and the methodology that if all our state legislators can adopt we can come together in our country and solve all pertinent issues.çó >> my quote came from julia adams, the secretary of the senate. she said, remember to be humble and have a str be kind to the people you meet on the way up. you'll meet them again on the way back down. >> i think in particulld in congress itself, oftentimes we ever a lack of true statesmen. as much as i may disagree with him, senator john mccain did something impressive last year. heçó committed to the veterans affairs form bill, m < how staying away from torture is at the center of our democracy. i think at the point we have people willing to cross the aisle, willing to make decisions with people theymy may not often agree with, that's essentially what we need to maintain the security, the integrity of our nation as we go on. >> high school students who generally rank academically in the top 1% of their states were

in washington d.c. as part of the united states senate youth program, sunday night fá8:00 p.m. pacific on e1c-span's q & a. on wednesday a panel looks at trends in health care costs. looking at the role of the affordable health care act in the slowdown of health care in the last few years. this was put together by the alliance for healthc reform and the kaiser foundation. good afternoon. i am marilyn sarafeeney with the alliance of health reform. along with senators carter and blunt, i would like to welcome you to today's briefing on the subject of health care costs. i would also like to thankw3 our partner in this briefing, the

kaiser family t(foundation and we have with us today as my co-moderator drew altman who is the founder of the kaiser foundation. our mission today is to try to take some of the mystery out of health care costs. our experts are goingt( to explain the trends, the prospects moving forward, what is driving health care costs, and what policymakers and the health care community are already doing to try and help keep costs down. so a couple of housekeeping e!p r(t&háhp &hc% matters. first, we are covered live on c-span today. if you are watching on c-span, you are welcome to also follow us on twitter. we will be live tweeting with the #hccosts. if you are watching on c-span, we invite you to submit questions via twitter again using that #hccosts. i would also like to note that

you have a blue evaluation form in your packet. before the end of the briefing today, if you could kindly fill that out. if you are a congressional staffer, you also received on the way in a yellow survey. we would be extremely!u grateful if you could fill that out and give it to one of our staff members on that will help us to know what your interests are andg us do a better job in puttingawq on these briefings. so i'd like to introduce our panelists today. first to my far right, we have gary claxton. he is vice president of the kaiser family foundation, and thefá director of its healthcare marketplace project. gary is going to explain the health care trend and what we can expect moving forward. to my left is jay antos. he is the scholar in health care and retirement policy at the american enterprise institute.

understand what factors are driving health care costs. to my far left is jeff selburg. else executive director of the peterson center on health care. jeff is going to address the various programs and approaches that are already under way and the strategie$/to keeping health care costs at a manageable level. and to my right, i have already introduced somewhat my co-moderator, the founder of the kaiser family foundation. he is a member of the institute: of medicine and was commissioner of the department of human services for new jersey. he was director of health and human services at : pugh chartable trusts and also vice president of theh2÷ robert j. johnson foundation. and drew also served in the carter administration. drew is going to start us offq by giving us some perspective on the issue of health care costs. by coincidence, he has a column in today's wall street journal

on the subject and you also received a copy of that on your way in. so i'm going to turn it over to drew. >> some of you remember the carter administration right? it's great to see so many of you here, i just have to say a word about marilyn. i starteni working with marilyn when she was at the national journal asking me hard questions a lot of the time, and then she worked with us at kaiser health news, and i got to ask herxd some hard questions sometimes, and now we're working together at the alliance. it's great to be working with you again. and it's amazing to see so many of youqedhere. thank you for being so interested in this topic. i actually started studying the problem of health care costs a long time ago when mi -- m.i.t. sometime between the passage of medicare and medicaid and when you were all born, just looking at the audience. it's kind of tempting for me to say i feel[ a little like a football coach who has seen all the plays and formations and evgniq! trick formations from

my new england patriots y80÷t one chart." and it documented what, since the beginning of time had been the basic dynamic for the problem of health care costs thechlt moderate and then they bounce back with peaks and valleys which are driven by both changing economic conditions and changes in health policy and

changes in the health care marketplace, and also just the thread of changes in health policy or impending changes in the marketplace. now we're coming off several years of unusual moderation in the rate of increasing health spending. it's really historic -- let's call it extreme moderation. it's really historic moderation in the rate of increase in health care costs. gary is going to show you the data, so i'm not going to do that. but just a couple of big picture points for you to keep in mind. one of them is that there is widespread agreement that the slowdown is due both to the sluggish economy and to changes in the health care system by which we mean changes both in health insurance and in the health delivery system with the economy being the biggest factor. but there is -- how should i put it -- i guess i would describe

it as modest but not profound disagreement about the relative contribution of each of those factors, and i'm sure joe and the rest of us will be talking about that today. and since i'm sure you're going to ask, this far less agreement about the role of the afca about the role of the affordable care act, and frankly if it has laid any role at all, and we will all have views on that. the big question really is has the sad history these peaks and valleys you see here in the chart, been repealed? have we somehow boldly gone on health care costs where we have never, you know ever gone before? is that even plausible to anybody? so we're beginning to see now, just rheevery recently, an uptick in the rate of spending, which was predicted in most of our models, and the model of kaiser.

and i think the question is not if spepdnding grows rapidly again but when and how much, and is it a lot or is it a little? here's one thing to keep in mind, and that is that this is a business where small increments really do matter. so think about this rule of thumb. a 1% difference in the rate of increase so 1% up or down in the rate of increased health spending, that's $2 trillion over a 10-year period. so a lot of what you do a lot of what we do in health policy when we work on the problem about -- of health care costs, it's, you know, not the effort to see if we can totally change the health care system or cut health spending in half it's really more the effort to see if through 100 little ways or 50 little ways we can shave 1% or half a percent or a quarter percent off of what that rate of increase in health spending

would otherwise be. just one other big picture introductory point i wanted to give you. keep in mind also that this is a multi-facet multi-faceted problem that you need to deal with in your jobs from several different angles. so you also focused a lot on medicare and medicaid because they're such a big part of the federal budget and, and spending on those problems are affected by a whole bunch of factors which can be different from the factors which drive national health spending. and just lastly you also need to deal with health care costs from the perspective, right of constituents and voters. so it's worth pointing out that experts and people and, you know, in my experience experts are also people but maybe not always, view the issue very differently, and that's what that wall street journal column you have in your packets i wrote down is about. this may be obvious, but it's worth saying. it would not be a great idea to

tell the average constituent in the town, meaning that they should be grateful because they live in this wonderful period of great moderation in health care costs because they might look at you like you're a little bit crazy, and that's because from their perspective, their premiums are going up, their deductibles, especially are going up at a time when their wages are flat. and so the last chart i just wanted to get into your heads is i don't think it could show is any more clearly. this was 2014 which was a record of health care spending and premiums. just 3% of americans told us they thought health care costs were going up slower than usual. and i will end with this kind of my framing for the discussion. the national health spending problem, the health and the federal budget problem the health costs as a consumer issue problem, these are all related but different dimensions of the

overall health cost problem which, in your jobs you all need to deal with. so as you listen to the briefing this morning, listen for not just one problem but at least those three problems. with that i'll turn it over to gary. >> i'm sorry -- okay, it's working. good afternoon everyone. i just have a couple minutes to try to talk to you about health care costs, what they are and how they've been changing over time. i'll try and do it kind of quickly so we have plenty of time for questions. this first slide show is information on per-person spending on health care over the last 50 years or so a little bit longer than that. this information comes from the national health accounts, which is sort of the nation's way of keeping track of how much we spend on health care. the total -- from what you can see from the slide the total expenditures on health care in

the u.s. in 2013, which is the last year with final numbers was $2.9 trillion, and this translates into about $9300 per person. it also the little numbers on the bottom show it represents a little over 17% of the gross domestic product or sort of national income. health care costs have risen steadily over time, from about $1100 per person in 1980 to almost $4900 in 2000, to the $9300 last year, or in 2013. they've also risen faster than other goods and services in the economy. health care represented about 7% of gdp in 1970, 12% in 1990, and as i said, 17% in 2013. while things have slowed recently, as drew pointed out the rapid growth in health care costs over the previous decades is what really raised

policymakers' concerns about the ability to afford and sustain our health care spending over time. obviously, why we care about health care costs just to say the obvious is it costs money obviously, for people to consume health care and for governments to support health care programs. but also the more money we spend in health care the less money we have to spend on other things we care about, like education at the state level. this next chart shows how the u.s. health care spending compares to that of other nations, and some of it didn't come out very well. but generally, the u.s. spends about $2600 more per person than the next closest country which is switzerland, and about twice the amount per person as sort of the average of other nations which are -- which have large populations and large -- and

high incomes. >> if i can just stop you for just one second gary, you have the full graphic, even though it's not showing properly here you have it in your packets, and i wanted to also mention that if you're following this briefing at home on c-span, you can look at all of these presentations and other supporting materials at our website which is www.allhealth.org. okay. sorry. gary? >> no problem. and when you look at the spending in terms of gdp as i said rgs the said, the u.s. spends about 17% on our health care. these other countries spend about 9 to 12% so much, much less. a sort of other dimension of the problem or the issue of health care is that different programs, different payers different -- there's different ways to look at it and they all have their

different political and economic dimensions. i have one example here which shows medicare spending per enroll enroll enrollee versus enrollee over a couple different decades. what you can see from it is although the growth has been very similar, until recently when medical growth has been much slower, medicare seems to be a bigger topic than medical health care spending. one reason is where private health insurance, while it has a big effect directly on the budget, those costs are indirect on the tax system, so they're not as visible. another is that medicare has a demographic issue where the population is aging. there are many more people going onto the program, so even if medicare spending per enrollee

goes up at the same rate as private spending or just the rest of us the cost of the program is going to grow because there's more people in the program. there are also some issues around the trust fund and payments for part a. i didn't want to so much point out the medicare issues here although they are important to what you all do but to point out that each program and each sort of perspective has its own important factors that you need to consider when you look at the health care cost issue. we're not even mentioning today the effects of health care costs on individuals and their out-of-pocket expenses and their ability to afford their out-of-pocket spentszexpenses. we could do a whole briefing on that. as drew mentioned, health care spending has slowed dramatically recently. this slide shows that the average growth rate of health spending compared to the economy as a whole has been faster for the last -- the previous four decades and sometimes considerably faster a couple

percentage points. until recently when really, health care spending is actually going up slower in the last couple years than the economy this recent slowdown in health care spending which began, as i think drew said, in the mid-2000s but has really accelerated recently into record low spending has raised the question as to what's going on. some people, including a paper that we wrote at kaiser with some others, attribute much of the slowdown to the economic downturn that we experienced recently and the slow recovery. that paper shows that the lag growth of gdt is correspondp is correlated with spending. others acknowledge that the economic slowdown had an effect but they would say the structural changes in the health system primarily higher cost sharing in insurance policies, but also things like better data systems and payment reforms, played a larger role in slowing

the health care spending. so why does this matter? as drew said because the answer to the debate about why spending has slowed down suggests something about what health care costs will be in the future. if the slowdown was primarily caused by the economy, the slow economy, then health care spending should begin to grow again as the economy recovers and we may see something that looks more like the traditional pattern of health care spending greatly going up much faster. if the structural reforms dominate, we may see a longer period of slow growth. this chart shows the -- both historic but then the projected spending from the actuaries at the centers for medicare and medicaid studies. their take on going forward is that health care costs will rebound as the economy rebounds

but will not go up at the levels that they have gone up in the past. in general, they're predicting health care costs in the next 10 years to go up at the rate of growth in the economy plus about 1.1-plus percentage points, which is slower than it has gone up historically. as drew pointed out the amount there matters a great deal if. if they're wrong by half a percentage point, you're talking about a trillion dollars, so it's meaningful. if i may make one final point. they're hard to see on the slides, but you may notice that a number of the slides that i showed today are attributed to the peterson-kaiser health care tracker which is a new program that we have with jeff and the peterson center on health care. the tracker is a place where you can find a lot of this type of cost information but also information on performance measures in health care, and just today we introduced an

interactive tool which will allow you to use information from the international health accounts and to draw your own charts and look at health care spending for different payers in different periods of time and different programs and set your own parameters and look at them in nominal terms and real terms and things like that. so it's pretty good, and we hope you'll check it out. thank you. >> fantastic. can you pass the clicker down? we're going to turn now to joe antos, who is going to talk to us about what is driving health care costs. >> thank you. thank you, marilyn and drew. it's a pleasure to be here to talk about this topic. it's always good for people to begin to come to grips with reality about health care spending in this country which is, as drew said it's bouncing back up. which is good news and bad news, of course, depending on who you are and how you look at it.

everybody has their favorite slide -- let's see -- how do you do it? oh. okay, good. so here's one of my favorite slides. this shows health spending growing as a percentage of gdp. it's a lot smoother than drew's slide, but it basically tells the same story. i will try to describe some of the many factors that people have suggested that have contributed to what really is pretty much a relentless steady growth in health care spending over the past 55 years, which is as far back as the data really takes us. why isn't it going forward? can you help me?

i had it backwards. which end is up? i'm an economist so that really tells you something. here's gary's slide if you wanted to see it and i want to thank gary for producing that slide. since he already talked about it, i can move on. it's always good to know what we're buying with our health care dollars. and so this is just a straightforward kind of slide. one of the things that people often say is that health spending has changed the nature of health spending has changed. that we've moved away from hospitals and we've moved towards outpatient services of all sorts. it turns out that isn't what the data shows. if you go back to 1960, hospital spending as a percentage of national health expenditures was 33%. now it's 32%. physician and clinical expenditures basically stayed about 20%.

the one interesting part of this chart that really moved around in the last 50 years or so is prescription drugs. if you look at the end points, all you see is kind of pretty much the same story. it started at 9.8% of national health spending in 1960 and is now about 9.3%. but unlike the other major categories of health spending, this is the one category that has really moved around substantially. it -- prescription drugs dropped as a share of national health spending to about 4.5% by 1981 and then it really didn't begin to grow substantially until the mid-'90s. and that is consistent with the technology story in this country with regard to prescription drugs, at least. we saw an explosion of medical innovation that led to

tremendous new drugs. staten's, for example, being the biggest driver of that. and similarly, in recent years we've seen that percentage drop off and precisely because of staten's mainly, the big staten's dropping off of patent protection, and frankly, a little bit less innovation although we're beginning to see some change there. anyway -- let's see, what do i want to say here? the other thing i want to say about this chart is i'm mostly going to be talking about the kind of health spending is covered by health insurance. but you'll note that there is a small but substantial portion of this chart that we're spending on what is essentially long-term care. that's the nursing care facilities and continuing care retirement communities. and that doesn't even include the costs that people incur that

don't show up in the national health accounts. so that's a major fak r torector. i'm not going to try to explain that directly. so who is paying? this is also good to know who is paying and you can see that about a third of this spending comes from private health insurance. medicare and medicaid account for another third or so out of pocket and other sources account for the rest. so let's move on to health spending growth. it, of course first the inevitable. we're going to see health spending grow over time. the factors you all know. it's an aging society. it's an economy that we're fortunate enough to live in a country that has continued to grow. despite the big recession we had recently nonetheless, the economic news is, i would argue, better here than maybe any other country in the world.

we're living with more chronic disease. that's partly because we're living better, eating more, maybe not exercising enough, and we're living longer, which is one of the reasons why chronic disease is a bigger factor. the longer you live, the more likely you are to have a chronic disease. financing, of course is a big big factor. this drives a lot of the spending. the fact that we have health insurance makes it less expensive for people to buy health services. health insurance is a combination of prepayment for routine expenses and coverage for, you know, unexpected totally unaffordable costs, but it's that prepayment that's really driving us. and the fact that hospitals and doctors and other providers are assured that the costs will not get in the way of treatment means that essentially they're more free, they feel more free to do the right thing in terms

of recommending what could be very expensive care. obviously there are very large subsidies. the medicare and medicaid programs are heavily subsidized. tax subsidyiessubsidies. it's hard to find someone in this country that don't have part of their health care subsidized by the taxpayer. the way we run these systems is funding. if you're a physician, say, in the fee for service world if you provide more services you get more pay. it's very simple. financial incentives promote innovation as well. so, you know, there is a yin and yang in all of this. we're spending more money but we're getting more innovation. but that often adds to spending. a fragmented delivery system. here is a bit of a puzzle. on the one hand we all say and

i believe this myself, because we deliver health care in a fragmented way, mostly because it's fee for service and we're not having this kind of coordinated care that health policy people talk about all the time, that leads to inefficiency, suboptimal care, unnecessary services. we're spending more money and getting less out of it. on the other hand, i wouldn't be an economist if i didn't say well consolidation in the local markets must be driving up prices and that must be adding to our cost. i'll let you ponder my schizophrenic stance on this. and transparency, we've been talking about this recently we really don't know what it costs if we're consumers. we don't know if the service is good for us, we don't know if the providers have a good track record and this also contributes, i think, to the cost. so the question ultimately is, is there a cure? and i think the real question

here is, is the growth in health care spending too rapid? i think that's a philosophical question. it's also a financial question, but it's very difficult to say that we need to cure something. again, it depends on your perspective. if you're looking at it from a federal budget perspective, there is a big issue, especially when you realize that a very large contribution to our national debt is in fact, caused by health spending. but from a personal standpoint, what i spend, you know, i spend what i think i should spend. at least, that's what i think, but i'm not fully informed. so this is a really difficult question. it's a difficult policy question. it's a difficult question for people and their families. will eliminating waste and efficiency put us on a sustainable path? we talk about this all the time. i would argue no. if you cut out all the waste in the system you would still have

a substantial amount of spending that would still grow. so it's really the question of how much growth do we want and as i say this is a difficult question to answer, and i will not plunge into competition regulation consumerism, but that certainly relates to my schizophrenic view on that other slide. >> fantastic. thank you. before we turn over the mic to jeff, i just wanted to remind you that if you would like to follow the conversation on twitter, the #is hc-- hash tag is hccosts. if you have a question on twitter, please use that hash tag and we'll pick it up here. after we listen to jeff, we'll have a question and answer period, and while we have two mics in the room where you may ask your questions we also have cards in your packets that you can write a question on and hold it up and a member of our staff will come by and get that. okay. let's turn it over to jeff, who

is going to talk to us about what is happening and what can happen to keep costs down. >> thank you marilyn. i'm going to take just a little different tack but before i do that, i want to reinforce gary's comments about the peterson kaiser tracker. our intent with the peterson kaiser foundation is to try to show whether or not this most vital of economic sectors' health care is improving in terms of its value proposition. in other words are we creating value over time? are we getting more to spend less or are we neutral? it's more challenging, as you might imagine, while tracking the spend and the components of the spend is challenging enough. identifying the measures to determine what we get for that spend is proving challenging. but we believe over time we'll

be able to demonstrate just what this most vital of economic sectors in the u.s. is doing with regard to performance. different tact. the institute of medicine, i think, has shown that about 30% of all health care expenditures do not add to the value of the outcome's intended. some would classify that as waste. let's just talk about what that means. 30% waste in a $3 trillion sector is something on the order of $800 billion. what is $800 billion? it's equivalent to what we spend in k through 12 education all in. it is double what we spend in all of research and development in this country. so it's a very very big number. now, one of the ways that the

institutes of medicine came up with this number is it studied variation in health care, variation in quality outcomes, variation in cost. and it found a very high level of variation, not only across the country but within communities. it also found that cost and quality, frankly are mutually inclusive. in other words, lower the cost, higher the quality in the outstanding programs they identify. now, most of us would lament this variation, this high degree of variation. we see it as a wonderful opportunity to improve. because there are the positive variance out there the exemplars, the less than 5% that are generating the highest quality outcomes at the lowest cost. and our intent in the peterson center on health care is to

identify those positive variance, those exemplars validate the work that they're doing by identifying what the active ingredients are that generates that exemplary and then replicate on a controlled basis, a limited basis and a mass basis. i'll give an example of that in just a moment. i know i'm in the land of policy here, which is foreign territory for me. my background is being out in the field of practice. and i will say that policy is extremely important in this effort to face the issue of improvement in health care. policy in my mind creates the conditions under which the field is willing to engage in change,

engage in improvement. i found, however, that sometimes you can get so enamored with policy that it's -- you come to the belief that it's all you need. that somehow the payment incentives will be aligned, somehow regulations will be aligned, and then the miracle will happen out in the field. we don't believe that. we believe that practice is as important as policy, and that's where we're choosing to focus. practice in terms of what i just described identifying the exemplars and then replicating the key features that they have that generate that exemplary performance. i'll tell you a third element that is critical in this and that is patience. we found that in integrating patience into the design of these new models, it's critical if we're going to have that exemplary performance. so it isn't just designing with the patient in mind, it's designing with the patient

involved. so those are the three p's: policy, practice and patients. so let me give you an example of the work that we're doing which hopefully will give you just a little bit more of a granular idea of what i'm talking about. we funded standards for the clinical institute of research with arnie philsteen. what arnie did was the measures he used were the top quintile, top 20%, and all-in per capita costs, the low end 25%. he found that a little over 5% practices surveyed did both. went out and site visited 11 of those practices and came up with ten features, ten features that we believe correlate to that

exemplar exemplary performance. now we're in the process of what we call limited market test with five practices to determine if, in fact, these features are the cause of that performance. replicate those features in those practices have a control group to determine it is in fact, causation, and then really understand what of those features have leverage in terms of improvement. then go to 30 to 50 practices, replicate, and then go to a mass republic replication. we don't claim to know how to mass replicate, if that's even a phrase. but that's what we're determined to learn is that approach. we think there is a lot of different approaches in adult education that we can use, whether it's the kahn academy,

or language like rosetta stone or pinsler. you might think, boy, he's getting farah afield here, but there are approaches we're going to have to adopt to get to the point where the 5% exemplary performance because the 95% standard in the community. i have been challenged on this in the sense that the question has been asked well, aren't those 5 percenters really exemplary in terms of people? aren't they the geniuses? aren't they like the great teachers? you can't make a good teacher a great teacher. we would strongly disagree. what we're finding in these practices is yes there are great people in those practices, but they surrounded themselves with systems and processes and other great people that can be replicated. so we have great optimism in

moving this sector by engaging in identifying validating and replicating those exemplary practices, whether they be in primary care, high cost-high need patients, and also advanced illness management. thank you. >> so we're going to start our q and a session so if you have a question, please step to the mic or write your question on the card and we'll have our staff pick it up. in the meantime i'd like to ask a first question, and we've heard a lot of discussion about moving, moving away from fee for service to coordinated care. the health care industry the sector, is moving quite a bit toward value. so how long is this going to take? what is the time frame here, and are we already seeing some results, and when will we see

some significant results? when do we actually turn the major corner here? >> well okay i'll go ahead and plunge in. it takes a while before you really know you have results, so i think to the extent that the affordable care act may have opened some doors it's way too early to know. it is certainly the case that there is a lot of talk about changing the way health care is delivered, but up,you know we do go back to some of our favorite examples. geisinger, for example, the health care clinic. these are organizations that are very successful and they didn't get that way overnight. it really has taken them decades and they're continuing to work on improvement. i think that's the key here. don't expect a miracle any time soon but let's not stop working

at trying to resolve the problems that we know we have so we can move on to the problems we don't know we have. >> i have a perspective on that. as long as i've been in the field, there were always basically two schools about how to approach health care costs. one came mostly from conservatives who believed in market competition more skin in the game insurance, and the other came mostly from liberals who believed in government regulation. now we're in a slightly different phase where through payment reform, some of the things jeff was talking about we're actually trying to get inside the black box of medical practice and change it. there is reason to be very hopeful aboutthat, and jeff outlined some of those reasons. there is also reason to be skeptical about some of that. joe talked about consolidation and being schizophrenic about consolidation. joe also talked about it takes

time and can we get beyond the big integrated health care systems to the mainstream health care system with some of these reforms? my view of it is, let's not be religious about it, we need evidence. one of the nice things about the medicare demonstrations is they are all tied to independent, rigorous scientific investigations which will give us some results about what these changes are. but it is a new approach. it is a new approach to -- if you look broadly on how we've taken over the problem of health care costs in 30 or even 40 years to how web tackle this. >> marilyn i know you have a stack of questions there but i think this is a great demonstration of how this is a two-step process. value-based payment is, in my estimation, a very good thing. it does provide an incentive i think, for greater efficiency and effectiveness where, as i

think joe said, fee for service is volume-based. the greater the revenue, the greater the incentive. the fact is though, you have to follow up with more effective delivery, more effective practice or you're not going to get higher quality and lower costs. all it does is create a condition under which improvement can be incentivized. >> okay great. if you could please identify yourself? >> thanks, marilyn. mike miller. i'm a health policies physician's consultant. i've been doing that for about 26 years. comparing volume to value, there is also new initiatives in terms of how health care is delivered and what's considered important. particularly more of an emphasis on population health, community-based care getting care out into the community. i'm wondering if any of you are familiar with elizabeth bradley's work where she looked at international comparisons of health care spending as a percentage of gdp and also

looked at what countries spend on social services and percentage of gdp and found that when you add the two together, health care services and social services, the u.s. came out not at the top but sort our health care outcomes. i'm wondering if any of you can talk about those social services as an aspect of how we can improve the quality and reduced costs for health care and how social services might be considered as something health care payers can start incorporateing into their scheme of what they will reward? >> i'll start very quickly. there's a lot there in your question. yes, i am aware of elizabeth bradley's work and some have chosen to respond to interest and say see, if you combine those two, we're not the highest spend spender, as if that's a response to the question of cost. if you look at it look at her work you'll find that we spend

disproportionately on the clinical medical side and much less so on the social service side. i think what we're finding, especially with high cost high need patients the most effective models there high quality in terms of responsiveness to the patient living conditions, clinical outcomes at lower cost, effectively integrates social services and the medical model together. so how does policy then follow that practice to create conditions that can happen. vexing issues in terms of insurance models including social services. there have been models that work on a per member per month reimbursement per capita that say it's still worth our while to provide those social services because they lead to such a reduction of the medical services. i think we're right on the

frontier to understand how to integrate these different services. >> i will direct this first question to gary while others are welcome to chime in. while health care spending is at record lows premiums why growing more slowly aren't show showing the same historic growth slowdown. why not? >> at least in our employer survey, premiums have been grow growing very slowly, not quite as slowly as health care spend spending overall. part of the reason overall health care spending is part of retukzductions recently private health insurance doesn't have quite the same effects. also, when you look at changes in overall health spending, when people lose health insurance they actually spend less that goes into the health accounts, means less health care spending overall.

the average premium for people who have insurance doesn't necessaryily go down because some people lose health insurance. that's a couple reasons. joe may have some others. >> it has been low? >> it has been low. the way we do our survey we can't say it's the lowest we've ever seen but it's really low. >> so, also there's a lag in all of this. you can't -- you can't have the premiums go down until the insurer has actually experienced actual slowdown in spending. so that's going to take some period of time. i don't want to speculate how long that would be. as drew pointed out in his opening remarks we seem to be headed back to a more traditional higher rate of growth of spending so this may be a very temporary phenomena. we have another question one question from twitter as

reminder if you want to tweet a question the #is hchccosts. >> should we change the way we educate doctors in the new delivery models. i would add to that nurses and advance practice nurse is in particular are playing a very large role in the new models of care delivery. should we also change the way we are delivering educateing them? >> in a word yes. i think in italian you would say -- just to confirm that -- what do they need to change? i would say design is a key issue, flow of care, integrated, coordinated, team-based care. integrateing some of the things we talked about in terms of social services with the medical model, empathy orientation to

the community. population-based. are all elements i think need to be fully integrated into a medical school curriculum. >> okay. let's talk a little bit about prevention and whether prevention should be at the forefront. if not why? and also what is the data behind prevention and whether it -- whether it saves. and consumer education, of course, is a part of that. >> i'll plunge in here. prevention, it's a nice word. the most effective prevention anybody can follow is to change their own behavior, to take the advice that we ought to get off of our chairs and start moving around, we ought to get a full night's sleep, and we ought to be nice to our neighbors.

absolutely. now, the kind of prevention that people usually talk about when they talk about health spending is preventive health services. that's a whole different kettle of fish. emphasis on services, not necessaryily on prevention. indeed louise russell it must be 25 years ago, maybe 30 years ago by now, has the classic paper that pointed out the obvious, that a lot of preventive health services have to do with screening. fortunately, most of this diseases we screen for, most people don't have them. if you have a national program to screen everybody for some rare disease you'll spend a lot of money potentially on screening to pick up a very few people. there will be, of course, false positive positives, there will be false negative negatives, there will be follow-up follow-ups. it's a very complicated and

difficult subject. we need to be smart about this. what we need is a health system that thinks sensibly about what prevention is. the slogan is not where it's at. it is as jeff has said, where the delivery system meets the patient that really matters. as i say, the principle culprit in this is you and me. >> i would like to see us maybe shift our nomenclature slightly from prevention to engagement and activation regardless of where the person is in their health process. i think it's been shown i think the research is there, that says activated and engaged patients are -- result in higher quality outcomes at lower costs. regardless in where you are in your aging or disease process, by being engaged and activated you're going to be better off.

>> so we have already waded into this a little bit. what about reimbursement for wellness versus, you know other kinds of care? should we be doing this? are we doing this? is anybody doing this? >> gary, you answer that. >> certainly, we see in our employer survey quite a few employer-based programs have some sort of incentives for people to both assess their own health and their own behaviors, and then have some sort of incentives to improve those behavior behaviors. they vary from small incentives to take a health risk assessment and maybe enroll in a program to address your weight or your eating or smoking or some other things, to much -- to somewhat more aggressive programs where

employers collect biometric markers, they get your blood get your cholesterol they get stuff. in some of those programs they actually have incentives or even penalties for not having certain health benchmarks that are within norms or within target amount amounts. you may or may not get incentive incentives to try to improve. we have the range of things out there. whether or not it's a good idea, clearly we have population health problems and employers are in a position to help influence those. at the same time you can use these programs to impose much higher individual costs on people who have medical conditions, some of which may or -- some of which may not be readily amenable to change. so -- and this can be about employers saving money or

insurers saving money or about trying to improve population health or some combination of those two things and how they are implemented really will say a lot about probably their future. >> just a footnote on that, there are some court cases now on this exact point. >> there's some privacy -- there's some privacy concerns and people obviously are concerned about some of the very intimate questions that areg(y included on the health risk assessment andxd information u+ìáhp &hc% they're being their employer'a$u and when they're being asked to do it. it has been going on a few years. as theqña5programsxi have more discussion aboutn =ñ all this. >> we have a couple of questions for jeff on cb÷this lots of interest in the exemplary practices of

set of grantees on high need high cost patients. in the case of primary care, perhaps i could very briefly go into the 10 features, not all the 10 but the features that the stanford group found. what they found basically was an organization -- a practice organized around the patient. it wasn't just the physician, it was a nurse-practitioner physician assistant nurses

coaches working as a team on behalf of the patient knowing the patient's life circumstance as well as their clinical condition. like to depict that as not only knowing what was the matter with them clinically but what matter mattered to them, which is different. then, always being available 24/7, having the systems to always be available to the patient and having an attitude or a culture that said we will always be responsible for the patient regardless where they are in the system. if they're in the emergency department we're still responsible for them, if they're with a referral with a specialist we'll still be responsible for them. you could say, my goodness, how do they do this? my primary care physician can barely keep up with an eight minute visit with me much less all the things you're talking about. again, a systems approach, team approach, good solid information in terms of a medical record

good solid relationships with other components in the system. there's an example. let's talk about mass replication. you said it is possible. tell us how it is possible and what needs to happen to achieve success. >> that's what we're working on. i mean quite honestly we're looking for help in this particular area. we know that how to go into a limited market test to replicate, to really make sure we're right about what these features can do. we believe we know how to replicate practices 30 to 50 practice practices, at that level. the challenge that we have is when you go to the level of 200,000 primary care physicians across the country and is that going to be done in increments of 30 to 50 practices in what we call collaboratives or are there

dijgital approaches and adult education approaches i talked about we can utilize. that's what we're going to test to find out. if there's any out there that would like to collaborate with us in the learning, we are very open to that. >> we had another question that has to do with nationalizeing an approach that has to do with accountable care organizations. the question is, can you nationalize acos with all the variation that's going on. acos are held out as a means of, you know, leading toward value-based care, coordinated care and with the hope they will bring down costs and improve quality. >> well, there are -- you know, a whole bunch of different types of acos. that's the first little issue. when you talk about -- i don't

want to use the word "national "nationalize," you talk about spreading them widely you have to be careful about what you're define defining. it is certainly the case there are things that are called acos that have nothing to do with the medicare program. why? because it's a great phrase. we have to be with it in health policy. there are a whole bunch of organizations that follow a similar philosophy but they're not doing it the way medicare wants you to do it. and to me that's fine. why not find a system that works for you as a local health system rather than necessaryily following, especially the initial ideas that the cms had. cms has loosened up its roles but nonetheless the results

have been less than promiseing. i would say that's partly because they started off on the wrong foot, partly because it's too early to know. and partly because this whole idea for the medicare program was to get them in an organized health program without them knowing they're in an organized health plan. that strikes me a bizarre idea. i want to call patient but might also be a customer we need to enlist that person in the struggle we have in the health system to do a better job at a lower price. >> let's turn to the microphone microphones. >> joyce. a few people have touched on the lack of affordable care act. i want to get back to that for a

minute. are people thinking it's too soon to tell whether the effect of having the act or having more people have insurance is going to help mitigate health care costs and what evidence might we be looking for later that would tell us whether it's having an effect? >> i am anxious to say if you expand subsidyies for health insurance, you should expect to spend more for health care. that part of it isn't going to control -- isn't going to help the health spending issue. it really is with everything else we've been talking about, changing the way health care is delivered. with regard to the aca, i do think it is too early. i'm a little skeptical about some of the initiatives that have been undertaken. nonetheless, let's see how they work out. the other point i would make is

the a krrksca and politicians in general have studiously avoided really reforming the medicare program. it seems to me that being the biggest purchaser, biggest payer in the country that to really not take a fundamental look at fever service medicare and really ask ourselves isn't there a better way to do it and shouldn't we instead of saying, oh we solved the physician payment problem because we haven't changed anything about the way physicians are paid we have just eliminated the political pressure on congress to do anything the update practice. that's not reform. we need to take a look at medicare. i'm concerned we are going to take the easy way out and say we solved that problem and not worry about it until the next

crisis. >> i would agree with absolutely everything joe said and when you ask that question look at the effect of the aca and changes it already is having on changes in the medical marketplace. if you're out there and run a hospital or group practice and you look at reductions comeing down the line in future medicare payments or you look at the medicare delivery and payment reform demonstrations, you see the writing on the wall. it's part of a writing already on the wall. changes already under way in the marketplace. i think there's good reason to believe it has accelerated changes already under way in the marketplace but don't ask me to prove it to you. >> joe i'm going to ask you to follow-up. you mentioned medicare and like other cost the cost growth of medicare has also been moderate the last four or so years. at what point can we expect some

return to this to medicare as part of the policy discussion because there has been less talk lately potentially because of the more moderate growth rates. yet we have the aging of the population and know we have a lot more coming. what do you see there? >> another reason why there has been less talk about medicare the very legitimate reason we have focused so much on uninsured. by definition, if you're on medicare, you're not uninsured. that was legitimate focus. there's just so much people can really spend time actively trying to resolve. but, you know, part of the issue here we do have the baby boom generation now coming into the medicare program. by definition when you turn 65

you're younger than 20 years later, you're likely to be healthier in general. the baby boom generation moving in is on average, probably healthier than certainly the medicare beneficiaryies who are say in their 70s and older. to some extent, this slowdown in medicare spending, i think to a small extent, is related to this actually having medicare become a younger program for a few years. certainly, in six, seven, eight years, that's going to reverse. the youngest baby boomers will be in their 70s. they will have gotten to be a very familiar with their physician physicians, they probably will have had diagnosis that require some active medical treatment. so we're going to see a change there. as far as why the slowdown occurred in medicare it is --

the numbers are quite startling. to have medicare spending growth on a per capita basis slower than the rest of health spending for a few years. but i don't think it's such a mystery. senior contrary to the cpo's working paper, seniors are affect affected by the economy. they haven't gotten a raise in social security. their pension or other retirement payments have been pretty slow because of the recession, not because of anything else. the slow recovery also affected them. in fact, part of this is, speak speaking about some of my relative relatives, when they see something on tv they say, gee, this could affect me. i think we have seen a slowdown in spending, driven partially by that. it's also a slowdown in spending because of part d.

with the -- especially the movement of thele bit biggest staten drugs on off patent basis, the cost of treating cholesterol in the medicare program has plummet plummeted. it's a very popular set of drugs to take so that obviously has had a big contribution. beyond that, though, i think we're going to see medicare spending return to its more traditional growth rates if only because some of the payment cuts that the aca enacted which are beginning to take effect cuts to hospitals and to other payment health care providers in medicare those can become very very difficult cuts to take political

politically. they accumulate and can become quite large. a big factor is what congress does. if congress decides they need 0 slow down the cuts, i think we will also see, that's another factor that will drive medicare spending in the future. >> joe you have now opened the door to -- by talking about prescription drugs for us to talk a little bit about prescription drugs, not just the ones that have gone down in price and cost for medicare beneficiaryies beneficiaries, we've had several folks in the audience and via twitter, ask us about the cost of prescription drugs, both the increase in spending on generic medications and also specialty drugs. we have a very expensive drug on the market now for hepatitis c. there are a number of questions in this area, cloudyincluding price

versus cost. how do you address the cost of specialty drugs such as for ms or hepatitis c without createing barriers to access and how much do oothe prescription drugs play into the costs? what do we need to see happen in this area. a lot of questions there. i think we could have another briefing on this. >> easily. >> gary. >> just to do part of it, clearly the specialty drugs are one of the big concerns from pay payers, private payers and public payers. we have seen in employer programs but also in some of the individual insurance market plan plans, tiered form mullahs sulas that put all the specialty drugs in higher pocket tiers and people whether use those drugs will be

in the out-of-pocket maximum pretty quickly and some drugs have the same problems depending how they're delivered. it commentses back a little bit, private payers in particular have no leverage whatsoever over what drugs are necessary or have true competitors or substitutes on patent. so those drugs are absolutely necessary for those patients. there aren't alternatives in some of these cases. they can charge what they want. the way some insurers chose to deal with it is make the cost shareing as high as possible to some extent shares the cost but also shames the pharmaceutical manufacturer to some extent. then you get other programs going the other way the pharmaceutical manufacturers will subsidize people who can't afford it and it all becomes very silly in some ways. everyone is doing what meets

their economic interests. whether or not we're able to come in and say we want to do more in terms of regulateing the prices that's never been a place we have been as a country. whether we want to try to push insurers to not put high cost drugs on -- that are necessary and have no substitutes on high cost shareing tiers, might sound like it's helping the patient and it probably is. those insurers probably don't have a way to ameliorate those costs either. that will just end up in premium premiums which may or may not be more fair. the way this works out is not easy to deal with if you're not willing to go in and say something about what you think manufacturers should be able to charge for some of those drugs. the generic issues are completely different. >> i -- just one thing. i agreed with everything that gary says. i was involved in a meeting with

various pharmaceutical manufacturers. the question was asked why aren't you oriented to those chronic diseases that generate what's called the highest disability adjusted life years or dailyies? because that's where the biggest impact can be, in terms of the health of the population. and the response was, there's too much risk. the price point is more competitive, the level of distribution to the population is much more challengeing. the level at differentiation in terms of what we can manufacture and the drug is perhaps marginal where witht orphan drugs you have a different set of circumstances gary just described. my hope is there can be well-meaning experts to determine what type of

regulations can be put together that will create a greater interest on the part of pharma to align their priorities to these diseases that generate the highest level of disability adjusted life year. >> so as an expert i -- chills run down my spine whenever anybody says, let's convene a group of experts. the pharmaceutical market is extremely complicated. it's very hard to make generalizations that are actually correct. i really appreciated marilyn's distinction between price versus cost. the price of -- we don't need to name the names, bitut the price of the hepatitis c drug is very very high absolutely.

now the question is, is it really 1,000$1,000 a pill? that's the first question. has any insurance company actually paid 1,000$1,000 a pill? we don't know the answer to that question. we do know that's the list price. second question, this is critical one, the cost. what is the cost of actually treating the patient opposed to delivering one form of treatment or one aspect of treatment? so the older methodology, which apparently doesn't work very well -- i don't know enough about the medicine here to be credible, but what i've read is that the older method of treat treating hepatitis c does not work very well. the percentages i vaguely remember are not very good for cure cures, and it's painful treatment, very difficult for the patient and it's also very

expensive. where did 100,000$100,000 come from, if that was the price, the list price? it was related to a judgment by the pharmaceutical company about the efficacy of their treatment versus the alternatives, the cost and the overall costs of the system which gets to the real point. if the overall costs of the system that we ought to be focusing on and this again goes back to the fragmentation of the health care system that said we're treading here on very dangerous ground for the future. it's not just hepatitis c, that cure that i want for me 15 or 20 years from now. i don't think we have the answer to that. it is certainly the case that if -- that in pharmaceutical investment and research is a major factor. it is certainly the case that

pharmaceutical investment by nih is very important as well. it is also the case that you have to have a market in order to encourage that kind of investment. unless you nationalize it. if you nationalize it, you run into questions whether you are at the same time reduceing the scope of research. i think there are really difficult questions here. it's easy to say there are some bad guys here. it is certainly the case their insurance -- some insurance companies are putting, especially drugs at the highest first tier tiers. what's the reason? i think the main reason is to discourage those people with the diseases from signing up for their coverage in the exchanges. when you limit what an insurance company can do to control cost you will get that kind of behavior and that's what the aca has done for the exchanges. we need to look more broadly at this problem. it's difficult. >> we have a question at the

mike. could you identify yourself please? >> gary filerman, i'm on the board of aacme, accrediting council on continueing medical education. it's through that lens i'm list listening to hear what you have to say about changeing provider behavior. they're not sitting in the march field clin -- mash field clinic. they're three guys at the drugstores writing precincts on paper blanks. they don't have any hr. cme is the only tether we have to them because the hospital medical staffs aren't functioning as we assume they are or should or would, they've changed. so the only way we have of engageing this backbone of practice in the community is through the cme structure.

i don't hear anybody addressing the question of testing it, improveing its efficacy, its reach and bringing the physician physicians into more active engagement and precipitation in order to bring them along in everything you're talking about. >> any response? >> gary, you and i have talked about this. i would say it's got to be made more meaningful more relevant. you and i have talked about kind of studying for the test, in other words, get your credits, licensure or board eligibility and the like. i would certainly agree that it is a channel, a distribution channel that we should more effectively utilize. >> i have a question. i have a question for, i think for joe, mostly for joe and

gary. from my perspective as we've been so focused on the aca, it's been almost a revolution in health insurance from more to less comprehensive especially with tremendous and steady and in the end tremendous growth and deductible. the average deductible is 1400 bucks for a single policy 28 for a family and most commonly selected silverman in the exchanges, it's 2500 bucks for a single policy. those are high deductibles, higher cost shareing. it brings me to the point, we talk a lot about national health spending and health care costs and the budget. for me it is also a people issue, or you could think of them as your constituents. so for joe i'd also like to get gary's comment on this, do you view this as a good thing? a bad thing? a little bit of both. then i'd like to see what gary think thinks. >> if you're a relatively low

income person with a heavily subsidized premium on the exchange but you're faceing say a 5,000$5,000 deductible that's as good as being uninsured as far as most people are concerned. now, it is true that there is that sort of end of the line safety net that we have if you put everything off, something really bad happens, you end up in the emergency room the hospital will have to take care of you. you will end up either qualify qualifying for medicaid or something will happen you might just be a bad debt. that's not exactly the image that we have for organized health insurance. that's not what we want. we need to make some changes there. the enthusiasm that a lot of conservatives have, which i share, for high deductible

health plans with health saveings accounts is really an enthusiasm for those of us who ought to be in them basically everybody in this room. people who have the money they're middle class people and they need the -- they need a little nudge to remind them that everything isn't free and they ought to be sensible about what they're buying. for low income people we've got to recognize their circumstance circumstances. we haven't solved that. >> i wouldn't disagree with joe. for the most part, as cost share sharing has gone up it does unfortunately look like people with lower incomes often have higher cost shareing than people with higher incomes except by choice if they go into an hsa qualified plan or such. we have some serious issues with people who have insurance being able to really effectively use

it. we did a paper you can find on our website shows substantial shares of people don't have save savings or liquid assets to actually pay the deductibles much less the out-of-pocket maxs in their policies. includeing familyies where everyone had private health insurance or private coverage yeah private health insurance. this is an issue we have to keep paying attention to over time. one of the ways the aca addressed it but to a minor extent people lower income can get subsidyies. that's not everybody and not people on lower income employer plans who may be faceing higher cost shareing. >> before we take our last question or two, i want to remind you you have a blue evaluation sheet in your pact if you would kinely fill that out. congressional staffers you were handed a yellow survey we'd be

happy to have back from you at the end of the briefing. we have a question about how effective all payers claims databases are in affecting price prices and consumer behavior. what is the potential of these database databases? i think before any on the panel answers that question particular particularly, it would be good to have an explanation as to what that is. gary can you handle that? >> at the state level, there are a couple states trying to collect information from payers about transaction costs for at least hospitals and maybe some other types of care. there's some national things as well. some of those are charges which means that the information you get is almost useless in terms of price. it tells you something about the number of services.

i've not looked closely -- a couple small states tried to pull together some actual price information and maybe sxwrefjeff can say more about this. i have downloaded it from one of the states. it was daunting and so i haven't explored it as much. getting more information about price certainly lets people know where they stand lets us understand more about what they actually cost and a good thing. not clear we know how to affect it other than the way we publicize it given the way we pay for health services. it's certainly a move forward better understanding what's going on. >> i'm certainly no expert in this, which i think gives you credibility with you, joe, right? >> absolutely. i think we need to form a committee. >> but i just take what gary has

said. this is very very complex. i think there was a time we thought, well, if we could just mask these private sector payers with public sector payers into one database we'd have what we need. clearly, it's only a step among many steps. as we look at the need for information, it's a high need, comparative performance on quality and cost is opaque in health care it needs to be transparent. it will take a lot more work than just having access to data to make it usable so that providers can understand their relative performance to other providers as an incentive to improve. payers can see provider performance per condition or procedure. a lot of that needs to be bundled in terms of hospital and

multiple physicians involved in that care. patients also need to know, especially now that they're incentivised with high deductibles and co-pays, what the comparative cost is. i would submit very important to also know comparative quality. i would say it's a step in the right direction but there's many more steps that have to be undertaken. >> this will be our last question. we talked a little earlier about the high cost of waste in the system. of course, fraud is a big part of that. if we have -- the question is what role health care fraud and medicare fraud have in influence influencing costs and how can we reduce fraud? i think that's probably easier, you know, said than done. gary?

>> i guess i would probably disagree with one of the things you said which was if we were talking about waste being multiple percentage points of health care spending i'm not sure fraud is a big part of that. i think it's millions of dollars whenever you do a report or tens of millions of dollars, which is important and it sends bad signals and it reduces people's confidence in programs, public programs, private programs. it often can result in people being poorly treated as well. but compared to 2.9 trillion$2.9 trillion, it's not a big part of that. >> okay. so we're going to wrap up here. please join me in thanking our panelists for a discussion i think will continue throughout -- for a long time to come. [ applause ]

tonight on american history tv in primetime a person of the year 1865 forum, starting off at 8:00 p.m., clara barton treated wounded and sick soldiers during the civil war. at 8:45 wilson green makes the case for confederate general robert lee. and then freed splaifs or freemen the result of president lincoln's proclamation.

and at 10:20 p.m. jefferson davis rounds it out. president obama is in louisville kentucky today, tour touring a cloud data business. c-span2 will air his remarks on-job training and the academyeconomy just past 3:00 p.m. eastern time. at 3:00 eastern, inc.sitv will host seven party leaders on 10 downing street. it includes audience questions. the uk general election is may 7th, that debate live this afternoon on c-span at 3:00 eastern. now the latest on indiana's freedom law and changes ahead from a reporter covering the issue. >> thanks for joining us. >> glad to be here. thank you for having me. >> give us a snapshot what's happened in the least 24 hours when it comes specifically

do business in indiana because of the law. >> problem hi the biggest impact we saw on wednesday was the christian church disciples of christ denomination in indianapolis announced that they would be moving their 2017 national convention away from indianapolis. that's a blow because that's a pretty large convention they bring about 8,000 visitors over several days. that was single alone estimated to cost us about 5.9$5.9 million in lost spending. the irony of this is that the christian church disciples of christ is actually headquartered here in indianapolis. this is a stand they're making in their own city by not holding their convention, bringing in people from all around the country to come to indianapolis. that's a big hit, probably the biggest one we've had so far. >> we also heard about this

women's conference potentially going to spend about a half a million dollars in the state over this. can eau claire fi and expand on this? >> yeah. i reported that on monday. that was really the first one to announce a change in their venue. the afscme, labor union that represents state county and municipal employees around the country. they were to be here in october at the marriott in indianapolis and bring somewhere in the neighborhood of 700 to 900 people for the weekend. that was estimated to be about half a million dollars just for that one weekend. they're decideing not to come here. they haven't even figured out an alternative location but decided it's not going to be indianapolis. >> mr. king, this morning there's also a story taking a look at the final four. do we see -- is there any plan planned announcement or some type of protest of this event because of the law?

>> we haven't seen anything real planned so far. the final four coaches issued a statement yesterday in support of the ncaa's position that this is a problem and that this needs to be addressed. we haven't seen any real formal protest. this is obviously a good venue for any who wants to make a statement because it's one of the most watched sports events in the country. the teams are just arriveing today. the event really doesn't get going until today when the teams start practiceing and fans start coming in to watch those and start coming in for the weekend. it will be interesting to see what happens. >> robert king, has there been a sense from the business community, chambers of commerce those kind of associations, hotels, those type of things, are they weighing in on the potential impact, as prfar as loss of business?

>> they are. they're being very outspoken. the deal you refer to that will be announced today, our statehouse reporters have been talking about how intimately involved the business community was in the deal that's going to be announced. they were directly part of the negotiations and their views have been taken strongly into account perhaps even more so than some of the social conservatives who were driveing the religious freedom legislation. nine ceos from our state's largest employers sent the governor a letter we have to do something about this. there's just been a lot of concern from everyone to past mayors of indianapolis and other business leaders about the impact this is having on our city. former governor daniels in an interview with the latest newspaperlatest --

lafayette newspaper said there are a lot of people heartsick here about what's happening to nand and indiana and indianapolis. i think that captures it well. >> that's robert king with "the indianapolis star", a reporter looking at the economic effect of boycotts in indiana. mr. king, thank you for your time. >> thank you for having me. fcc commissioners were on capitol hill in mid-march to answer their internet vote classifying it like a telephone service. they designed open internet rules from blocking or discriminateing against legal content move through their networks. commissioners testified before the senate commerce committee.

the good afternoon. this hearing will come to order. great to have all five of our fcc commissioners with us today. we want to welcome you and generate a bit of a crowd who have an interest in some of these subjects i think senator nelson. let me just start with my remarks and then i'll yield to my distinguished ranking the senator from florida and his remarks and then ask the fcc commissioners to confine their remarks to about three minutes and get to the question & answer everybody around here is interested in. welcome to today's oversight hearing on the federal

communications commission. everyday every single american relyies on some part of our nation's vast communication system, telephone gps, radio. it is the bedrock of our nation'snation aes nation's economy, the tie that binds together our 21st society. the fcc sits right in the middle of america's digital world more true following the decision to turn our nation's broadband internet infrastructure into a public facility. and they are potentially threat threatening an unpredictable agency as it struggles to operate under a legal authority designed 100 years ago and not seriously updated in decades. to be clear today's hearing is not a response to the title ii order but clearly no discussion about the fcc can ignore one of the most significant controversial decisions in the agency's history. my views on the subject are well-known. i believe there should be clear

rules for the digital load and fcc to enforce them. i put forward a draft bill with my house colleagues to begin the legislative discussion how best to put such rules into statute. like most first drafts, our draft bill is not perfect. i invite members of this committee and stakeholders across the political spectrum to offer ideas how to improve it know final draft can win by bipartisan support and provide everyone in the internet world with a certainty they need. the fcc's action accomplished the exact opposite, rather than exerciseing humility, the three majority chose to took the most polarizeing path possible. instead of working with me and the house and senate on a bipartisan basis, the three of you chose an option i believe will only increase political regulatory and uncertainty which will ultimately hurt average internet users. simply put your actions

jeopardize the open internet we're all seeking to protect. the tech and telecom industries agree on few regulatory matters. one idea for two decades, the internet is not the telephone network. you cannot apply the old rules of telecom to the new world of the internet. three weeks ago three regulators turned their back on that consensus and i believe the internet and its users will ultimately suffer for it. it shows the importance of the fcc and amazing that congress has not re-authorized the fcc since it was passed a quarter of a century ago. it is the oldest authorization a situation i intend to rectify in this congress. today's hearing marks the beginning of the congress's efforts to write and pass legislation to reauthorize the fcc. i know contentious matters like title ii divide the membership

of this knee but fcc is a place i believe democrats and republicans can and should work together. wanting them to be an efficient and effective regulator shouldn't be a partisan goal they need to make it more responsibletive to consumers and responders alike. i look forward to hearing their views and hearing the commissioners thoughts ways to help their agency improve. writing a new fcc krrksc authorization bill should not be a one off effort. it is my hope the committee will get back to regularly authorize authorizing the commission as part of its normal course of business. in order to do that effectively the committee must be diligent in its oversight and the commission should expect to come before this committee again. how it works is just as important as what it does. important communications policy matters, i hope they will use today's hearing to explore

communication, processes and budget. they have requested 530$530 million for fiscal year 2016. this funding level would be the highest in the commission's history. that alone raises eyebrows particularly when american households continue to do more with less in a stagnant economy. they want to fund this by raid raiding the service fund. paying for high budgets while raiding from usf is dangerous. while some may have questions about usf's scope and growth one thing we should agree on its limited fund should not be used to pay for the fcc's statutory functions. that's what the regulatory's fee fees are for. usf fund should pay for usf services and i don't believe they should jeopardize the service fund to pay for its record high budget requests. given the significant interest in the hearing today i do not expect this hearing to be a short one. in order to get to all the

questions i have asked all members limit questions to three minutes apiece, longer questions submitted for the record. i look forward to questions and what i hope is a productive afternoon and with that i yield to my ranking member senator nelson. >> thank you mr. chairman. a few weeks ago, everybody in this room today knows that the fcc responded to the dc circuit court and responded to 4 million americans by restoreing essential protections for consumers and competition on the internet. obviously, there's going to be a lot of discussion today about the content and the development of those rules. and there will be much scrutiny on the legal justification that the fcc used to support its adoption of the rules.

now, while those legal means are important, in fact, they are the statutory tools congress gave the fcc to perform its job. we must not lose sight of the results of this rule-making in terms of the protections that the fcc adopted. as this senator has said repeated repeatedly, as i had discussed with the chairman i remain open to a truly bipartisan congressional action provided that such action fully protects consumers, does not undercut the fcc's role, and leaves the agency with flexible forward-looking authority to respond to the changes in this dynamic broadband marketplace

so much of which what we think we know today is often changed because of the rapiddyity of the development of technology. many of you have heard me speak of title x as a yet to be defined title. i use the term as a way to think beyond the rhetoric that has now engulf of mexicoed this political argument. the key question for me is we must ask how or is it possible to take what the fcc has done and provide certainty that only legislation signed into law can provide. is it part -- it is part of the larger debate on the appropriate role of our laws and regulation is in the broadband age. and as we have that broader

discussion, i invite you mr. chairman wheeler, to continue to work with us to craft the right policyies to accomplish that goal. as important as the issue of net neutrality is to this to this nation, we should never forget the other vital work that is done by the fcc. with ongoing regulatory overnight over as much as one-sixth of our nation's economy, this agency plays a critical role in ensuring universal access and promoting competition and protecting public safety and protecting consumers. the fcc recently closed the biggest spectrum auction in history. $41 billion. and funding the nationwide public safety wireless broadband

network and providing $20 billion for deficit reduction. that's huge. and it's in the midst of planning for the voluntary broadcast television incentive auction. a new form of spectrum auction that could fundamentally change the nation's spectrum policy. yet we can't rest. and when it comes to spectrum continued public and private technological development will continue to put strains on our spectrum resources going forward. congress, the fcc and the rest of the federal government needs to work together to develop a smart, forward-looking spectrum policy. and i certainly -- this one senator will certainly try to help that effort. the fcc is also overseeing the

ongoing evolution of nation's communication networks known as ip transition. one of the trial projects associated with ip transition is proposed in my state. i'm looking forward to an update on that. generally, i have concerns about how the ip transition might affect public safety. so we can get into that. and the fcc has done a lot to modernize its universal service fund programs including expanding the e-rate program. what one of us senators has not been involved in e-rate and promote it? and this program provides critical support for our nation's schools and their libraries. the enhancements, the increased funding will help guarantee the nation's students have access to 21st century technology, not

just some of the kids in this country. and i also appreciate the work that the fcc has done to increase the availability of affordable high speed broadband in rural areas around the country. i encourage you to redouble that effort to ensure there's not this digital divide that keeps going on. that urban kids get one thing and rural kids get another. i want to thank chairman wheeler and the fcc staff on improving the agency's consumer complaints department. senator udall and i sent a letter to the fcc last year asking them to upgrade the commission's consumer complaint website to make it more user friendly.

and the chairman delivered. the new consumer complaint website is light years ahead of the previous system and i hope that we can continue to see the additional upgrades. i want to thank all of the five fcc commissioners for your public service. i want to thank you for subjecting yourself to five committee hearings -- no eight committee hearings in five days. and, mr. chairman, i thank you for the privilege of serving with you on this committee. >> thank you senator nelson. i share that. we look forward to working together on a lot of these issues in the days and weeks and months ahead. colleagues on this committee on both sides of the aisle, some important work to be done. we're going to start by hearing from our commissioners starting with the chairman, tom wheeler, who will kick it off. then we will go in alphabetical

order order. thank you for being here. welcome. chairman wheeler, proceed. >> thank you very much. it's a privilege to be here with my colleagues. we're five type a individuals who have been working together for the public interest. let me make three quick observations in keeping with your three-minute rule. one, the open internet decision as you indicated, is a watershed. your leadership mr. chairman, has illustrated that there really aren't any differences about the need to do something usa said today. we need clear rules. there are different approaches. >> wireless is causing cancer. the fcc has been hiding it from everyone. suffering brain tumors, breast cancer.

>> you are subject to arrest. >> the world health organization has classified -- >> order in the hearing room. >> the world health organization classified all the wireless a class 2b carcinogen. >> sorry, mr. chairman. please proceed. >> thank you, mr. chairman. as i said there are different approaches we take on open internet to be sure. no doubt we'll be discussing those. we have completed our work. strong open internet rules will soon be in place. let me touch on a couple other issues real quickly. one is that there's a national emergency in emergency services. congress holds the key to that issue. the vast majority of calls to 911 services now, as you know come from mobile. we had a unanimous decision of our commission just a few weeks

ago to require 911 location capability from wireless callers. the carriers are stepping up. but delivering location information from the phone is only the front end of the problem. there is no national policy on how to maximize the life saving potential that is now being delivered as a result of the carriers activity and our rules. there was an example -- a tragic example in georgia a few weeks ago. a lady who was calling from a sinking car in the middle of a lake. and her call was picked up by an antenna in a different public safety answering points jurisdiction. and you can hear this heartbreaking conversation with her as she says where she is and the dispatcher keeps saying, i

can't find it because this other jurisdiction didn't have the maps as to where this woman was, all because of the vagueries of how a wireless signal gets distributed. there's a real opportunity. 6,500 different public safety answering points are staffed by dedicated, qualified individuals. but there's an absence of a federal program that recognizes that mobile has changed the nature of 911. we can't just worry about the signal coming from the caller. we have to worry about what happens to make sure that that signal is used. just let me be real clear on one thing. this is not an fcc power grab. i don't care how this gets done where it goes in terms of responsibility. but we have a responsibility to americans to make sure that the information that we as a

commission are requiring be transmitted actually can get put to life-saving uses. the congress has the ability to do something about that. my second quick issue, the brootd broadband progress report we released found rural america is falling behind. the disparity between rural and urban america is unacceptable. only 8% of urbanñ&lgñ americans lack high-speed broadband. but 53% of rural americans do. we tackled that -- a part of that with the e-rate modernization and the rural fiber gap for schools. 40% of public schools -- 40% of rural schools are without access to fiber. they now have alternatives under the new rules. the commission recently revised the support mechanism for price cap carriers an additional $1.8

billion from universal service fund to upgrade their activities. in areas that are not participating, began the process that will lead to an auction next year where alternative providers can step up and say, no, i will provide service. in an experiment up to that, put $100 million out to actually test alternative pathways. we plan to act on rate of return carriers this year to create a voluntary path for those who elect to receive defined amount of funding to deal with the tieing of voice and broadband together which is a problem that they experience. to deal with replacing the infamous qra. that's a process that would be greatly facilityated if stakeholders could agree on a common solution. so i thank you, mr. chairman, and members of the committee, for the opportunities to be

before you. look forward to discussing any of the issues that you want to discuss as we go forward. >> thank you, chairman wheeler. >> chairman, ranking member nelson members of the committee, good afternoon. my written statement details my views on some of the difficult decisions facing the fcc. for purposes of my oral summary however, i will focus on just two. while i prefer competition over regulation, the truth is that marketplace nirvana does not always exist. here are two examples where it has failed. i made rule call completion a pryiority because it's unacceptable in this day and age that calls are not being put through. we tackled this practice by prohibiting a ringing signal unless a call is actually completed. and we have required carriers to retain and report call data.

data collection rules go into affect april 1st. and we will use this information to ensure that the fcc has the tools necessary to take additional action if appropriate. while a petition requested relief from egregious rates fees and rates continue to increase. calls made by deaf and hard of hearing inmates topped $2.26 per minute. add to that an endless array of fees. $3.95 to initiate a call. a fee to set up an account. another fee to close an account. a fee to use a credit card. there's even a fee charged to users to get a refund of their own money. there are 2.7 million children with at least one parent incarcerated. and they are the wins most

punished. the downstream cost of this is born by us all. the fcc adopted interstate rate caps in august of 2013. what has been the result? despite dire predictions of losing phone service and lapses in security, we have actually seen increase call volume as high as 300% and letters to the fcc expressing how this relief has impacted lives. i hope we answer the call with permanent rate caps and fees for all of these customers this summer. i am grateful mr. chairman and ranking member, for the opportunity to appear before you today and look forward to answering any questions you may have. thank you. >> thank you, commissioner clyburn. >> thank you, mr. chairman, ranking member nelson. i have always held this committee in the highest regard given my past involvement as a

congressional staffer with oversight hearing and legislative efforts. i recommit myself to being available as any resource i can and be any help in the future. in my time at the commission, i have enjoyed the many intellectual and policy challenges presented by the innovative and ever challenge communication sector. it's my goal to maintain friendships even when we disagree and seek out opportunities where to work together. to provide a brief snapshot i voted with the chairman on approximately 90% of all items. unfortunately, a percentage drops significantly to 62% for the higher profile open meeting. one of the policies i have not been able to support is the insertion of the commission into every aspect of the internet. the commission pursued an ends justify the means approach to subject providers without a shred of evidence it's necessary. it punts authority to fcc staff to review current and future internet practices under vague

standards such as just unreasonable unreasonable interference and reasonable network management. this is a recipe for uncertainty for the broadband providers and ultimately edge providers. nonetheless, i continue to suggest ideas to modernize the regulatory environment often through my public block. i advocated any document considered in an open meeting should be made publically available on the commission's website at the same time it's circulated to the commissioners. under the current process, i meet with numerous outside parties prior to an open meeting. i'm precluded from telling them, for example, having read the document, that their concern is misguided or already addressed. the stated objections to this approach presented under the cloak of procedural law are grounded in resistance to change and concerns about resource management. in addition, the commission has questionable post adoption process that deserves significant attention. i refrain from commenting on

legislation. i appreciate the ideas put forth by senators which would address these and other commission practices such as the abuse of delegation that lock the public out of end stages of the dlib are aive process. i believe these proposed changes as well as others would improve the functionality of the commission and improve consumer abscess to information. separately, i have been outspoken on many substantive issues such as the need to free up spectrum resources for both wireless broadband licensed and unlicensed. i look forward to working with my colleagueses on ss on this and many other issues in the months ahead. >> chairman ranking member nelson and members of the committee, thank you for giving me the opportunity to testify this afternoon. it has been an honor to work with the members of which committee on a wide variety of issues. it's a privilege to appear before you today now that the senator from my home state of

kansas has joined the committee. when you held my confirmation committee, he was kind enough to introduce me. i hope his kindness will continue if and when he has a chance to question me later today. i last testified in front of this committee in march of 2013. since then things have changed at the fcc. i wish i could say these changes have been for the better. unfortunately, that is not the case. the foremost example is the commission's decision last month to apply title ii to the internet. the internet is not broken. the fcc didn't need to fix it. our party line vote overturned a 20-year bipartisan consensus. with the title ii decision, the fcc voted to give itself the power to micromanage virtually every aspect of how the internet works. the fcc's decision will hurt consumers by increasing broadband bills and reducing competition.

the title ii order was not the result of a transparent rule making process. the fkcc has lost in court twice. its latest order has legal flaws that are sure to keep the fcc mired in litigation for a long time. turning to the designated entity program, the fcc must take immediate action to end its abuse. what once was a well intentioned program designed to help small businesses has become a playpen pore corporate giants. the recent auction say shocking case in point. dish, which has annual revenues of $14 billion and a market cap of over $34 billion, holds an 85% equity stake in two companies that are now claiming $3.3 billion in taxpayer subsidies. that makes a mockery of the small business program. the $3.3 billion at stake is real money. it could be used to under write

over 580,000 grants, fund school lunches or incentiveize hiring veterans for a decade. the abuse also had an enormous impact on small businesses from nebraska to vermont. in my view, the fcc should quickly adopt a further notice of proposed rule making so that we can close loopholes before the next spectrum auction. chairman, ranking members nelson thank you for giving me this country to testify. i look forward to answering your questions and working with you and your staff in the time to come. >> thank you. >> good afternoon chairman and ranking member and members of the committee. today communications technologies account for one-sixth of the economy. they are changing at a

breathtaking pace. how quickly? well consider this. it took the telephone 75 years before it reached 50 million users. to reach the same number of users, television took 13 years and the internet took four years. more recently angry birds took only 35 days. so we know the future is coming at us faster than ever before. and we also know that the future involves the internet. our internet economy is the envy of the world. it was built on a foundation of openness. and that is why i support network neutrality. with an eye to the future, i want to talk about two other things today. wi-fi and the homework gap. first, wi-fi. few of us go anywhere now without our mobile devices in our palm pocket or purse. every day our lives are

dependent on wireless connectivity. while the demand for our airwaves grows the bulk of our policy conversation are about increasing the supply of licensed airwaves for commercial auction. this is good, but it is also time to give unlicensed spectrum and wi-fi its due. we should do that because wi-fi is after all how we get online. wi-fi is also how our wireless carriers manage their networks with licensed spectrum through offloading. wi-fi is a boon to the economy. there are studies that demonstrate it's responsible for more than $140 billion of economic activity every year. that's big. so we need to make unlicensed services like wi-fi a priority. the commission is doing just that with our work on the 3.5 gig

gigahertz. i think the time is right to explore greater unlicensed use in the upper portion of the 5 gigahertz band. we need to be on guard to find more places for wi-fi to flourish. second, i want to talk about the homework gap. today roughly seven in ten teachers assign homework that requires broadband access. fcc data suggests that as many as one in three households do not have access to broadband at any speed. think about those numbers. where they overlap is what i call the homework gap. if you are a student in a household without brandband today, getting your homework done, just getting your homework done is hard. it's why the homework gap is now the cruellest part of our digital divide. but it's within our power to bridge it. more wi-fi will help as will our

recent efforts to upgrade connectivity in our nation's libraries through e rate. more work remains. i think the fcc needs to take a hard look at modernizing its program to support connectivity in low income households, personally those with school-age children. i think the sooner we act the sooner we bridge this gap and give more students a fair shot at digital-age success. thank you. >> thank you. we have a lot of participation on both sides today. as much as we can trying to adhere to the five-minute rule i know it will be hard because we have a lot of questions we would like to ask today. let me start by talking a little bit about an issue that's important to me and to my state. i start by saying that laws and policies that are outdated often lead to rules that are arbitrary, which ultimately limits consumer choice and raises cost. the current universal service fund rules require a rule

consumer to buy voice service from a small rural telephone company for them to be eligible for usf support. if the same consumer decides to buy only broadband service without a telephone service the carrier is no longer eligible to receive u.s. support for that subscribe subscriber's line. this contradicts and undermines the mission of the new usf. it makes broadband more expensive and increases the sustainability of communication networks. last year senators and i led letters to the commission that urged the fcc to solve this issue nearly a year later that issue remains unsolved. so i want to ask each of you a question. i'm going to take the approach of my predecessor and ask for the commitment from each commissioner. the question simply is will you commit to solving this growing threat to rural communications

by the end of this year? >> absolutely. >> yes. >> yes. >> yes. >> very good. thank you. >> we have unanimity now, sir. >> this was designed to get you on the same side of an issue. you know i want to make just an observation, too. i know the commission's order is the subject of the day in addition to other things we would like to talk about as well. i have a father who is 95 years old. he lives in my hometown in south dakota with a population of 500 people. and he is a user of the internet. it strikes me if i had to suggest to my dad that we're going to regulate the internet that he uses with a law that was passed during the great depression when he was 14 years

old, i think he would probably be flabbergasted. and essentially, that's what we're doing. we're trying to take something that was designed for a very different era and squeeze it and try to fit it into a modern technology. one of the issues that that statute allows for is rate regulation. now, i know that chairman you have contended no rate regulation will result from the open internet order. let's just say hypothetically that someone files a complaint at the fcc alleging that the rates they are paying in internet for broadband service are not just and reasonable under section 201. as a result of title ii reclassification isn't the commission legally obligated to investigate and rule on that type of a complaint? >> that is absolutely right. the order opens the door to complaints under section 208 to

the commission and to courts around the country. at that point, it's up to the commission if it receives to adjudicate whether a rate is just and reasonable. the order limits itself to saying we don't engage in anti-regulation, tearariffs. i think that's why ex-post rate regulation is a i real prospect. >> if that circumstance were to happen if the commission judges the rates to be unreasonable could the fcc require the isp to adjust its rates or impose fines and for fit turs on the isp? >> we don't have such a case before us right now. i think it's important as a matter of due process that any provider that's having difficulty succeeding in getting the interconnect they need to provide service has the opportunity to complain to the commission and seek resolution. >> the answer is, yes, the fcc could? >> we'll see when we have a complaint before us.

>> i'm just saying. i'm not saying you should. i'm saying you could. in a rate complaint case how will the fcc decide if a rate is unreasonable or unjust? >> given the same context that you set up, one of the examples that i gave in my opening statement was on inmate calling. that affirms and should affirm to us all that the bar is incredibly high when it comes to the scenario that you put forth. we waited over ten years to even think about addressing what was obviously a market failure. again, we won't know -- like my colleague said -- until something is before us. it passes that far is extremely high for that case to come to the resolution in which you put forth. >> you would have the discretion to determine if a rate is unjust or unreasonable? >> we have an obligation to look at any complaint, anything filed before us and to make a decision accordingly.

>> if that decision is made if that conclusion is reached, the fcc could in that circumstance act in a way that would adjust rates or impose fines? >> i jokingly say that even though i'm from the south and we have the other -- the our south south carolina, and that we have been known to -- there have been very interesting people who have predicted the future. i unfortunately, do not have that talent. >> well, i have a hard time i would think, explaining or how that process would not be rate regulation. like i said granted the chairman has said that something on which they would forebear. if you are -- if a case is brought forward, it strikes me that the fcc has an obligation to respond. and i also think that things that are decided by this commission certainly don't bind future commissions, which is why

we argued all along that working constructively on a legislative decision that sets clear rules of the road is the best approach. my time has expired. >> chairman wheeler rate regulation, unbundling tariffing, these are things that some of the big corporations are quite concerned about. and no doubt, you've had conversations with ceos of those corporations, and you've explained what your order is. how did you explain it and what was their reaction? >> thank you, senator. so rate regulation tariffing unbundling, those sections are

all for -- we're not using them out of title ii. to the point that senator thune was just making, 1993 senator marky, then congressman marky created section 332 of the communications act in the house which was sought by the wireless industry when they asked to be treated as title ii common carriers and to have forbearance from parts of the act that are no longer appropriate in a non-monopoly situation. that included specifically as a decision by congress section 201. so the kind of example that was just raised by section 201b being some kind of back door into rate regulation has existed for 22 years in the wireless

industry, and the commission has not been confronted and has not acted in this kind of way that suggested it's some kind of back door regulation. in fact, what's happened is that with the absence of consumer rate regulation, that industry has been incredibly successful. the wireless voice industry has had $300 billion in investment since then. and it was that model that is actually more forbearance than was created for the wireless industry that we patterned the open internet order on. so that it is not your grandfather's title ii. title ii has 48 sections 27 of those sections we said we will not use, which is 50% more than

mr. marky results in 22 years ago. so i think that the record is pretty clear that if we say we're not going to have con sunlersunl er didn't consumer rate regulation we are not going to have unbundling and we remove those and say we're not looking at those sections and we pattern ourselves after something that has this kind of a two decade record of not having these imaginary horribles happen that we're on a good course. >> and things like transparency and a host of other issues, there's wide acceptance. >> the interesting thing is that it there are four regulatory actions in our order. no blocking, no throttling, no paid prioritization and transparency transparency. which is the same thing that they have introduced contain the four. the isps run ads saying we're

for these. we would never think about doing these kinds of things. those are the four regulatory constructs. the thing where everybody gets agitated is that we also say and there should be a basic set of ground rules for things that nobody can anticipate, that are not preskiptive regulatory saying we are smart, therefore you will do this, but are saying, let's take a look. is that just and reasonable? is that in consumer interest? is that in the public interest? and on a case by case basis. the fascinating thing to me, sir, is that the isps for years have been saying we don't want the fcc to have such broad rule making authority. they ought to be looking at the ftc on a case by case basis. now what happens is we come out and we say okay, we do something like the ftc on a case

by case basis and everybody says, that's terrible uncertainty. we don't know what it is. if only they would make rules and telling us what things were. you can't have it both ways. i think what we have built is common on four aspects. the only four regulatory aspects. and then says there needs to be a set of rules and there needs to be a set of standards and there needs to be a referee on field who can throw the flag if somebody violates those standards. >> and i would just conclude mr. chairman by saying that certainly the five commissioners in front of us would never do this kind of dastardly stuff. but would a future commission do it? and flip side of that -- i would like you to comment, chairman wheeler -- what about the future

ceos that presently you have confidence in them but what about someone that suddenly wants to go beyond the scope of your intent? >> ceos come in to me, senator, and they say, you know, we trust you. we think you have -- we agree with everything. you are not wild and crazy. we think there will be decent, responsible decisions. so we trust you. but what about that crazy person that's going to follow you some years down the road? my response is i feel the same way about you, sir, that you have said you would never do these kind of dastardly things to the internet. what about the wild and crazy ceo who follows you? so what we're all -- all we're trying to do is say, let's have a basic set of rules. is it just, is it reasonable and is there a referee on the field who can measure against that

yardstick and throw the flag if appropriate? >> thank you. senator fisher. >> thank you, mr. chairman and ranking member nelson. chairman wheeler there are a number of members of congress who believe that new technologies can help the united states remain innovative. i'm working with senator booker, senator schott on the internet of things. i think that's going to be a very good bipartisan resolution and moving forward hopefully legislation so we can see innovators are able to grow their businesses. they're going to be able to solve problems with clear rules and also clear expectations. i think that's necessary that innovateors have to have that certainty out there. when i look at the general conduct rule that is proposed that you have here, i'm concerned it could jeopardize

that regulatory certainty that i think we have to have if we're going to remain competitive. the electronic frontier foundation has described this rule as an overreach and confusing. spifsh spifshly the eff says the fcc believes it has broad authority to pursue any number of practices, hardly the narrow light touch approach we need to protect the open internet. "the wall street journal" reported that at a recent press conference you said with respect to the general conduct rule that, we don't really know. we don't know where things will go next. the order says the agency will watch, learn and act as required. a process that is sure to bring greater understanding to the commission. so my question to you is how can any business that's trying to innovate have any kind of certainty that they're not going to be regulated by the fcc under

what i view as a very vague rule that you have here? for example, when will it be applied? what specific harms does the general conduct rule seek to address that the rest of the open internet order doesn't capture? what are you after here? >> thank you, senator. first of all i would like to identify myself as an entrepreneur and as somebody who started multiple companies and spent ten years before i came into this job as a partner at a venture capital firm investing in those companies. i know from my experience that the key to innovation is access. when a gate keeper denies access innovation is stifled. that's what we want to avoid. we do not want to be in a situation where we are having rules. we want to be -- what we have

structured is something that says, okay let's ask a couple of questions. what's the impact on consumers of this action? what's the impact on content providers, those who want to be delivering? and what's the public interest? and i think we can probably all agree that nobody wants to sit by and see something evil happen to any three of those legs of the stool. and those are the tests. and we look and say okay, now, what happens on those three legs of the stool with this kind of an action that we have had a complaint on? the important thing is as i was saying to senator nelson, that this is not us saying, we're so smart, we know what you should do. this is specifically doing what the isps have been saying to