model within the private insurance plans. controlled by a consumer protection board to make sure those plans are not cherry picking. make sure they're what they're supposed to be, and then we make medicare compete with that. so what we do is, we put the forces of competitiveness back into the system which we do not have today. ask yourself for a minute why we have an acute shortage of primary care doctors today in this country? because have you a price fixing bureaucracy that has undervalued the value of primary care, internists, family practice, et cetera. and they've underpaid it, why do you have one in 50 doctors who graduate from medical school in this country, only 1 in 50 go into primary care. because for the investment that they've seen, they're responding

to market forces, if we want more primary care doctors, what has to happen? you have to create a market incentive for them to go there. and the option against that is, the government will tell you what kind of physician you'll be. the elite position is,we'll mandate only so many positions in all these other areas so we force people into primary care. the whole goal behind the senior's choice act is to set up both through increased recognition of our aging. so we would start in 2016 by slowly advancing the age of eligibility for medicare. we would start by 2016 a premium support competitive model, which is adjusted both for income and -- on both ends of it. if you're on the low end of income, you get an actual boot

up in your premium support. of the 60,000 people who have adjusted gross income in this country who are collecting medicare today, you would get less help. in other words you pay the full cost on medicare part b. we also would have an impact and direct in terms of supplemental policies. most people don't realize that people on medicare today who buy a supplemental policy consume 23% more medicare dollars with exactly the same health outcomes. so we combine the a and b deductible together. and we create a new ma'am mum exposure for seniors, all seniors, we create a ma'am mum exposure so you know you'll have -- here's the limit of which you will never spend any of your additional dollars on. we limit low deductable medicare

supplemental policies, so we can do one thing that's most important in health care, i want to give one final comment on that as an example. when you have skin in the game, i don't care what it is, whether it's health care, buying a car, buying groceries, whatever it is, if there's a connection with an extraction from your pocketbook, you're a better consumer. when it's not, when there is no connection, we see what we're seeing in health care today. there's no differential increase in cost for over consumption. and we do know through lots of studies that we have overutilization in large areas in medicare. and the reason that we have over utilization in large areas doesn't have that much to do

with patients as it does providers. we would put that in, and the example i use. i've had the good fortune to take care of a ton of amish families. they don't have health insurance. they're the best purchasers of health care i know anywhere in the world. they want to know what something costs before they buy it. they want to know why i have to have it. and if i have to have it, where can i buy it most cheaply? they negotiate deals on pricing, if i pay you in advance, do i get a discount? in other words, they're the ultimate consumer in terms health care. and the reason they are is because it's fully connected to their pocket. and what we need is a model to where we have a connection. not an absolute -- but a connection of price and payment

to be reinstituted. that's what we've tried to do through the senior's choice act. i get letters all the time from seniors about their health care and the waste associated with medicare. i mean, hundreds of letters every month about what they're seeing. and, of course, there is no connection to their pocket because medicare's paying it. they don't have a connection. and yet they know medicare's in trouble. the final point i'd make is why we have to change medicare is, if you go back to the macro economics that are facing our country and the fact that we're going to add another $6 trillion to our debt. and that medicare has increased its unfunded liblg eed liabilit trillion. that's what the increase was in terms of increased funding

liabilities, we have to fix medicare. and t a choice about the status quo, which is what the typical politician says, we're going to protect medicare. what we ought do be say stg, we're going to make sure you have quality health care. but the system we have today isn't working. it's heim highly inefficient and will bankrupt your children. the choice isn't of medicare as it is today and nobody's going to touch it. the choice is, how do we with fix it so our children can afford it. how do we make it better? how do we get more security for that aging american, so that they know that they're not going to be bankrupted. that their lifestyle is not going to be markedly changed through any changes we would make in medicare.

we can absolutely assure american seniors that we can do it better, we can do it more efficiently and they can have the security that they have today. but knowing that that security does not come by a loss standard of living by their children and grandchildren. with that, i'd be happy to take any questions and go into details on the bill. and visit with you on it. >> 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 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 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 tient. >> the question from twitter is, do you think things might change if mr. santorum or mr. romney wins in november? >> ll 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 effectivesont 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 fhinkoroureatment 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.omes 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 right now or i can spend an hour with my nurse trying to find online, i got to first of all meet hipaa 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. every doctor's purchasing they know whether i'm an habits. they actually measure each efficient physician. doctor by what it costs them to they know whether i order excess tests. care for an identical diagnosis. they actually have a profile -- one of the things that's every insurance company in this happening to medicare patients, country knows everything about 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.