

guaranteed medicare is not guaranteed quality care, and is not guaranteed access, and the choice is, are you going to have access to a doctor in the future? that's the first thing. we're going to have 150,000 shortage of doctors in the next ten years in this country. the doctors my age are all saying see you. i'm not messing with this anymore. i've had it. so i would say the motivations on both sides of that question are different. could that happen? absolutely. that happens today. that happens because when you go to see a doctor on average, they don't spend the time they should be spending with you to actually listen to you about what's going on with your health care. that's happening today, because medicare underpays primary care doctors, and so what do they do? rather than set down and spend 45 minutes with you to hear what's really going on and get paid for that, which medicare

won't pay them for, they spend, you know, you go in, the average right now is less than 30 seconds before they interrupt you, with you telling them, because they got to get busy to see the next patient, so what do they do? they hear part of what you say, they order a whole bunch of tests to cover themselves, and walk to the next room, because they're on the treadmill because medicare set up a payment system that says you can't make it if you actually spend the time with the patient. we won't reimburse you for doing that and there's good studies coming. we have a new group of doctors out there that have said i quit it all. i'm going to go into concierge medicine. you pay me a flat fee. i'm yours 24/7, 365 days, you get a comprehensive exam, see you, talk to you any time you want. these doctors are telling us this. i'm finally getting to practice medicine the way i was trained, i get to sit down and listen to my patients. on average they're ordering 40% less tests because they're actually listening to the patient. the insurance companies that are actually covering some of these

are actually spending less and getting better outcomes, reduced hospitalizations, because we were all trained, no matter what you do, listen to the patient, they will tell you what is wrong with them. and nobody's listening because we have a system that says get on the treadmill, here's all we're paying you, and i can't pay my nurses if i practice medicine the way i want and get reimbursed for medicare. that's why you're seeing people not wanting to take new medicare. so what good is a medicare program if you can't get a physician? and if you can get one, what good is it if they won't listen to you? so i would tell you the downside is continuing the status quo, because it's going to get worse, and we know that. we're seeing it. >> senator, i'm afraid that's all the time we have for questions today. on behoove of the hudson institute i thank you for coming here and for your leadership

issues and wish you a happy 64th birthday yesterday. >> thank you. see you all. [ applause ] >> we have more live coverage come up today in about half an hour, 30 minutes from now, live to capitol hill where fbi director robert muller will be testifying before a senate appropriations subcommittee on

his agency's 2013 budget request, and proposal calling for $8.2 billion, that is a 1.4% increase from last year, that hearing will be live on c-span3, beginning at 10:00 a.m. eastern. and an c-span officials from the nuclear regulatory commission will testify on safety issues, one year after the nuclear emergency at in a january peace fukushima daiichi power plant. the nrc ordered major safety changes for the u.s. nuclear power plants last week. the industry has until 2016 to put those changes into effect. that hearing will get under way at 10:00 a.m. eastern, again on c-span. and then coming up at 1:00 defense and foreign policy scholar also discuss the u.s. national security agenda in the middle east, north africa and the asia-pacific regions and the role of national security issues in the 2012 presidential election. that's hosted by the american enterprise institute, it will also be live at 1:00 p.m. eastern on c-span. yesterday the atlantic

hosted a day-long economic forum in washington. up next, gene sperling, president obama peace national economic council director, who defended the president's policies in responding to the financial crisis and recession. this is about 30 minutes. >> gene, as many of you know, has been in politics for more than 20 years now and served in the same capacity in the second term of the clinton white house, if memory serves, was the negotiator on the bipartisan budget deal of '97. i think that cheryl sandberg, formally of treasury, now of facebook -- she's ki. >> she's kind of doing okay. >> she said i've seen heads of state cower before this man. maybe you can tell us a couple of those stories. and "the washington post" recently referred to you as obama's jobs creator, which is

actually a pretty mighty responsibility. so i thought we might as well start there. there have been signs lately of what seems like a slow and steady recovery. i think that's been the view on this stage today. yet we remain in a very deep jobs hole, consumer debt remains very high. what is a realistic range for the unemployment rate in six, seven months now? [ laughter ] >> it's a great idea for people in government jobs like mine to make projections where the unemployment rate will be. it always works out well. [ laughter ] and there are never any unexpected headwinds or unintended consequences that get in the way. so it's a great idea. but i'll probably take a pass. [ laughter ] so here's what i would say. i think people here know the basic story, which is basically