>> my name is thomas cloud, i'm a reporter with cnsnews.com. you mentioned market forces and consumer choices being the key to solving medicare. if that's the case, why not simply just phase it out and replace it with a cash subsidy directly to the person and let them chose among whatever with the cash. >> it's not cash, it's a premium support which is a payment and allows them to use it. so in fact if i'm 65 years old or 66 ten years from now, when i'm medicare age, i will get a deposit into a health account of a fixed amount. if i buy something that covers and meets my needs, that is less than that premium support, i pocket the difference. in other words, it's essentially what we're doing. what we're saying is, can you

take that same thing and buy traditional fee for service medicare or you can buy any plan out there that meets your needs. we're essentially saying that, but still, have you the guarantee of having the ability to buy that every year. we don't allow the -- that's why the committee we've set up to oversee this, makes sure we don't get cherry picking, you don't get caught with an illness you can't ensure. what we're essentially doing is, what you suggest but still allowing seniors who don't want to go there, who say i don't want to have to make a choice about what's best for me, i want to stay in fee for service medicare, you can do both. you can stay in fee for service. fee for service will have to be be competitive with the average costs of those plans. what it does. it not only causes the insurance industry to have to compete for

these dollars, but it causes medicare to have to be ago actuarily accountable. one out of three dollars in medicare isn't helping anybody. we're trying to squeeze that to one in 20 or one in 25. if you want to buy something better than that, if you're well to do, and you say, i want to buy something better than this, can you buy something better than that. but you'll never get less benefit than what you're getting today in terms of the benefit you receive. the problem where we're going with with medicare today, the system we have set up is a promise with no access. ask somebody that's going on medicare today how easy it is to find a new medicare doctor. 40% of the physicians in this country aren't accepting new

medicare patients. and that's growing every year. why is that? it's because medicare isn't competitive or they're overly competitive in some areas and under competitive, like the disruption and maldistribution in terms of physician specialties and primary care. market forces would take care of that, where as a controlled elite system run by washington doesn't take care of it. >> if you're 50 years old today then if you say you're going to get the medicare benefits of a 65-year-old today let's say 25 years from now, if you ex-trab late the trends in health care, if people really understood that, they may say that's insufficient or a lot less than

what medicare is promising me now. medicare is promising me at 75 i'm going to get -- as health care spending rises relative to everything else, i'm going to get a much bigger share. so doesn't that mean that at some point people have to be told that they need to save more if they want to spend anything like the share of spending of health care that's expected 25 years from now? >> i think that's a great question. i think that discounts the fact that 1 in 3 dollars doesn't help anybody. and can we use market forces to make it more efficient so that that incremental increase in cost isn't there. ask yourself why are health care costs rising? is it all technology? what is it that's causing -- forget the demographic numbers, the increased numbers of seniors. let's say the number seniors is going to stay constant.

why is it rise something because there's no competitive forces and there's no connection with overutilizati overutilization. the age old joke is, why do people come see you. they come see you so it's -- it's cooler in my office in the summertime than anywhere else in town. and it doesn't cost anything to come in and see you. that's an extreme example and i don't mean to say it applies. but the point is if you have market forces, and if you have a need, we're not promising a medicare that's like today tomorrow. what we're promising is quality health care that is affordable for you that is not rationed from washington that both you and your children can afford. and we're also saying, if you're 50 today. you're probably going to -- if you're 50 today, you're probably not going to receive medicare until you're 66 or 67.

we have a slow incremental increase in the age of eligibility associated with that. but the point being, can you allocate a resource better than we're doing it today? and there isn't a study out there that says we're allocating resources very well. every study says we're allocating them terribly. let me give you an example, the new health care lawman dates physicians will use i.t., right? we're spending -- we're giving every doctor in the country $50,000 to buy a computer system. we've taken your tax dollars and given it to every doctor in the country. here's what the first exam has shown on utilization of i.t., the doctors who can get their tests through a computer in terms of diagnostic x-ray tests, whether mri, ct, x-rays whatever it is, who can get that through

the aide of i.t., order 14 to 18% more tests than doctors who don't. if something's easy to utilize, guess what happens, it gets utilized. what we know is, all these supposed benefits on i.t. aren't going to drive any efficiency, they're going to make us have a more compact medical record that nobody looks at. if you talk to doctors in terms of a computerized model now, who are using it because it's got so many spots, they don't look at it, they put a note at the bottom of it, and says, here's what i did. now we're playing the game on i.t., but we're not going to utilize it, and it's not going to save us significant money. it will save us information money on when somebody doesn't have something over here and you need it, you can go get it, but right now the first test out of that is it causes increased utilization rather than decreased utilization, with no change in outcome for the

patie t. >> the question from twitter is, do you think things might change if mr. santorum or mr. romney wins in november? >> well, i think -- you mean on health care? here's what i know assen accountant, a businessman and a physician. we're on an unsustainable course. we can say -- we can tell the political lie, don't worry about medicare, nobody's going to touch it, and then we're going to reach a bump in the road where the international financiers are not going to loan us money to fix it. most politicians are afraid to talk about medicare. when i talk to seniors in oklahoma and contrast their grandchildren with what they have today, most of them want to make sure that they do their part to make sure their grandchildren have a great

future. and we can do both. doing nothing on medicare assures seniors they're going to have a terrible outcome in terms of medicare. if you want to save medicare, we have to fix it now. we can't wait ten years to fix it. we can't wait until we're in the middle of the baby boom cost explosion in medicare to fix it. simply because nobody in the world will loan us enough money nor will we be able to afford the interest costs off that money to be able to do it. so the question is, not whether or not we're going to fix medicare, the question is, are we going to fix it it smartly and do it in a way that protects the quality of care of seniors? or are we going to wait until the international financial community comes in like they had with greece and say, you will do this, this, this and this, even though it may not be the best thing for the citizens of this country. that's the choice we face.

we ought to be reassuring seniors we can provide quality health care, but how we're doing it with the tremendous waste in it, and the inefficiencies in it, and the top down control in it ought to go away and we ought to do it smartly. the way to do is -- if you think about the two area where's america is really failing. we're failing in education. why are we failing in education? we have no competitive forces any longer that have any impact at all in terms of quality of education. the government's involved in an area, so we've taken -- 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 be -- we have to drive efficiency in it. 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 breast 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 senior, and you've 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 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 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 ones 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 expenditures go 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 financial exposure in the 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 harm 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'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. that's all we're doing. 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, feel particularly that not only are some of our systems brok broken, as you've alluded with 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, 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 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 me 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 politicians to washington. we have the government we have, because the american people have sent the people that are here,

here. they are wonderful people, 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 of a guy by the name ron johnson. he 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 salesmen but their action is far different to what you've been sold. ask yourself the question, 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. it's bipartisan support in the house and senate, that 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 that. 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. coburn, 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.