the speaker: members of congress, i have the high privilege and distinct honor of presenting to you his excellency mohammad ashraf ghani president of the islamic republic of afghanistan.

president ghani: in the name of god the merciful and compassionate speaker boehner vice president biden, senate majority leader mcconnell, house majority leader mccarthy house minority leader ms. pelosi, senate minority leader, ladies and gentlemen of the congress, please allow me to thank you for your gracious invitation to address this unique forum of deliberative democracy. above all else i'd like to begin by thanking the people of the united states whose generous support for my country has been such immense value in advancing the cause of freedom.

more than one million brave americans have served in afghanistan. they have come to know our snow-capped mountains, our valleys our wind-swept deserts, our parched fields our rivers and our plains of waving wheat, but more important, knowing our gentlemenography, they've come to defend and to know our people. in return, the people of afghanistan recognizes the bravery of your soldiers and the tremendous sacrifices that americans have made to keep afghanistan free.

we owe a profound debt to the 2,350 service men and women killed in the more than -- and the more than 20,000 who have been wounded in service to your country and ours. we owe a profound debt to the soldiers who've lost limbs to the brave veterans and to the

families who tragically lost their loved ones to the enemies' cowardly acts of terror. we owe a profound debt to the many americans who've come to repair wells and cured the sick and we must acknowledge with appreciation that at the end of the day, it's the ordinary americans whose hard-earned taxes who over the years built the partnership that has led our conversation today. i want to -- i want to thank the american taxpayers and you, their representatives, for supporting us. the service of american men and women in our country has been made possible by the bipartisan support of the congress of the

united states. on behalf of our parliament and people, i salute and thank you. it has always been a pleasure to receive the congress men and women during your trips to afghanistan. please do come again and again. and if you are in service, please come in your proud uniforms. i have a unique opportunity that when senator graham was just as a colonel, i asked him to salute -- our british general and he complied. so thank you. veterans will always be welcomed in afghanistan. our deepest hope is that the time will come when americans visiting our country, see the cultural heritage and natural

riches of the valley the ancient architecture the fishing streams, the forests and the ancient architecture of another. not as soldiers but as parents showing their children the beautiful country where they served in the war that defeated terror. on behalf of my entire country, when that day comes you'll be our most welcomed and honored guests. america's support to afghanistan has been led by a succession of remarkable generals. i'm proud to have known and worked with dan mcneil david mcconcernon, stanley mcchrystal david petraeus,

john allen, joseph and john campbell. their commitment and dedication is inspirational. these generals lived in simple quarters. they worked tirelessly through the night and their leadership of their troops sets an example that our generals are working hard to follow. your civilian leaders are no less inspirational. ambassadors such as ronald newman ryan crocker, james cunningham and my good friend, michael mckinley, give american diplomacy first-class leadership and strategic understanding. and i would be remiss not to mention the stimulating conversations with my friends from this chamber like john mccain, lindsey graham, carl

levin. but i must also acknowledge the deeply appreciated contribution of the aide workers who are day-to-day representatives of your country. i've met people from all 50 states of the union, from senators and representatives to construction workers and computer operators. i want to thank all of them for introducing the best of america to the people of afghanistan. finally, i would like to thank president obama. he's an admirable and principleled partner. his support for afghanistan has always been conditional on our performance. i like and appreciate his clear and disciplined approach make an engagement. thanks to his rigor we were

encouraged to build up the afghan armed forces into the self-reliant army it is today. because he stood firm on the deadline for the surge and the transition the u.s. army pulled out a logistical near miracle. first deploying then withdrawing nearly 100,000 soldiers without a hitch. and it is thanks to his promise to america to end the active combat that we saw a seamless hand over the responsibility for all combat operations fromure side to ours on december 31, 2014. -- from your side to ours on december 31, 2014. u.s. soldiers are no longer engaged in combat.

but we are delighted to have them in the train asset, and advice mission. tragedy brought our two countries together, but our shared interest and values that will keep us together. september 11, 2001 was not a distant image that i watched on the emotionless screen of television. it was horrific and it's personal. i was -- and it was personal. i was in my office at the world bank when the first plane crashed into the world trade center and forever changed the lives of each and every one of us. new york is a special place for me and my family. my wife and i are both graduates of columbia university. i was another beneficiary of americans' wonderful generosity that has built so many

long-standing friendships throughout its universities. i ate corn beef at new york's greatest melting pot. close friends were working near the trade center. my children who were born in new york and my daughter was living in new york when the twin towers fell. i visited ground zero that very week. seeing first hand the tragedy and devastation drove home the realization that after 9/11 the world would never be the same. i went home knowing that america would seek justice and i began to write the plan for our national reconstruction. justice came swiftly al qaeda terrorists were killed or driven underground. the taliban acknowledging their losses after the initial

encounters quickly vacated the cities with their leadership moving to pakistan and their rank and file returning to their villages. there was considerable anxiety about how the afghan people would respond to the american presence. the issue was put to rest by the welcome accorded to the american soldiers and civilians as partner. even today, despite the thankfulness, the overwhelming majority of afghans continue to see the partnership with the united states as foundational for our future. there's no better proof of this than last october's overwhelming and immediate parliamentaryry approval of the bilateral security agreement and status of forces agreement, both of which testified to our desire to continue the partnership.

afghanistan has been the frontline of the global battle against extremism. america, as a result, has been safe, but that safety has been ensured through the loss of american and afghan lives in the fight against terror. we have made great sacrifices. but then it's our patriotic to do so. you, on the other hand, have a choice and when came to a fork in the road chose to do the right thing. thank you. most recently due to the refusal of the government to sign the bilateral security agreement and status forces agreement with nate heo we have lost momentum.

and both partners have to operate under uncertainty resulting in some eight months of lost time in the most critical moment of transition. you could have used this opportunity to end the partnership and return home in frustration but you did not. thanks to the flexibility showed by president obama and congress we have made up for the loss and have regained momentum. without breaking by even the day of promise of president obama to the american people that the combat role would end on december 31 2014. thank you for staying. i would like to talk a little about our partnership because it's evolving. we are starting to balance the focus on security with a new emphasis on rule of law and

justice, growth in the pursuit of peace and reconciliation. the framework for our future relationship is defined by our strategic partnership agreement and the bilateral security agreement. on your side you have reaffirmed your commitment to support afghanistan. on our side, we will focus on self-reliance. to get there, we have initiated reforms that would create a self-sustaining afghanistan. i know american people are asking the same questions as afghan people. will we have the resources to provide a sustained basis for our operation? and the answer is. within this decade, we will. as the current face of our relationship grows to a close, our appreciation for the depth

of american contribution to our people cannot be measured in words alone. but can be seen quite literally in the number of afghans whose futures have been changed thanks to america and its allies. on september 10 2001 this will no longer shock you, there were no girls enrolled in school in afghanistan. it was illegal to educate girls. today, more than three million girls in primary schools across the country are learning to openly and actively participate in the future of a democratic afghanistan.

their parents thank you. in 2002, when the allies built their first clinics, the average life span of whole of afghan was 4 years. today today it's over 60. their children thank you. today the rate of maternal more tality in our poor country was

unacceptably high, but thanks to the immense effort you have made to build clinics and train nurses an afghan woman no longer -- is no longer more likely to die because she gives birth to a child than if she had been somewhat caught on the frontline of combat. their husbands and their children thank you. our partnership with america and its allies has brought oiler country hope where we -- our country hope where we had none. we would once again like to thank you for that wonderful gift from your people to ours. the gift of hope.

but in afghanistan, there's a saying that no gift can remain unreciprocated. today i would like to return that gift of reborn hope by offering the american people a partnership with a nation that is committed to the cause of freedom and that will join the fight against the growing threat of terrorism. i will use my remarks today to tell america the history of how a future of afghanistan came to be. it is a story about how a poor country that relied on foreign help became a self-reliant nation where free trade and the rule of law create jobs and prosperity for its people.

it is also a story about how a country that has been ravaged became a platform for peace and regional stability and prosperity. ladies and gentlemen the story of afghanistan's path to self-reliance is already started. it began with last year's election and the formation of our national unity government. afghanistan's external image is of a traditional country that has been frozen in time. that my partner of dr. abdullah, intense and compassionate campaigns on the most modern officials. that is the need to end corruption. taking the action that is will build transparency into government and guaranteeing support for the impartial rule of law. campaigns became forums for public debate, in the final election, not only more than

seven million afghans turned out to the polls, but more than 38% of the votes were cast by women. 90 of them would never have previously had a chance to speak politically with their own choice. there's no denying that the election was hard fought, but in the end we chose the politics of unity over the politics of division. the national unity government brings together all parts of the country to make the government where disputes -- an arena where disputes are resolved. dr. abdullah and myself may not initially agree on every issue, but we both believe deeply that spirited debate will produce

better outcomes than will confrontational stalemate. we not only work together, we like working well together. afghanistan country perception is what's suited to democracy. like americans afghans are individuals, none of us defers to anyone else. we -- persuading each other is an art form. our key characteristics are our openness and hospitality. we believe in equality. even if the most traditional parts of the country, our

leadership must earn rather than inherit their position. there is a strong public conscience. people are expected to act for the common good. we love debate. ladies and gentlemen please allow me to introduce you to afghanistan. we are an old country with a proud heritage and a history of trade with our neighbors. we have had exchange for at least 2,000 years. and our women could write 2 1/2 thousand years ago. for at least three millennia, we have the caravans and trade folks that spread across asia bringing chinese silk and indian textiles to and shen rome and renaissance italy. the 19th century disrupted this world as it did in so many other places. afghanistan became an isolated buffer, caught between two expanding empires. the emergence of the soviet

union further isolated our country culminating in the 1979 invasion and the subsequent war of resistance. . today, however, the isolation is over. first awareness is growing, afghanistan is quite literally the heart of asia. asia cannot become a continental economy without us. asia in the next 25 years will have the 1869 moment, the east and west coast of the united states were joined through the transcontinental but this new interconnected asia cannot happen without us. we are in the midst of 3.5 billion people and we should be able to export something and not just import. our fragmented geing a raffy can once begin become the opportunity for integrating central west, east and south

asia into a network that supports stability and prosperity over a vast swath of service. diplomatic efforts cross-border trade and support, multicountry investments in energy transport and water. and this again is beginning. the first major project between central asia and south asia for transmitting energy is already under way. and i truly believe that diplomatic efforts backed by the leaders of our countries was built, the peace and prosperity for south and central asia in the same way that the common market has done so for europe and afghanistan has done for our neighboring region to the east. we envision afghanistan that within 20 years it's become a hub of trade in gas pipelines

power transmission lines, railways, modern telecom and banking services. american support for all of these is essential and we thank you for that commitment. ladies and gentlemen, if one story of our future history is bright, there is another darker cloud that is making its way towards our country. afghanistan's security transition took place against the backdrop of the unexpected rise of religious extremism in the middle east. the promise of the arab spring gave way to the emergence of dash terror and collapse of state. but the change ecology of terror could have not formed without some states tolerating, financing, providing sanctuary and using violent nonstate

actors as instruments of shortsighted policies. it is critical that the world understand the terrible threat that they pose to the states of western and central asia. terrorist movements whose goal to destabilize every state in the region are looking for new bases of operation. we're the front line. but terrorists neither recognize boundaries more require passports to spread their message of hate and discord. from the west, the dash is already sending advanced guards to southern western afghanistan. without pakistan's counterinsurgency operations in which more than 40,000 people have already died are pushing the taliban towards afghanistan's border region. cull minutization of the economy is part of this new ecology of terror.

control over the narcotics trade is proof providing the financing of these groups to find weapons. blurring the lines between criminal economics and criminal politics. each of these groups poses a clear and present danger to our neighbors, to the arab islamic world and to the world at large. afghanistan is carrying forward everyone's fight by containing this threat. but extremism is becoming a system, one, that like a dangerous virus, is constantly mutating, becoming more lethal, well-financed and thriving on weakness and an overall lack of regional coordination. to date, afghanistan's people have rejected the violent movement. we are willing to speak truth about terror.

military fighting may stem the advance of extremism but it will not put an end to the anger and hatred being promulgated across majority countries from these groups. that hate musting chapped and overcome from within the religion of islam. dd that hate must be challenged and overcome from within the religion of islam. who is entitled to speak for islam? leaders intellectuals and those many millions of muslims who believe that islam is a religion of tolerance and virtue must find their voice. silence is not acceptable.

but silence is not what the world will hear from us. afghanistan is joining a new consensus that's emerging in the muslim world, a consensus that rejects intolerance, extremism and war. they have documented beautifully central asia's long tradition of rationalism and scientific inquiry. during islamest golden age they recorded all known knowledge of the medieval word giving the word, advances in algentleman bra astronomy, water resource managing,

printing. this is the islamic civilization that needs to reinvent itself. the islamic world must understand its own gloriously tolerant and inquiz tiff past. it must re-engage with the world openly and without paranoia. we, the unity government of afghanistan, know that islam is a religion of peace. we are responding to extremist threats by building partnerships in the global, regional, islamic and national levels. afghanistan abides by national convention and the rule of law. the declaration of human rights is firmly embedded in our

constitution. to achieve these rights for our citizens, we're committed to support our independent human rights commission and i'm pleased that a tireless champion of human rights is a member of this delegation and is today sitting in the audience of this great chamber. and our government will join the free trade system and harronize investment rules that build prosperity -- harmonize investment rules and building prosperity. we are engaging people across asia for trade.

a vast region that extends from india to beyond. we are making a headway in the corridor that will link us to georgia, turkey and europe into reality and thank you, members of congress, for -- the arab islamic world from the saudi arabia, united arab emirates, is keenly aware of the new threats and we hope they will soon agree on a framework of cooperation. the recent declaration of a council across the muslim world may well be an historic turning point in building that alliance. condemnation of terror by this largest gathering of muslim is

an unprecedented step and in acknowledgment of the shortcomings of muslim majority country governments. properly supported, afghanistan is uniquely positioned to block the spread of extremism. we have none of the historical complexes that choose resentment across western domination. after all, we defeated most of the empires. with the bare exception of the taliban regime islam has been inclusive and reflective, not violent and angry. and after 36 years of conflict our people are well vaccinated against the seduction of ideologically based -- our people our children desperately want to be known. ordinary is what has escaped us

and we would really like to be leading ordinary lives. to go to school and to come back. to shop without being blown up. to play volleyball without being attacked. so many children i have held in my arms have been mutilated. that must not be permitted and cannot be permitted and will not be permitted. for afghanistan to oppose the violence of extremists we must

turn our sights to the struggle to end the condition that gives rise to extremism in the first place. our efforts begins with a frank recognition of our problems and the challenges that we must tackle with determination and commitment. nearly 40 years of conflict is produced a country where corruption permeates our government. until we root out this cancer, our government will never generate the trust to win hearts of our people or the trust of your taxpayers. we will eliminate corruption. on our second day in office we tackled the notorious case of

kabul bank which for years -- i'm pleased to report to you that all the court systems of afghanistan, including the supreme court has now made a decision against these thieves and have allowed to collect from them and get the public purse refilled. ladies and gentlemen ending corruption and impunity are the precursors of self-reliance, but the true test will be whether we can restore the fiscal basis of public expenditure. we must make sure that natural resources and critical market linking infrastructure, development provide our youth with jobs, help us balance the budget and launch the virtuous cycle.

here i'm pleased to report that we are reversing decades of mismanagement. we have just reached agreement with i.m.f. but more significantly we are determined to create the wealth that would not make us dependent. during this decade we can assure you that we will be able to pay both for our security and delivery of services. economic growth is the first foundation block of self-reliance. the second foundation is with the educational of afghanistan's woman. no country in the modern world can be self-reliant with half of its population locked away. uneducated and unable to contribute energy, creativity and national development. we have a tradition of

respecting women and let us to the forget the largest trader was the wife of the prophet. and the greater transmitter of college it was the second wife of the prophet. customs do not replace the fundamental sense of justice between man and woman that societies that seek fairness are built upon. afghan culture tradition for women as leaders, managers, and traders. the gender apartheid imposed by the taliban came from people outside of families in refugee camps and villages boarding schools. our plan for restoring woman's place in society is built on three pillars. that rests on a foundation of respect for the human, religious, and constitution price of all our citizens.

first, and i want to spend a little time on this theme educating woman is not solely a matter of right, important though they are. it is a matter of national necessity. i said in the past that educating one of a young girl will change the next five generation of a family. i would not be standing before you today as an educated moon if my grandmother, an exile in india, could learn to read under the british not taken it upon herself to make sure that i would match my youthful passion for hunting and riding horses with masters the classics and striving in foreign languages. thank you grandmother.

afghanistan's self-reliance aligns men and woman who can run a modern economy. basic health and education must reach all our young girls. that's a promise. but beyond providing all our young girls with these basic rights we'll increase to parity, the number of woman graduate interesting high schools and colleges. even as i talk to you, today in kabul the signs are already being finished for an all woman's university that will provide safe, top quality education for the next generation of afghan woman leader. let me tell you the story of a young woman from kandahar. her schooling began when she breaks thread of the cycle by people swearing that they will throw acid in her face before they would let a girl attend a school. she would not be dissuaded. her uncle threatened to disown

her when she applied to university, but she stared him down. she went to american university of afghanistan where she not only top of had her class but aided by a fulbright scholarship went on to get a master's degree from the ohio state university. today formererly her uncle is so proud of her that he tell his grandchildren, both little boys and little girls, they must be as brave as their mother. like thousands of afghan women thanks america for those opportunities. from the primary schoolteachers, university in kabul for the scholarship to ohio. that changed her life and her children's future. she has educated -- she is

dedicated to create opportunities for millions of afghan women. the second pillar is that woman must have the same access taking on the opportunities as man. woman's full empowerment will come about not through global conventions or government programs but when they own jobs and businesses. the united states has been a steadfast supporter of the nationwide national solidarity program which for 10 years has given not thousands but millions of poor village women their first chance to have their own resource. our third and final foundational belief is that a mental and cultural revolution must take place over treatment of women and by our society. interest's no point talking

about how much we respect woman's honor if we let threat go unpunished or allow harassment in our street. we have signed the global conventions to end violence and discrimination against woman. we will implement them vigorously, but work is still needed to convince our people that the protection of woman's right is part and parcel of their own quest for social justice. i personally as the leader of afghanistan am committed to working with the activists and leaders ever our country to bring about this mental change. both dr. abdullah and i will

insist that the officials of our government have national standards for workplace fairness. thanks to your help and support the opportunities for women are indeed changing. i'm sure that many of you have seen those videos of fathers proudly taking their shiny eyed daughters to show off their newfound skills in the ancient part of skateboarding. they are but a few of the changes that are under way and must be protected. i am meeting frequently women who are entertaining idea seriously idea of becoming the first woman president of afghanistan and we will support them.

i am pleased to state that we fulfilled our promise to name four women to the afghan cabinet. raising the woman share to 20%, still too low, but at least our promise, we are determined to name qualified woman to ambassadors and increase their number as deputy ministers, and we are working hard to attract and trade our whole new cadre of woman into our government. i promise you years from now our ministry will have a whole new electorate with woman in leading position. we are a country of young people. the absolute majority of people are under 30 years ever age.

-- of age. you are invested in the future not in repeating the past. jobs and engagement with the world are their first priority. despite all of the assistance afghanistan has received over the years 30% of the population still lives below the poverty line. lacking even basic services such as clean water or household electricity. this cannot continue. we have articulated a charter that will find investments that are needed to reduce poverty across the nation and prepare the next generation for capsulizing on the new opportunities that are thriving economy can provide. ladies and gentlemen so far i have talked about how we will achieve self-reliance by ending corruption, balancing the budget, mobilizing the energies of woman and utah, and growing the economy. let me now turn to the elephant

that is lacking in the back of the room. we must secure peace. afghans have shown that we know how to fight. unfortunately, we have inherited that skill for three pl year. since as far back as invasion of alexanderer and the more modern expulsion of the soviet union afghans have shown that you'll protect our country against foreign attacks no matter how steep the price or how well armed the intruder. i have no doubt that provided that they continue to receive equipment and training our formed forces will stand firm against any effort by outside extremists to build a base inside. but we must now show that we can also bring peace.

our strategy is built around three issues. the first is dimcy to build a communchte of nations. we have met with the leaders of pakistan india, turkmenistan emirate, and china, among others. their commitment for building mutual security across nation includes ending the financing and sanctuary for extremist groups. the second initiative is to build up the ability of our armed forces to project their elected government across our entire national territory. our partnership with the united states now transformed into the resolute support mission has given afghanistan a well trained army that is taking the fight to the enemy. we are no longer on the defensive. on december 31, 2014 all combat

operations were ended and turned over to afghan security forces. general campbell, has publicly testified in this very chamber that the afghan army's professionalism and morale meet all of the military man's expectation. we will meet the taliban from a position of strength not weakness so that the hard part, gains in education, health, government, freedom and woman's rights are not lost. the third initiative will be our push for national reconciliation. the taliban need to choose not to be al qaeda. and if they choose to be afghan, they will be welcomed to be part of the fabric of our society.

many believe themselves to be patriots against the corruption and criminality that they saw in their towns and villages. we can deal with grievances, provided that competence agree to respect the constitution and the rule of laws as the outcomes of negotiations we are confident that we can find a path. ladies and gentlemen, i'm not here to tell you a story about an overnight transformation of my country. you're too wise for such stories. 12 years of partnership provide evidence enough that the road ahead will be difficult. we live in a rough neighborhood. we are a very poor country. self-reliance is our goal. we bear the scars of the fight against the soviet union. scars that are in our minds as

on the bodies of the afghan farmers and american soldiers who have fought for freedom. but although we may be poor, we are very proud. our goal of self-reliance is no pipe dream to pacify partners who are tired of hearing the promises that we failed to meet. we want your know how, the business skills of your corporations the innovation of your start-ups and the commitment, but we don't want your charity. we have no more interest in perpetuating a childish dependence than you have in being saddled with a poor family member who lacks the energy and drive to get out and find a job. we are not going to be the lazy uncle joe. afghanistan can and will be an

enduring success. your support your understanding and your commitment to our country will not have been in vain. afghanistan will be the graveyard of al qaeda and their foreign terrorist associates. never again will our country be hosts to terrorists. never again will we give extremists the santh sanctuary to be their destructive plots. we will be the platform for the peaceful cooperation of our civilization. together our two countries will finish the job that began on that clear terrible september morning almost 14 years ago.

we have the will and we have the commitment that will anchor our country and the world community of peaceful democratic nations. knowing our condition, you the american congress and the american people, will decide how to ensure that our common goals and interests are written into the books that will be telling the history of our shared future. thank you, again and may god bless the partnership between america and afghanistan.

that all begins 8:00 p.m. eastern on c-span 3. next a discussion about medicare and the sustainable growth rate. and then a house hearing on the future of the tsa's pre-check program. after that a pentagon briefing on 21st century deterrence and national threats. the alliance for health reform hosted a discussion about the sustainable growth rate of medicare today with acting deputy director for center of medicare medicaid innovation. congress is currently considering legislation to change the sgr. let's try to get started if

we can. my name is ed howard with the alliance for health reform. i want to welcome you to today's program on behalf our board of directors. the program is on the basics of medicare. it's the third in the series that of the alliance and the kaiser family foundation are conducting. we do this near the beginning of each congress and the recent years and we've done sessions on the affordable care act the last week on medicaid and next wednesday we will be doing the final one in the series on the subject of health care costs. watch your inbox for notices about that if you haven't gotten them already. today we are going to focus on medicare are the largest healthcare program at least in terms of federal cost. and before we go any further i

want to recognize the moderator for today's program, she is the senior vice president of the foundation and the director of the focus program on medicare policy and its project on the medicare future. >> it's a great to be here today and with my friends at the alliance. they do such a great job in putting together these sessions to bring information to you and today for the audience and those watching on c-span. and on behalf of the foundation we want to welcome you all to get your film of medicare this is our medicare 101 and it is an opportunity to get your questions answered and we have a great group of people who will be joining us to answer your questions. we have a lot of ground to cover today which we have gotten very good at doing very quickly. for those of you in the room i'm very pleased to be able to show you our primer which you all can

take home. and for those of you who are watching this will be on our website which you can download at kff.org. you may be hearing a lot about medicare because of what has been going on with the sgr. you may be hearing a lot about medicare because of what has been going on in the budget resolution and we may be talking about that. but we talked about medicare for important reasons. one, it's very important to the lives of the 55 million people it serves mostly seniors but younger people with disabilities. medicare is a very important source of revenue to the nation's hospitals, physicians, home health providers. so i'm sure you hear a lot from those in your boss's districts who come because they care about

medicare, as well. medicare is 14% of the federal budget. when you are working on issues related to the federal budget you are working on medicare. so we are going to get through the a, b, cs and ds of medicare. we will try to demystify some of the acronyms. and we hope this will be helpful to you. before we get to our panel of experts we are especially pleased to be able to show you a very short animated video on the history of medicare and right before we get to this video i just want to acknowledge three people in the room who worked very hard on this video and i hope that you will join me in giving them applause. francis ying over there. [ applause ] christina swoop right over

there. [ applause ] and shannon griffin who is also over there. thank you all for all your heart work on this. i hope you will pretend that we distributed popcorn and we'll dim the lights and watch the video. >> in the depression the elderly were quite dependent on their sons and daughters and they were out of jobs. the principal problem was medical care costs not that people couldn't get good care but they couldn't afford the hospital costs. >> there wasn't much of an argument about the need. the argument was what to do about it.

♪ >> they thought it would help people in the south but only 32 states have adopted it. what we showed clearly was only half had coverage. most of it was very poor coverage. >> older people are three times as often to be hospitalized but their income is less than half that of people under 65. >> one of the methods of imposing socialism is very easy to disguise as a medical program. >> we haven't forgotten. [ applause ]

♪ >> the social security offices were kept open into the evening for people who were still at work. ♪ ♪ >> i would submit legislation shortly to help free the elderly from the fear of catastrophic

illness. ♪ >> we are supposed to represent the people. ♪ ♪ >> one senior's annual drug

costs exceeds $250,000 they fall into the so-call doughnut hole. ♪ >> now that the plan is in place 39 million have signed up for it. drug costs are less than anticipated. [ applause ] >> beginning next year preventive care including annual physicals, wellness exams and tests like mammograms will be free for seniors as well. ♪

♪ ♪

♪ >> a lot of care was given that would never have been given if it hadn't been for medicare. >> thanks again to the folks who put that together. did you get all that because

knowing kaiser there will be a quiz at some point that you will have to take on all of the material. >> actually, there is a quiz on our website. you can take that quiz. >> you will hear a lot more not so much about medicare's history in the next hour and a half but its prentd and its future. we can ask our panel to join us. we want to take full advantage of the folks. they are stars, as well. we want to give you as much chance to ask questions as we possibly can. as i said, we are joined in this effort by the foundation and i just want to say where this

video is not the only high quality resource on medicare and other health policy topics that you can find by going to their website, kff.org. and we have one of the countries experts as a matter of fact right here in the funds senior vice president trisha newman. she can do more than just referee the discussion. a little bit of house keeping. i am happy that the alliance and kaiser are on the house side. we don't get back here very often. i do want to apologize for the sight lines that some of you folks in the corners might have. but it is a limitation if you can't get in the room, then here you are so bear with us and we will try to make the best of the shape of the room, the clarity of the conversation i think will make up for it.

if you are in a twitter mode you can see the hashtag medicare 101. if you need wifi there are instructions on how to connect. i think they are on your table and they are on the screens that you see there, as well. lots of important information in your packets including speaker bigraphical information more extensive than you hear from us. there is a materials list that has everything that's in your kit listed. all of that is on the alliance website at allhealth.org so you can pass it along to some of your colleagues who may not have been able to get here today. speaking of which i should note the presence of c-span if you are watching on c-span and you have access to a computer, as well you can go to allhealth.org and find all of the speakers' slides and the

background material so you can follow along more closely. there will be a video recording of this briefing available on the kaiser website, kff.org probably monday if not tuesday and a transcript a couple of days later on the alliance website at allhealth.org. so two pieces of paper i want to call your attention to, the green question card you can use to ask a question at the appropriate time. there are some microphones that you can use at the far corners of the room to ask your question orally. and then a blue evaluation form that will help us improve these programs for you and get the subjects and speakers and the treatments that you need to do your job. one final thing that all of you don't have in your hand is a

yellow evaluation sheet that is more general about the briefings and activities that the alliance puts on. we want to try to get particularly the opinions of congressional staff. those of you who identified yourself as such when you checked in i hope you got a yellow evaluation form. if you didn't see one of the staff folks and we will get you one. we very much appreciate you filling that out. so enough of the preliminaries. we have a terrific panel. we are going to start with juliet associate director of the program at kaiser, one of the leading analysts of medicare today and of proposals to change it. her task today is to sort of keep it simple, describe the basic structure of the program, who is in it what's covered what's not? how and by whom its paid for and she can do all of that in eight

minutes no problem. thank you very much for being here. >> thank you. it's great to see all of you here to learn about medicare and i have a lot of ground to cover in a short period of time so i will jump right in. i'll start at the beginning. medicare was established 50 years ago to provide health insurance to people age 65 and older back when most seniors had no or inadequate insurance coverage. the program was expanded a few years later to cover people under 65 with permanent disabilities. today medicare covers 55 million people most aged 65 and older but also 9 million people with disabilities under age 65. beneficiaries get the same benefits without regard to income or medical history. medicare covers a comprehensive set of benefits including hospitalizations, physician benefits, post acute care and a prescription drug benefit which is delivered through private plans and private plans have

been playing a larger role in the delivery of medicare benefits in recent years which i will talk about briefly soon. medicare covers a population that is on the whole sicker and has greater health needs than people who are not covered by medicare. for example, nearly half of beneficiaries have four or more chronic conditions and one-third have one or more functional impairments. and many people on medicare live on modest incomes primarily derived from social security. in 2013 half of all beneficiaries had annual income below $23,500 which is equivalent to 200% of poverty in 2015 for an individual. so now let's look at what medicare covers. most people on medicare get their benefits through the traditional medicare program as distinct from the medicare advantage program which i will discuss shortly. in traditional medicare beneficiaries can see pretty

much any provider that participates. coverage of medicare is divided into parts which are funded differently and have different cost structuring. part a is the hospital insurance program which helps pay for hospitalizations and post acute care. in 2015 beneficiaries paid a deductible of about $2,500. most people become entitled to part a after paying payroll taxes for ten years and enrollment is automatic if you are receiving social security when you turn 65. and there are details about financing here but i will come back to that shortly. part b is the supplementary medical insurance program which helps pay for physician visits and other outpatient services. most pay a monthly premium for part b which is about $105 in 2015. this premium is income related

meaning people with higher incomes pay a higher part b premium. services are subject to deductible and coinsurance of 20%. enrollment is voluntary but most people who are entitled to part a also enroll in part b. parts c and part d are different from traditional medicare because they involve the delivery of medicare benefits through private plans. part c is known as medicare advantage which is an alternative to traditional medicare where beneficiaries can sign up for a private plan such as hmo or ppo and these plans are paid by medicare to provide enrollees with all part a and part b benefits and provide part d drug benefit and provide extra benefits that medicare does not cover such as vision and dental services. today about 16 million people or 30% of all people on medicare

are enrolled in medicare advantage plans. part d is medicare's prescription drug benefit. part d coverage is voluntary meaning people who want the benefit must enroll in a private plan either stand alone prescription drug plan or medicare advantage plan that covers prescription drugs. plans can offer the standard drug benefit which is illustrated on this slide or they can vary the design of the benefit as long as it is at least equal in value. enrollees pay monthly premiums for their plan and pay for their prescription drugs in terms of co payments cht these costs vary from one plan to the next. if you have heard nothing else about part d you probably heard about the part d coverage gap also known as the doughnut hole. as a result of the provision in

the affordable care act the doughnut hole is being phased out and will be phased out completely by 2020. beneficiaries in part d with low incomes get additional assistance with premiums and cost sharing and in total about 7 out of 10 beneficiaries are now enrolled in part d plans. the money to pay for all of these benefits comes from several different sources. part a is funded primarily through pay roll taxes paid by workers and employers while part b and d are financed primarily by general revenues and monthly premiums paid by beneficiaries. part c is not shown here because the medicare advantage program is not financed separately. in 2014 medicare spent about $600 billion on medicare covered benefits. payments to medicare advantage plans and spending on hospital inpatient services for beneficiaries in traditional medicare accounted for about half of medicare benefit

spending while payments for physician services and drug benefit were about 10% each. despite the important benefits that medicare helps pay for there are some missing pieces in its benefit package. traditional medicare doesn't cover vision or dental services or hearing aides and it doesn't pay for most long term services and support such as extended stays in a nursing home. medicare also places no limit on beneficiaries out of pocket spending each year unlike typical private insurance plans. so to help with out of pocket costs and provide benefits that medicare does not cover most beneficiaries have some form of additional or supplemental insurance. a primary source is employer sponsored retiree health benefits. another is private insurance policies which help pay for medicare's deductibles and

coinsurance. and for about 10 million low income people on medicare medicaid pays their premiums and cost sharing. for most of these so-called dual eligible beneficiaries medicaid provides benefits that medicare does not cover notably long term care. even with medicare and supplemental coverage most beneficiaries face substantial out of pocket costs. in 2010 beneficiaries spent close to $5000 on average out of their own pockets both for premiums for medicare and supplemental coverage and for their costs for medical and long term care. so now i'm going to take an abrupt turn and give you a quick overview of major changes to medicare that were included in the affordable care act of 2010. there were benefit improvements including as i mentioned closing the doughnut hole and eliminating cost sharing. there were provisions to improve

quality of care through payment of delivery system reforms and also explicit savings including reduced payments to hospitals and other providers and to medicare advantage plans. and there were new revenues. income related premiums for the part d program and payroll tax increase for people with higher incomes. the congressional budget office estimated that the affordable care act would reduce medicare spending by $428 billion over ten years between 2010 and 2019. so the low is a big deal not just for uninsured but also for medicare. and the program does face pretty big challenges so i think it is clear that medicare will continue to undergo changes in the future perhaps the near future as we are all kind of witnessing with the latest debate over the sgr. medicare represents a growing share of federal budget with aging population. beneficiaries face rising health

care costs and more complex landscape with proliferation of plans. and providers are navigating their way through new payment approaches and these factors could be a springboard for future changes to medicare. with that i turn it over to you, bob. >> let me just say who bob is. dr. robert barrenson is an institute fellow at the urban institute. he was practicing internist for 20 years and helped shape medicare policy from the inside as senior staffer and served on the medicare payment advisory commission. and today we have asked him to describe complicated world of medicare payments. bob, thanks for joining us. >> it's a pleasure to be here. it is a complicated topic. i will try to start with going

over terminology which is some of the terms are used certainly in the media but with serious policy analysts and researchers the -- you going to set the timer for me? i am going to be looking. it's important to understand some of the terminology. important concepts and some of the terms being used in some ways are misleading and i want to point that out. many people will continue to use them but at least it helps to understand what we are talking about. so the first one is fee-for-service. what fee-for-service means is payments are made for each individual service or item provided during an encounter or hospital stay. and actually it's not each service that is provided, it's individual services that actually are codified.

they receive a designated code that they can be billed and paid for. so the classic fee-for-service is the medicare physician fee schedule where you have over 6,000 individual services for which physicians can bill but even there there is a lot of activities that physicians may perform that they don't get paid for because they don't have separate reimbursement or payment code. that is fee-for-service. fee-for-service medicare is a commonly used term to designate the part of medicare that is not medicare advantage. many people just refer to it as fee-for-service medicare. medpack has that, does that and i spent a term on that and was unable to change that. i noticed that kaiser correctly uses the term traditional medicare rather than fee-for-service medicare because as i'm going to point out in more detail in a couple of

minutes most of the payment that traditional medicare uses what it is is the next bullet i have there volume base payment. by volume base payment i mean payments that increase as a function of the number of units of services performed and for which payment is requested. so most traditional medicare payments are, in fact, volume based. i will go over that in more detail, but they are not classically fee-for-service. and in fact there is a different connotation of doing services because you get high volume and doing services because it involved activity for which you may get paid. let me go to the next one. the alternative as it is being presented in most of the public

dialogue around payment and medicare is the alternative to volume based payment is value-based payment. here payments include some level of financial rewards or penalties for measured quality and/or incentives for holding down costs with the view that under volume-based payment the incentive is to generate more volume and get more payment. the idea here is to have some incentives for being more prudent with health care spending. one of the points i want to make and i think it is important is that value-based payments as currently being implemented and will go over a lot of this in uch more detail than i have time are usually placed on top of volume-based payments. it's not an either/or situation for the most part. so what you have is current payment models which we will talk about and then on top of

that some new payment incentive or marginal reward or penalty related to an assessment of value. and then finally, a basic term to get out is what is now generally described or called population-based payment. these are payments that are made to a provider prospectively meaning ahead of time to a provider responsible for a population of individuals irrespective of the actual services provided. that's the key concept. so here the payment goes for caring for an individual for a year usually the payments are made on a monthly basis. and the incentive is completely different on the providers because if they do few services or lots of services they're basically getting the same payment. so that the notion here is the payment is based on the

population for which the provider is responsible. now, there are other terms and now we are getting more concrete about the units of payment which is where all the action is. it can be at the individual service level. in the fee schedule there is actually i don't know what the actual count is. i said 6,000. here i put more than 7,000. there are lots of individual services and the medicare physician fee schedule for individual services that the physicians provide and request payment for. there is a concept called packaging which isn't used very much in general discussion. it's when various services that are performed at the same time are not paid separately but are actually packaged into a single payment. so a simple example would be if you go to a doctor for an office visit and some of the incidental

lab work like urinalysis is not paid separately but part of the payment that goes for the visit. bundled is a term used a lot and there are two different meanings. you can get very confused. i have been very confused about what people are talking about. it is used at the same way packaging is used. a whole bunch of services are bundled together into a single payment. that is the term used a lot in the dialysis where there has been a recent reform that instead of paying separately for the dialysis and then the drugs that the individual receives it's become a bundled payment or a packaged payment, a single payment with the drugs being included in that payment. it changes the incentive for how much drug you provide and that's a reason to package it or bundle it. the other meaning of bundled

means putting different revenue streams together. money that goes to different providers, it can be a hospital and doctor we are now bundling that into a single payment that goes to one of the entities as a bundled payment or it can be -- we will get into the detail. that's the basic concept. it's bundling across providers. an episode is payment for services extending over time. so i'll give you examples. so a case rate is one example of a payment to a hospital. the episode is the hospitalization also called a case rate. instead of paying for each service performed in the hospital or even for each day in the hospital it's a case rate. it's a payment for the episode of the hospitalization and then a bundled episode is when you combine putting it out over time with putting different providers

together into the same payment model. per diem is each day of a hospital stay. you are not paying fee for service for each item but paying a fixed amount for the day in the hospital. diagnosis related groups is the term for the whole system of acute care hospitals of paying case rates and capitation is a common form of population-based payment. we now have bonus and penalties so pay for performance is value-based purchasing. these are marginal payments made up or down based on performance against specific metrics usually quality of care or service use. and then shared savings. we will talk a lot more about some of this stuff where there is an incentive for spending less than a target amount. if you achieve that the provider

and in this case medicare will share in the savings. now, i'm not going to go through any detail. the point is to demonstrate there is a variety of payment methods in traditional medicare. we still have lots of fee schedules but notice that some of the fee schedules have extensive or some packaging. so it's not a payment for an individual item but it's still a payment for services, individual services provided under a fee schedule. but there are per diems. under hospice and psychiatric hospitals there are episodes. in home health we moved to a system in which the home health agency receives payment for 60-day episode of care and not fee for service but 60-day episode and then finally capitation which is the payment to medicare advantage and to

part d plans. it's a fixed amount per month. and their responsible. very quickly raul it is the hhs framework for evolution of payment models. i am going to finish with just two more minutes if i can with what was in this legislation some of you i'm sure were working with it. last year's bill title was a sustainable growth rate repeal of medicare provider payment modernization act. i had to do my slides before a title was put on this year's legislation. this turned out to be the title for title i of that act called the medicare access and chip reauthorization act. the point is there is a repeal of this thing called sustainable growth rate and some notion of provider payment modernization which mostly means physician payment modernization.

briefly the background is that the sustainable growth rate which was enacted in 1997 in the balance budget act wasn't formula which passed an effort to control volume of services which is the concern about a volume-based payment method is that you get a lot of volume. what was called unsustainable growth in medicare part b spending. so spending targets were established and the theory here was if spending exceeded the target the fees would be reduced, individual fees of the 6,000 or 7,000 services so that spending would then revert back to the target that the treasury would not be out of pocket that extra spending. and, in fact since the early 2000s actual spending has mostly exceeded the targets so that

clinicians and i used the term clinicians because the medicare physician fee schedule applies to health professionals other than physicians. they should be subject to reductions. in fact in 2002 they did receive a reduction of a little more than 4.5% and based on that experience the congress decided we can't be cutting physicians fees every year by 4.5% so each year there has been a fix. 17 of them. and that means that instead of reducing the fees which there is a cumulative factor so the fees would not be reduced 4.5% but in the 20% to 30% range we have to do a fix every year. the original theory here behind this was -- i went back to 1989 when this was first talked about this notion of putting a total cap on physician spending and reducing fees the theory was

somehow the profession itself would discipline itself when it was exceeding this target they would establish clinical practice guidelines, self policing mechanisms so that their volume of services would come down. that never happened. and if you think about it and the many people thought about it, it wasn't a very good theory to begin with. now we are at the point and here is my last slide where the bill would repeal the sustainable growth rate specifying fee updates for -- what is called consolidated merit based payment incentive system. under this is an expansion of the concept of pay for performance. as much as 9% down, reduction in payment or increase in payment would be applied to a physician based on their performance on

measures of quality and resource usism so there is a fee schedule which has specified updates but that fee schedule to any physician can be adjusted by their performance. and that is the notion of improving value. and then finally the bill would set up alternative payment systems with 5% additional payment going to those physicians who actively participate with what's called alternative payment methods such as accountable care organizations, patient-centered medical homes, bundled payments if they are shown to be effective. so there is an incentive in here to move away from fee-for-service and in this case it is fee-for-service to alternative payment methods. and that sets up the next discussion. excellent.

pass the clicker to the distinguished doctor. he is the acting deputy director of the center for medicare and medicaid innovation what trisha referred to as cmmi. you have one of the acronym-like things explained. he holds medical and law degrees completing a residency in internal medicine. spent a good deal of career helping respond in the fast changing world of health reform and asked him to bring us up to speed about what they are doing to identify and spread helpful innovation in health care delivery and payment. thanks for being with us. >> thank you so much for having me here today. i want to start first by thanking you for having me here today and it occurs to me that i see a lot of young congressional

staff in the room. probably the most important thing you will learn here today from me is that if you ever want -- you will have fun with this fact in your careers. fact if you want to see a member of the executive branch and squirm a little bit, invite them to the building and put them on c-span and ask them a bunch of questions. that is what you will see over the next ten minutes. this is an overview. i will give it tew you in three parts. parts number one is why this is important and what are the goals let's start with the patient. the way that we pay for health care actually matters. that is my thesis. if you remember nothing else i say today is all in that one sentence. it matters because it signals to the providers and the market what it is we value as a payer,

a society and a nation. fee for service sends one signal to providers that the more you do, the more volume you produce the more we will pay you. and the purpose of cmmi and payment delivery reform is to send a different signal to the market. here is a practice in southeastern pennsylvania. they are a participant in the cmmi model called comprehensive primary care initiative. they do some things that are different than a traditional fee-for-service practice. they provide proactive preventive care to their 19,000 patients. they use clinical decision support. when a patient has a missing lab or screening their electronic medical record alerts the provider. and then they risk stratify their patients to identify patients that are high cost or likely to be high cost and sick. and they take care of those patients in teams.

and the teams include a doctor nurse and a care coordinator. it is a different way of practicing medicine. the question is how do you move from a fee-for-service world to a world that looks more like this where physicians are practicing in teams and providing proactive preventative care. so we are doing three things at a high level. number one, we are trying to change the way we pay providers. through the innovation center testing new models of payment and if they work expanding them nationally. number two, changing the way that providers deliver care. so giving providers the tools that they need to manage population health, to help them learn from one another and to promote patient engagement. and thirdly information. so being transparent about information, getting as much medicare and medicaid data out into the world as possible and promoting the uptake of

electronic health records to make sure that both providers and patients have information they needed to make the right decisions about their care at the right place at the right time. this is a basic taxonomy. i spend most time talking about the first bucket of payments. this is the taxonomy that bob alluded to of how to pay providers. this is my entire world. if you think of it category one is fee-for-service as it existed say 20 years ago. fee-for-service, pure fee-for-service with no link to quality or value. category 2 are fee-for-service payments, pay-for-performance with some link to quality or value. they think of programs like hospital acquired conditions required program or on the physicians side pqrs or physician value modifier. category 3 are alternative

payment models, work of the innovation center. these models are largely built on a fee-for-service architecture. things like accountable care organizations, bundled payments, advanced primary care medical homes. category 4 is the future where payment is no longer tied to the delivery of a particular service but it is tied to taking care of entire populations. these are the goals that secretary burrwell announced this past january 26. really focus on the dark blue circle here on this page. so the dark blue circle is percentage of medicare fee-for-service payments and alternative payment models. in 2011 there were zero. in 2014 at the end of 2014 about 20% of the $362 billion of

medicare fee-for-service payments excluding medicare advantage but numbers are similar. about 20% were alternative payment models. the goal is that by the end of 2016 30% of medicare fee-for-service payments will be in new models that work and 50% by the end of 2018. this is the first time in the history of the medicare program that we have set broad national goals. and what's really critical to understand that it is not just a medicare project. this past wednesday at the white house you may have seen that president obama kicked off something called health care learning and action network where we have convened commercial payers, state medicaid organizations and purchasers to join us in matching or exceeding these national goals. and for the last five years cms through the innovation center has been using a number of strategies to bring the private sector along in reaching these

alternative payment model targets. in a number of models we convene commercial payers and ask them to do models with us. in some of the models like pioneer acl model we give providers the incentives and say we will enter this contract with you but at the end of the second year we want you to enter alternative models. thirdly, we partner with states. states have a lot of power to convene commercial payers and help us achieve these targets. so part two, what are we seeing in terms of results? at a very high level and taking out a little bit of a risk knowing who else is on this panel so we could have a robust debate about this. one fact is absolutely true. over the years 2010 to 2014 we have seen unprecedented slow down in per capita medicare expenditure growth for parts a and b. the reasons behind this are

multi factorial. we think part of the power here is changes in payment and the way we are paying providers. we've seen significant reduction in medicare all cost 30 day hospital readmissions. this means that from 2010 to 2013 about 150,000 fewer medicare patients were readmitted to hospitals. readmissions are a key measure of health care quality. pioneer aco, just by show of hands, how many of you have at least heard of the term accountable care organization in the room? almost everyone in the room. i will give you a 30-second dramatic oversimplification of what an aco is. an aco is a group of providers that get together and they say "we are going to be accountable for these 10000, these 20,000, these 30,000 patients." and this can be in the commercial world or it can be in the medicare world. now, in the medicare world, what

that means is that we look at these ben fish united nationseficiary fisheficiaryiesbeneficiaries, how much they cost over some his for i can period of time, and that's the baseline. then we use some formula to project out what we think they are going to cost over the performance year. that's the benchmark. and an aco contract is basically a deal between the group of providers, the aco, and medicare. and we say if you beat that benchmark, we're share in the savings. if you exceed, that we'll share in the losses. by the way, we're going to measure you on 33 measures of quality and we're going to adjust those payments based on your performance on those measures of quality. so we have results from two years of the pioneer aco program. we're now in the fourth performance year but we have two years of public results. the pioneers beat national benchmarks on 15 out of 15 quality measures for which there are comparable national benchmarks and they beat them on four out of four patient

experience measures for which we have comparable national benchmarks. then they improved by a composite of 13 percentage points in the second year. for two years in a row they generated savings cumulatively of about $184 million and the savings per aco increased from 2.7 million in the fist year to 4.2 million in the second year. so pioneers are organizations that are pretty advanced they're -- they have some experience in bearing risk and quite a bit of experience in delivering care in this new world of delivery system reform. the partnership for patients is part of our pay for performance. partner for patient s iss is where we asked ceos to reduce patients in

hospitals. three numbers over the years 2010 to 201350,000 lives saved, 1.3 million patient harm events avoided and $12 billion in all payer savings. very brief just a couple of seconds on the cms innovation center. this was created by the affordable care act, section 3021, it's one of the most inspired sections of the aca. i love it. it's -- [ laughter ] i would think of it this way. we are scientists so we are testing models. if a model works, we evaluate it. we have 50 ph.d. research level scientists who work with us to evaluate these models. if they improve quality and cost remains neutral or option number two if quality is neutral and cost is reduced or option number three, the one we all hope for, if quality goes up and cost comes down the secretary of

health and human services has the authority to expand these models nationally. their duration and scope. this is a quick overview of our portfolio. we're testing about 25 different models. i could not talk about all of them today but it's in your package. this is a slide that just shows that innovation is happening pretty much everywhere in the country. this is a map that shows where our acos are. so nearly eight million 7.8 million medicare beneficiaries are currently aligned or assigned to acos, we have more than 400 acos operating now. last slide, here's what i think you will see over the next couple years. we are increasingly focused on integrating with the rest of cms, so really important point. cmmi is part of cms, we could not function without the rest of cms. everything we do is to improve the programs the agency runs. we are focused on evaluating results from our models

launching new models to round out the portfolio. you will see a steady drum beat of results over the next few years and expanding models that work. one very last thought. trisha gave you three reasons why medicare is important. i want to add one more that -- to that list. here's reason number four. all of us should we live long enough will become medicare beneficiaries. you could work on many other areas of domestic policy and it would never touch your personal life. but if you live to the age of 65 or become a patient or become disabled god forbid you will become a medicare beneficiary and that's why delivery system reform actually matters. because in the brief time i've been in government i have been admitted to a hospital myself, i've taken my children to see the pediatrician. we will all be patients. so this matters not just as a matter of public policy or to your bosses but to all of us as individuals. so, again, thank you for inviting me here today. i look forward to your

questions. >> thank you very much. our final panelist today is sheila birch. she's a faculty member at the harvard kennedy school. she's affiliated with baker donaldson, a public policy law firm. spent a number of years on the hill as many of you know, most prominently as bob -- senator bob dole's chief of staff. she, too, was a member of med pac and serves on a number of nonprofit corporate boards. sheila is our designated visionary today. she's charged with identifying some of the major challenges facing medicare as it enters its second half century and i'm looking forward to hearing from you. >> thank you very much. i have to admit i've never been called a visionary, but maybe it's my trifocals that are working in my interest. certainly reflecting my age. i want to -- it's a great pleasure to be here again and to be with my colleagues on the panel and to talk about the

medicare program. i'm essentially going to start with juliet left off and try and reflect looking forward on what some of my colleagues have commented on in terms of the challenges facing medicare. but i wanted to begin by underscoring a point that raul made and that is that how we pay, who we pay, what we pay for makes an enormous difference. as we've seen since literally the passage of the program in '65, as medicare goes, so largely goes the health care delivery system. we saw in the how we transitioned the payment for end stage renal disease and where that occurred and really in a great many places medicare has led the way. obviously private sector has an enormous role again, but, again, the policies that we set, the collaboration we've put in place with respect to the private sector will drive our delivery system going forward. again, let me start what juliet began and really talk about sort of these three sort of groupings

of issues, both spending, financing beneficiaries, and providiers and, again reflect a little bit on what we might expect short term and long term in terms of looking at the program going forward. while much has been made about the slowdown in medicare spending, it will continue to be an issue of tremendous concern to your colleagues and to your members. in part, obviously, as you can see from the pie chart that juliet gave us it consumes a big piece of federal outlays and that piece is growing. it is an issue because a portion is financed by payroll taxes and the work force is not expected to keep up with the number and the growth in beneficiaries. by 2030 we're looking at approximately 2.3 workers per retiree. so that essentially is an underpinning of the financing of the program becomes an issue in terms of long-term stability. at issue as well is because of tin creasing percentage of funding that essentially is required out of general

revenues, the other portion of the medicare financing package juliet pointed out leaving far fewer resources available for other federal priorities. again, if you look over time at the changes in social security, medicare and medicaid they become an increasingly huge part of what it is that we spend on the federal side. medicare costs are, in fact slowed down as was pointed out. they're expected to go to 4% from about 2014 to 2023. again, a smaller rate of increase than we have seen in the past certainly from the years i was on the hill and on med pac but at that same time, the gdp is only projected to rise 3.5% and the cpi 2.2. so essentially we continue to see the outpacing of costs generally by health care costs. so, again all of this causes us to continue to concern ourselves with what medicare's spending. and, of course, the demographics are working against us. the baby boomers are arriving and while many of us are

relatively healthy -- notwithstanding my trifocals -- at the outset and arguably less expensive for the near term, that changes. the good news is we are living longer. the bad news is we're more expensive as we get old unless of course, you i love the 95 then you become less expensive or you die. in 2011 the average per capita medicare spending tripled between the ages of 66 and 96. this is not entirely attributable to end-of-life care. i mean, we hear a great deal of what that contributes, but that is, in fact, not the only factor. in many cases, they are individuals who are chronically ill and the management of these patients is enormously important. and, of course there are the shear numbers of those who are going to be eligible. the first baby boomers began to arrive in 2011 when approximately 40 million americans were over the age of