details aren't known. the principles are known. it will extend breakout time to a period of ten years. the breakout time will shrink after that. and iran will be allowed to do research and development on centrifuges. what is turkey's position on this agreement since the main elements are known? and are there any circumstances in which turkey would feel that it should pursue the development of nuclear technology on its own as a precaution against an iranian breakout? what would those circumstances be? thank you. >> okay. well unfortunately, yemen is concerned for all of us. and they took the control of the whole country. and democratically elected president

president. let gccc countries have the operation. and this operation became legitimate. and in principle, we supported this operation. and we announced that we can, if they need, we can support, we can give them a logistic support and intelligence. so far, we haven't received any demand from the coalition. but at the end, turkey's political solution and immediate cease-fire. and humanitarian aid, we are sensitive in that. and broad-based political dialogue. meaningful dialogue. and possibly national unity administration or government in yemen. that is what we need. and that is turkey's position.

and i was with him in tehran, and he was straight with our iranian counterpart that what iran is doing, their sectarian policy ambitious in the region is not helpful. and not helping their interests either. we were very clear with iran, but we can -- aaron should also be involved in the process. in this process that i mentioned in yemen. they should also use their influence that they shall withdrawal and cease-fire and meaningful dialogue and so on. and regarding the basic principle, the current achievement between the p5 plus 1 and iran. we are fully supporting this process, we are fully supporting the achievements.

and we haven't -- we shouldn't underestimate the achievements made. in this process. and we also spent a lot of efforts together with -- and it was not easy to convince iran. iran is our brotherly country, our neighbor. but it is not always easy to make deal with iran. we haven't even changed the agreement that turkey signed long years ago. and hopefully, we can find a solution to that, as well. but we are fully supporting this process. and we are against nuclear weapons. not only in iran but we are against nuclear weapons. and turkey has no intention to have a nuclear weapon. we didn't and we will not have nuclear weapons. thank you.

>> yes minister thank you for your remarks. i'm going to ask you an armenian question without mentioning the word genocide from just now. >> you already did. >> i already did, yes. but you yourself today and also the prime minister and the president have gone much further than turkish officials in the past in acknowledging the suffering of the armenians but the situation on the ground is very bad, the border is closed, and to give, you know, one other example very few working churches, armenian churches in turkey still in ruins. >> we have our 40,000 armenian citizens. there are two candidates, as well, from different parties. one of them is from my party. they are enjoying all the

rights. and they are also and during the rights that the turkish government and state has given back. this is not something not that we give it for free, but it was their rights taken in the past in turkey. it's not only them that the religious minorities are being enjoyed. we just integrated our grand synagogue recently. and turkey restored it. and and armenians get together every year for worship in that church. and we need to do more and we are supporting the patriarch as

well patriarch, and foundations. roughly 40,000 armenian migrants, also, enjoy living in turkey. we know that they had to leave because unemployment and poor economy, and they are irregular migrants. i don't like to use the word illegal as the former president of the parliament council of europe, they are not illegal people but they are irregular migrants. we tolerate they stay in turkey. and regarding the turkey/armenian issue and reconsolation. we are for reconciliation. efforts, particularly since 2009. of course, this year armenian focus to influence the public opinion on the events of 1915.

so we are not expecting any positive response from our armenian friends. we understood that we have to look forward. and we need to overcome all these issues. and the statements and the president, the prime minister two statements are a kind of turning point in turkey, as well. so we have been taking casual steps towards reconciliation. i hope the armenian friends also understand that we need reconciliation, and we shall we will not give up as turkey and we will continue towards reconciliation reconciliation. >> thanks. prime minister, i'm wondering if

you remember -- i'm sorry, mr. foreign minister. i was wondering if you remember last year the government kicked me and my family out of the turkey because i tweeted a single report on twitter, and your government recently arrest ed how do uh you reconcile this? >> thank you. i thank mr. foreign minister and welcome him here. the success of turkey, thank you for your government, for your people and who went to mogadishu shoemoeg mogadishu in 2011. it's tense where we are because of that leadership and division

that he showed. i went on the somali, the turkish istanbul conference. and at that time, i met with him when he was the prime minister. and i promised him at the time. i say to him. i don't know what to give you as a gift because, you know, it was very quick. today, i have a gift here, i will give it to the embassy. it's a book it's not any book. the koran. the book, the defined word of a a la. and it's the same book read by 1.1 billion muslims that has been hijacked by a bunch of criminals. so thank you very much and i will give it to the embassy. >> thank you. >> well media freedom is crucial for democratic societies.

the home of rule of law and democracy and fundamental rights. and i am fully for free media and freedom of expression. however, in democratic societies and countries, nobody is immune from prosecutions because of because of his or her profession. and regarding the journalists in turkey, the latest committee to protect journalists cpj reported seven journals in prison in turkey. and when you look at the list, none of them are prosecuted for their journalistic work. and as as a matter of fact, five of them charged with serious crimes such as homicide causing injury with weapons bank

robbery, forgery throwing molotov cocktails to the security officers. and two of these journalists have been released. and you see the similar cases in other democratic countries, as well. for instance, following the news of the scandal in the uk, the news editor of the newspaper was sentenced to eight months. and the editor of the news world was sentenced to 18 months in jail for conspiring to hack phones in 2014. for instance the 79-year-old editor of the monthly magazine

it means debate. and the editor in chief of the milan based daily are imprisoned for libel, perjury, and criminal defamation. let me give youen a example. there's an example in greece but since it's our good neighbor, i don't want to give this example. another example from this country. he's a u.s. journalist, and he has been sentenced to 63 months of imprisonment in january 2015. for involvement in activities of activist group called anonymous. so for me, even one journalist imprisoned because of his or her journalistic words is unacceptable. so for turkey. therefore, turkey cannot tolerate any parallel structure

particularly structures in the, in the state's structures. and no democratic country can tolerate this either. thank you. >> two gentlemen in the back close by each other. >> thank you very much. my name is tyler thompson. i'm with united for syria. i was hoping that you could expand on. we've p been hearing that turkey backs the idea of either no-fly zone or some sort of protected zone to save devillians along the turkish border. and i wondered if you could expand on what the turkish policy is on that, and also explain any road blocks or obstacles that the united states may be presenting in the -- >> can you repeat the last part of the question? the obstacles in the united states? >> the obstacles that the united states might present to turkey

in implementing this type of protected area. thank you. >> okay. >> just pass the mike to the gentleman there. and then we'll -- >> thank you very much mr. foreign minister for your address. given your extensive experience in the european affairs in the your tenure of the countsel of the assembly i wonder if you can comment of the fact on april 15th 2015, the european parliament has adopted the resolution, which officially recognizes the tragic events that have faced the armenians as the ultimate empire as a genocide and where it calls upon the european council and european commission and turkey as well, to recognize the events as the genocide and to come to terms with your past and thus

pave a way for genuine reconciliation between turkish and armenian people. thank you very much. >> thank you for the questions. before i answer this question i forgot to respond to my somalian friend. thank you very much for the gift, first of all. and we are doing our best to support somalian people. and we just built a hospital with 200 beds. and turkey is running this hospital now. but hopefully in five year's time, we will hand over to the somalia somalian that we are training them right now. the doctors and the staff and then hopefully they will be able to run that hospital. and we also build hospitals in other african countries including sudan and serving not only people of those countries, but citizens of other african countries. and we are developing we are supporting the development projects in almost all african countries, and we will continue.

and thank you very much for the gift once again. regarding the safe zone. turkey proposed safe zone with air power. or no-fly zone. we know the realities of the region very well. and as i mentioned in my introductory speech, we warn our allies and other countries in the coalition right now about the possible developments in syria and also in iraq. unfortunately, our recommendations or advices were not taken in the account. now, including the united states, our friends regret that they didn't. now, we are proposing a safe zone because it's a must in syria. first of all, we need safe areas. we are implementing the program. and we need safe zones syria for

the success of this program. in the ground. secondly, you know how many refugees living in the neighboring countries syrian refugees, including turkey. more than 4 million. and you know how many idps in syria, more than 8 million. and who is helping these vulnerable people. turkey is doing its best, and we are supplying whatever they need, particularly in the camps. now around 240,000 of them living in the 25 camps that we built, another 38,000 living in the camps, three camps we built in northern iraq. and we are supplying education, health care and food and everything. now, the budget is, the budget of food organization has run out. and we have to support those

vulnerable people living in turkey not only in the camps. but these people deserve better. can we give proper education to the children? there are 500,000 syrians in turkey at the age of education. and we have been able to give education to only 140,000 of them. what will happen to another 360,000 syrian children. and we have more than 100,000 newborn babies syrian babies in turkey. so, what i mean this is essential to relocate all these refugees and idps. our guests in turkey living in better conditions than the ones living in other neighboring countries. i'm not blaming them because they are also doing their best. but they cannot afford, actually.

particularly lebanon and jordan. so we need to relocate these people in this safe zone with all the infrastructure that they need. schools, hospitals whatever they need. that's why we propose the safe zone. and the main problem is here. how as the coalition is going -- and has the security for this safe zone. whether supported by no-fly zone or air. obviously we think different here with the united states. or the united states have different proposals or different ideas of this safe zone and no-fly zone. if we agree, we should implement together with the united states. so we are not, turkey is not insisting to do to enhance the safe zone or no-fly zone as its

own self. but, unfortunately, few coalition members, like france gave full support but other core countries, the core members of the coalition has have different operating on this safe zone. but we will continue, try to convince our allies. regarding the armenian issue and the decision of the european parliament is kept the party i think, made this proposal. it doesn't matter who did. but this resolution is not legally binding. and it's not binding. and to our mind, the politicians politicians nation of parliaments and the european

parliament international or parliamentary assemblyies of international organizations shouldn't give such decision. we shouldn't politicize this issue. and i know as politician, this is not that easy to decide about the history. i also wrote a lot of reports for the parliamentary assemble council of europe on missing persons in the balkans and so on. and i wrote one of the most difficult report for the parliamentary assembly. in 1932 and '33. so it was not an easy job. and i visited russia ukraine and also belarus for fact finding. visit. and i met everybody. and then president of ukraine

was obviously for genocide. and he arranged a group of scientists to meet me. 30% of those scientists historians told me it was a genocide. and 30% of them said no it was not genocide. and another 30% said, we don't have idea, i don't have idea. so as a politician, how can i decide whether it was or it was not genocide? in my report i said crime against humanity for 1932 and '33. well who is going to decide whether it was a genocide or not? obviously, genocide is not a generic term. it's a legal term. and to our -- historians also decide.

that's why we propose armenia to set up a joint committee of historians and scientists. proposed in the archives. and this joint committee shouldn't be limited with armenia and turkey scientists and the scientist historians from third countries could also participate. and the third countries should also open the archives. . and committed in our letter in the letter of the prime minister committed to accept the outcome of this study. why don't we set up this joint committee of historians? and we will accept the outcome. otherwise, it's easy to convince parliamenttarians to sign the resolution or adopt a resolution. but it doesn't help to solve the problem. it didn't. in the past, the nation of

parliaments of some countries in europe, in latin america adopted such resolutions. but it didn't help. i think turkey and armenia and armenian people should solve this issue together. thank you. >> i think we have time for one more. >> thank you, thanks very much. you have peace and stability in europe, and then you have chaos in the middle east. do you ever regret having invested so much effort and attention in your middle east policy? and are you ever concerned that al assad if he stays much longer in power he's going to suck turkey into the vortex of middle eastern chaos? thank you. >> thank you very much. it's true that despite all the challenges that european societies have been facing, like

economic and financial crisis, migration issues, and integration, and also international crime and organized crime and international terrorism, climate change, you can -- i can name more. despite all these challenges, the european continent is still the most stable and most developed and most democratic continent. and we never regret for investing in middle east. you cannot always succeed. but we shall do our best to support the middle eastern people. and we should support the countries suffering from all these crisis. that's why we give full support to new iraqi government. inclusive government. and regarding syria. yes, we have to allocate the

terrorist organization. but we should eradicate the root causes of the problem. yesterday, there was al qaeda it was emerged from al qaeda in iraq. then they got support from different circles, and they moved to syria and they got a lot of support from the regime. that's why they have this russian, chinese and serbian made weapons in their hand. and when they feel themselves strong enough they went back to iraq. they captured mosul and also kept our consulate as hostage for 102 days. and at the end, we were able to bring them through similar operation, that's another story. but, and in mosul the shia militias of maliki around 70,000 of them left mosul. and they left all these heavy weapons behind.

and got them. artilleries and even missiles. and all these heavy weapons, american weapons. now has american and russian-made weapons in their hands. and they advance in both with all this power. if you don't eradicate the root causes. yesterday, it was al qaeda we don't know who is going to be emerged as terrorist organization. the current situation and the regime is the familiar ground for the radicalization and terrorism in syria, therefore assad must go. and we cannot unite the people of syria around assad anymore. because this regime is killing. as long as assad stays, they will, they will continue killing people through the chemical weapons, through the -- and

bombings. and around 2 million civilians living there. therefore, we never regret for stance for the middle east and turkish foreign policies, multidimensional one, anyway. and these multidimensional and proactive policy is complementary. they are not alternative to each other. thank you very much. >> thank you. >> i want to thank on behalf of everybody here. i want to thank you for your remarks and especially for taking all these questions and addressing them. we wish you well. >> if everyone can remain

seated, he's going to go out very quickly.

a reminder that if you missed any of this event you can watch it in our video library at c-span.org. and coming up this saturday the annual white house correspondents' dinner with remarks expected from president obama. also saturday night live's cecily strong will be the entertainment for the dinner. we spoke to the white house correspondent about the history of this choice and history of entertainment at the dinner. here's a bit of that. >> for a while, they used to do like musical acts and believe it or not, there was a juggling act at some point. that was a long time ago. but since the association started having comedians come and service the entertainers, she's the fourth woman to have done that. i don't know why it's always a late night white guy. which is great, those guys are funny. you know, but it's important to have different perspectives represented at a podium like that. i think she's funny, and i think she's sharp and cutting and i think she'll bring us down to

size a little bit. that's part of the fun. >> and watch our live coverage of the white house correspondents' dinner starting at 6:30 p.m. eastern saturday on our companion network c-span. >> challenging the new fcc internet rules, five organizations have filed lawsuits against the fcc. tonight, on the communicators, we'll speak with the president and ceo of one of those organizations. u.s. telecom's walter mccormick and the supporter of the rules, christopher lewis. vice president for government affairs at public knowledge. what we're challenging is the reclassification of internet access from being an information service to a telecommunication service regulated as a common carrier pursuant to 19th century railroad regulation. a ves taj of the english common law. it was originally applied to railroads and to trucking companies and then to airlines.

but it's been repealed for all of those industries going on over 30 years ago. because it proved to impose -- it delayed employment, slowed innovation, and really chilled investment. >> we both agree that net neutrality protections are important. and that's an important thing to start with. but we do disagree with the lawsuit. we've been very supportive of the rules that the fcc enacted. and have now become a force of law. we think that after a decade of working towards a way to have net neutrality rules that could hold up in court that this is the strongest set of net neutrality protections that we've seen in the three different attempts at the agency to ensure that the internet remains open. >> tonight at 8:00 eastern on the communicators on c-span 2.

>> next, health care policy experts discuss the trends in health care costs including whether or not obamacare played a role in the slowdown of health care spending over the last few years. the alliance for health reform and family foundation teamed up to hold the discussion. it's an hour and a half. >> i would like to welcome you to today's briefing on the subject of health care costs. i would also like to thank our partner in this briefing, the kaiser family foundation. and we have with us today as my co-moderator drew altman who is the founder of the foundation. so, our mission today is to try to take some of the mystery out of health care costs. our experts are going to explain the trends, the prospects moving forward, what is driving health care costs and what policy makers and the health care community are already doing to try and help keep costs down.

so, a couple of housekeeping 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 hashtag, #hccosts. i would also like to note 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 grateful if you could fill that out and give it to one of our staff members on your way out. that will help us to know what your interests are and to help us do a better job in putting on these briefings.

so, i'd like to introduce our panelist today. first, to my far right, we have gary claxton. he's a vice president of the kaiser family foundation and the director of its health care marketplace project. gary today is going to explain the health care cost trend and what we can expect moving forward. to my left is joe antos, he's the wilson h. taylor scholar in health care and retirement policy at the american enterprise institute. joe is going to help us understand what factors are driving health care costs. to my far left is jeff sellberg executive director of the peterson center on health care. jeff is going to address the various programs and approaches that are already underway and the strategies 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 charitable trusts and also vice president of the robert wood johnson administration, and also served in the carter administration. so drew is going to start us off by giving us perspective on the issue of health care costs. and you also received a copy of that on your way in. i'm going to turn it over to drew. >> as long as you remember the carter administration, right? it's great to see so many of you here. i started 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 her hard questions sometimes. and now we're working together at the alliance. it's just great to be working

with you again. and it's amazing to see so many of you here. thank you for being so interested in this topic. i actually started studying the problem of health care costs long time ago when i was at m.i.t. some time between the passage of medicare and medicaid and when you were all born. just looking at the audience. and it's kind of tempting for me to say i feel a little bit like a football coach who has seen all the plays and all the formations and even the trick formations from my new england patriots. before and there's nothing new. but actually that's not true. we're at kind of a different point when there's a lot that's new about the problem of health care costs. there's some pretty big questions about where health spending is headed. so i actually think it's a very timely briefing you know, the alliance always gets it exactly right. in 2002, i published see if

this works, yeah. i published this chart in health affairs. it was a one-page article, and the title was the sad history of health care costs as told in one chart. and it documented what since the beginning of time had been the basic dynamic for the problem of health care costs. they 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 threat of changes in health policy or impending changes in the marketplaces. now, we're coming off of several years of unusual moderation in the rate of increase in 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. and gary's going to show you the

data. i'm not going to do that. 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 would be talking about that today. and since i'm sure you're going to ask this far less agreement about the role of the aca, about the role of the affordable care act or, frankly, whether it has played any role at all and we will all have views on that. so the big question really is has the sad history these peaks

and valleys that 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 very recently an uptick, again, in the rate in increase in spending, which was predicted by most of the models, including our own models at kaiser. and i think the question really to keep in mind is not whether health spending grows more rapidly again, but when and by 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. 1%, up or down the rate of increase in health spending that's $2 trillion over a ten-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. it's the effort to see if we can shave 1% .5% or .25% off that rate of what it would otherwise by. just one other big picture introductory point i wanted to give you. keep in mind also this is a multifacetted problem you need to deal with in your jobs from several different angles. you also focused on medicare and medicaid. they're such a big part of the federal budget and spending on those problems. 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. it's worth pointing out that experts and people and you know, in my experience view the issue very differently and that's what that "wall street journal" column you have in your packets i wrote today is about. and it just, this may be obvious, but it's worth saying. it would not be a great idea to tell the average constituent in a town, meaning 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 they're premiums are going up, their deductibles, especially, are going up. any time when their wages are flat. and so, the last i wanted to get into your heads, shows that i don't think it could show it any more clearly.

this was in 2013, which was a record year for low increases for health spending and health care premiums just 3% of the american people told us that 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 care, 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 you have plenty of time for questions. this first slide shows 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 $9,300 per person. it also is the little numbers on the bottom show it represents a little over 17% of the gross domestic product or sort of national, national income. health care costs have risen steadily over time from about

$1,100 per person to almost $4,800 to the $9300 last year in 2013. they also have risen faster than other goods and services in the economy. health care represented about 7% of gdp in 1970, 12% in 1990, and 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 policy makers ' concerns about the ability to afford and sustain our health care spending over time. and 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. generally, the u.s. spends about $2,600 more per person than the next closest country, switzerland, and about twice the amount of money per person as the average of other nations which are -- which have large populations and large -- and high incomes. >> and if i can just stop you for one second, gary. you have the full graphic even though it's not showing properly here. you have it in your packets. and if i wanted to also mention that if you're following this broefing at ing 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, the u.s. spends about 17% of our gdp on health care. these other countries spend between 9% and 12%. so much, much less. sort of another 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 enrollee versus enrollee over a couple different decades. what you can see from it is although the growing, the growth has been very similar until recently where medicare growth has been much lower, medicare continues to be a much hotter political topic than private

health insurance spending. there's a couple reasons, probably, for this. one is that medicare's a public program, which is on budget, where private health insurance while it has a big effect indirectly on the budget. those effects are indirect through the tax system. and they're not as visible. there are many more people going on to the program. even if medicare spending per enrollee goes up and private health insurance or for the rest of us, the costs of the program are going to grow because there's more people in the program. there's also some issues around the trust fund and the payments for part "a." i didn't want to point out the medicare issues although they are important to what you all do. but to point out 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 expenses. and we could do a whole briefing on that. as drew mentioned health care spending has been slowing -- 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 has actually gone up slower in the last couple of years than the economy. this recent slowdown in health care spending, which began which as drew said in the mid-2000s but has really accelerated recently into record low spending has raised the question as to why, what's going on. some people, including a paper that we wrote at kaiser with others attribute most of the slowdown to the economics

downturn we experienced recently and the slow recovery. that paper shows that the leg growth of gdp is correlated with health spending and highly protective and accounted for substantial share, we think, of this slow down. think, of this slowdown. 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 projecting health care costs in the next 10 years to go up at the rate of growth in the economy, plus about 1.1 percentage points. which is slower than it has gone up historically. as drew pointed out, the amount there matters a great deal.

if they're wrong by half of one 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 national health accounts and to draw your own charts and look at health care spending for different payers and 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 causing -- 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. statins, for example being maybe the biggest driver of that. and similarly, in recent years we've seen that percentage drop off and precisely because of statins mainly the big statins 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 that 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 factor. 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. and we're living with more chronic disease. that's partly because we're living better, we're 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. okay. 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 subsidies. essentially, it's hard to find anybody in this country who doesn't have some part of their health care costs subsidized by the taxpayer. okay. the way we run this system also drives spending. fee for service payment is a big

factor. fee for service promotes the use of more and more expensive services if you're a physician, say. in a fee for service world if you provide more services you get more pay. it's very simple. financial incentives promote innovation as well. there's a yin and yank in all of this. we're spending more money but we're getting more innovation. but that often adds to spending. 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 then lack of transparency, we've been talking about this a lot lately, but we really don't know what it costs. if we're consumers, we really don't know if the service is good for us we don't know whether 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 inefficiency 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 hashtag is hccosts. and if you would like to submit a question via twitter please use that hashtag and we'll pick that up here. after we hear from jeff, we're going to turn to a question and answer period. and while we have mikes -- two mikes 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 just want to reinforce gary's comments about the peterson kaiser health system performance tracker. our intent in our partnership

with the 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 accreting value over time? are we getting more for the spend, less, or are we in 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 institutes of medicine, i think, has shown that about 30% of all health care expenditures do not add to the value of the outcomes intended. some would classify that as waste. so 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 variants 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 variants, those exemplars, validate the ork work that they're doing by identifying the active ingredients that generate that exemplary performance and then replicate. replicate on a controlled base tois really understand there's causation in terms of the identified features or ingredients and then move to replicate on a controlled basis limited basis and then a mass basis 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 say a third element that's critical in this, and that is patients. we found that in integrating patients 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 research with the stanford standards for clinical institute research excellence with arnie milstein.

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. high quality low cost. went out and site visited 11 of those practices and came up with ten features. ten features that we believe correlate to that exemplary performance. now we're in the process of what we call a 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 in fact it is 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 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 far afield here, but there are i think non-health care approaches that we're going to have to adopt to get to a point where the 5% the 5% exemplary performance becomes 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. and 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 when -- 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 you know, we do go back to some of our favorite examples. geisinger, for example, the marshfield 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. and i think that's the key here. don't expect a miracle anytime 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, prude ernt

erntent purchasing. the other game 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 about that, 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 evaluations which will give us some actual evidence data about

what the results of some of this data are. it is a new approach to -- if you look broadly on how we've taken over the problem of health care costs over 30 or even 40 years to how we tackle this. >> marilyn, if i could i know you've got 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 volume, 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

communications physician consultant. i've been doing that for about 25, 6, 7 years. parallel to the change from volume to value i mean there's also sort of new initiatives in terms of how health care's 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 as a percentage of gdp and found that when you add the two together social services and health care services, the u.s. came out not way up at the top but sort of in the middle consistent with our health care outcomes. so i'm wondering if any of you can talk about those social services as an aspect of how we can improve the quality and reduce costs for health care and how social services might be considered as something that

health care payers can start incorporating into their scheme of what they will reward. >> i'll start very quick will i. there's a lot there in your question. yes, i am aware of elizabeth bradley's work. and some have chosen to respond to it and say see, if you combine those two we're not the highest 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. and i think what we're finding, especially with high-cost, high-need patients that the most effective models there, high quality in terms of responsive o'ness to the patient, living conditions, clinical outcomes at lower costs, effectively integrate social services and the medical model together.

so how does policy then follow that practice to create the conditions under which that can happen? vexing issues in terms of insurance models including social services. there have been models that have worked on a per member per month base reimbursement or 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. so it is i think -- we're right on the frontier of trying to understand how to integrate these different services. >> so i'm going to direct this first question to gary although others are welcome to chime in. while health spending is at record lows, premiums while growing more slowly aren't showing the same historic growth slowdown. why not? >> excuse me. at least in our employer survey, premiums have been growing fairly slowly not quite as

slowly as health care spending overall. part of the reason that overall health care spending takes into account some of the reductions in public programs that have occurred 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. that means there's less health care spending overall. but the average premium for the people who have insurance doesn't necessarily go down because some people lose health insurance. so that's a couple reasons. i don't know. joe may have some others sxwlp but it's been low. >> yeah, it has been low. the way we do our survey we can 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 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 about how long that will be. but as drew pointed out in his opening remarks, we seem to be heading back to a more traditional higher rate of spending. so this may be a very temporary phenomenon. >> okay. so we have another question -- we have one question from twitter. and by the way, again, as a reminder if you want to tweet a question the hashtag is hccosts. should we change the way medical schools educate doctors to perform well in the new delivery models, and how? and i would add to that nurses and advanced practice nurses in particular are playing a very large role in the new models of care delivery. so should we also change the way that we are delivering --

educating them? >> well, in a word, yes. i think in italian you would say asolutamente. just to confirm that. what do they need to change? well i would say design is a key issue. flow of care. intd graited, coordinated team-based care. integrating some of the things we talked about in terms of social services with the medical model. epths. 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. >> okay. well i'll plunge in here. prevention. you know, it's a nice word. the most effective prevention that anybody can follow is to change their own behavior to take the advice that we have 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 though, is preventive health services. that's a whole different kettle of fish. emphasis on services. not necessarily on prevention. and indeed, louise russell about -- gee, it must be 25 years ago, maybe 30 years ago, by now has the classic paper that pointed out the obvious,

which is that a lot of preventive health services have to do with screening. and fortunately, in most of the diseases we screen for, most people don't have them. so 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 positives. there will be false negatives. there will be follow-ups. it's a very complicated and difficult subject. so 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 said, it's where the delivery system meets the patient that really matters. but as i say the principal 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, and so regardless of where you are in your age and your disease process by being engaged and activated you're going to be better off. >> so we have already waded into this a little bit but 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 that quite a few employer-based programs are --

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 behaviors. they vary from small incentives to take a health risk assessment and then to 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. they get your cholesterol. they get stuff. and 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 amounts. and you may or may not get 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 not be readily amenable to change. so and this can be about employers saving money or insurers saving money, or it could be about trying to improve population health or some combination of those two things and sort of how they're 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 -- i mean there's some privacy concerns, and people obviously are concerned about some of the very intimate questions that are included on the health risk

assessment or about some of the information that they're being asked to give their employer and when they're being asked to do it. so this is way -- it's been going on a few years. but as the programs evolve we're going to have a lot more discussion about all this. >> yeah. >> okay. we have a couple of questions for jeff on this. lots of interest in the exemplary practices of the 5%. so first let's start with the first one, and that is could you give some very specific examples of what these practices are? that we should be watching. >> well, i tried to give the example of the stanford research that peterson center on health care is funding. so let me stay there. we also are working with them to identify exemplary practices in specialty care hospital care, and we're also working with another set of grantees on

high-need, high-cost patients. so in the case of primary care, perhaps i could just very briefly go into the ten features. not all the ten. but the features that the stanford group found. and what they found basically was an organization -- a practice organized around the patient. so 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 circumstance life circumstance as well as their clinical condition. so i'd like to depict that as not only knowing what was the matter with them clinically but what matters to them, which is different. and 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 of where they are in the system. so 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. and you could say, my goodness how do they do? my primary care physician can barely keep up with an eight-minute visit with me, much less all the things that you're talking about. again, a systems approach, a team approach, good solid information in terms of a medical record good solid relationships with other components in the system. so there's an example. >> so let's take that one step further and talk about mass replication because you said it's possible. so tell us how it is possible and what needs to happen to achieve success. >> well, that's what we're working on. quite honestly, we're looking for health in this particular

area. we know that how to go into a limited market test to replicate, to really make sure that we're right about what these features can do, we believe we know how to replicate to the practices of 30 to 50 practices, at that level. the challenge 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 digital approaches and adult education approaches that i talked about that we can utilize? that's what we're going to test to find out. and if there's anyone out there that would like to collaborate with us in the learning, we are very open to that. >> okay. so we had another question that has to do with nationalizing an approach, and that has to do with accountable care organizations. so the question is can you

nationalize a.c.o.s with all of the variation that's going on? and a.c.o.s are held out as a means of you know leading toward value-based care coordinated care, and with the hope that they will bring down costs and improve quality. >> well, there are a whole bunch of different types of a.c.o.s. that's the first little issue. so when you talk about -- i don't want to use the word nationalize. when you talk about spreading them widely you have to be careful about what you're defining. it is certainly the case that there are things that are called a.c.o.s that have nothing to do with the medicare program. why? well, because it's a great phrase. and we have to be with it in health policy. there are a whole bunch of

organizations that have followed a similar philosophy, but they're not doing it's 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 necessarily following especially the initial ideas that cms had. cms has loosened up its rules but nonetheless, the results have been less than promising. 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 a way of getting people into organized health plans without them knowing they're in an organized health plan. and that strikes me as a very

bizarre idea. we need tone list what we call a patient, but he may also be a customer, we need tone list that person in the struggle that we have in the health system to do a better job at a lower price. >> so let's turn to the microphones. >> joyce frieden from med page today. a few people have touched briefly on the effect or lack thereof of the affordable care act. so i just wanted to get back to that for a minute. people thinking it's too soon to tell whether the effect of 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. >> well, i am anxious to say that if you expand subsidies for health insurance you should expect to spend more for health

care. so that part of it doesn't -- isn't going to control -- isn't going to help the health spending issue. it really is everything else we've been talking about. changing the way health care is delivered. and 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. but nonetheless let's see how they work out. the other point, though that i would make is that the aca and politicians in general have studiously avoided really reforming the medicare program and it seems to me that being the biggest purchaser -- biggest payer in the country, that to really not take a fundamental look at fee for service med care and really ask ourselves isn't there a better way to do it and shouldn't we -- you know,

instead of saying oh we've 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 factors. that's not reform. we need to take a look at medicare medicare. i'm concerned that we're 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 just said. but i would also say that when you ask that question i would look less at what's actually in the aca and more at the effect it may be having and has had on accelerating changes already under way in the marketplace. so if you're out there and you run a hospital or a group practice and you look at reductions coming 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 that is already on the wall changes already under way in the marketplace. i think there's good reason to believe it has accelerated changes which were already under way in the marketplace. but don't ask me to prove it to you. >> so joe, i'm going to ask you to follow up. you mentioned medicare. and of course like other costs the cost growth of medicare has also been moderate over 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. but yet we have the aging of the population. we know that we have a lot more coming. so what do you see there? >> another reason why there's been less talk about medicare is the very legitimate reason that we have focused so much on the

uninsured. by definition if you're on medication -- uninsured. that was a legitimate focus. this is so much that people can really spend time actively trying to resolve. but you know, part of the issue here is that we do have the baby boom generation now coming into the medicare program. by definition when you turn 65 you're younger than, you know, 20 years later. you're likely to be healthhealthier. and in general the baby boom generation moving in is on average probably healthier than certainly the medicare beneficiaries who are, say, in their 70s and older. so 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 very familiar with their physicians. they probably will have will diagnoses 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. contrary to cbo's working paper, seniors are 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. and the slow recovery also affected them. so in fact, part of this is that speaking about some of my relatives, when they see something on tv they say this could affect me. so i think we have seen a slowdown in spending driven part partially by that. also a slowdown in spending because of part d. with especially the movement of the biggest statin drugs to off-patent basis. the cost of treating cholesterol in the medicare program has plummeted. and 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 politically. they accumulate. they can become quite large. a big factor here is what congress does. if congress decides they need to slow down the cuts then i think we're going to also see that's going to be another factor that will drive medicare spending in the future. >> okay. so 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 med care beneficiaries.

but 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 including price versus cost. how do you address the cost of specialty drugs such as for ms or hepatitis c without creating barriers to access? and how much do the prescription drugs play into the costs? and what do we need to see happen in this area? >> a lost questions there. i think we can have another briefing on this. >> easily. >> okay.

gary? >> just to do part of it, clearly the specialty drugs are one of the big concerns from payers, private payers and public payers. we have seen in employer programs but also in some of the individual insurance market plans, tiered form larys which put all the specialty drugs into high-cost tiers. people who use those drugs will end up with their out of pocket maximum very quickly. public programs have some of the same problems depending on how they're delivered. and it comes back a little bit to private payers in particular have no leverage whatsoever over drugs that are necessary have no true competitors or substitutes in them which are on patent. so those drugs are absolutely necessary for those patients. and there aren't alternatives in

some of these cases. and they can charge what they want. the way that some insurers have chose to dealt with it is to make the cost sharing as high as possible, which to some extent shares the cost but also shames the pharmaceutical manufacturer to some extent. then you get other programs going the other way where the pharmaceutical manufacturers will subsidize people who can't afford it and it all becomes very silly in some ways. but everyone is doing what meets their economic interest. whether or not we're able to come in and say we want to do more in terms of regulating the prices, that's never been a place where 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-sharing tiers might sound like it's helping the patient

and it probably is but those insurers don't have a way to ameliorate the costs either. so those will end up in premiums. which may or main 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. >> just one thing. i agreed with everything that gary says. i was involved in a meeting with various pharmaceutical manufacturers and 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 dailies? 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 challenging. the level of differentiation in terms of what we can manufacture in terms of what we can manufacture in the drug is perhaps marginal where with orphan drugs you have a much different set of circumstances than gary just described. my hope is there can be a convening of 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 here. >> so as an expert chills run down my spine whenever someone says let's convene a group of experts. >> uh-oh. >> the pharmaceutical market is

extremely complicated. and it's very hard to draw -- 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. but the price of the hepatitis c drug is very, very high. absolutely. now, the question is is it really $1,000 a pill? that's the first question. has any insurance company actually paid $11$1,000 a pill? we don't know the answer to that question. we know that's the list price. second question. and this is the critical one, which is the cost. what is the cost of actually treating the patient as 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 the older method of treating hepatitis c does not work very well. the percentages that i vaguely remember are not very good for cures. and it's painful treatment. it's very difficult for the patient. and it's also very expensive. so where did $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 cost of the system. which gets to the real point. if the overall cost 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, you know we're treading here on very dangerous ground for the future. it's not just hepatitis c. it's that cure that i want for me 15 or 20 years from now. and i don't think we have the answer to that. it is certainly the case that if -- that pharmaceutical investment in research is a major factor. it is certainly the case that pharmaceutical investment by n.i.h. 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. and if you nationalize, it then you run into questions about whether you are at the same time reducing the scope of research. so i think there are really difficult questions here. it's easy to say there are some bad guys here. it is certainly the case that

some insurance companies are putting especially drugs at the highest tiers. by the way, what's the reason? i think the main reason is to discourage people with those diseases from signing up for their coverage in the exchanges. when you limit what an insurance company can do to control cost then you're going to get that kind of behavior and that's what the aca has done for the exchanges. so 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 finerman. i'm on the board of aacme, the crediting council on continuing medical education. and it's through that lens i'm listening to hear what you have to say about changing provider behavior. they're not sitting in the

marshfield clinic in geisinger. they're three guys sitting upstairs at a drugstore writing their prescriptions on paper blanks. they don't have an nhr. and cme is the only tether 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. the only way we have of engaging this back bone of practice in the community is through the cme structure and i don't hear anybody addressing the question of testing it and proving its efficacy, its reach, and bringing the positions in to more active engagement and participation. in order to bring them along in everything you're talking about. >> any response? >> gary you and i have talked about this and i would say just got to be made more meaningful more relevant, you and i have

talked about just kind of studying for the test. in other words get your credit, licensure or 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 for, i think for joe mostly for joe and gerry. from my perspective is we've been so focused on the aca it's been almost a revolution in health insurance from more to less comprehensive especially with the tremendous and steady, and in the end tremendous growth in deductibles. so the average deductible is $1400 for a single policy $2800 for the family and the most commonly selected silver plan in the exchanges, it's $2500 for a single policy. those are high deductibles. higher cost sharing.

and it brings me to the point, you know we talk a lot about national health spending and health care costs in the budget, for me it is also a people issue, or you could think of them -- that as your constituents. so for joe, and 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? an then i'd like to see what gary thinks. >> well if you're relatively low-income person, with a heavily subsidized premium on the exchange but you're facing say a $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'll end up either qualifying for medicaid or, you know, something will happen that you might just be bad debt. but that's not exactly the image that we have for organized health insurance. that's not what we want. so we need to make some changes there. i mean, the enthusiasm that a lot of conservatives have which i share for high deductible health plans with health savings 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. but for low income people we've got to recognize their circumstances. and we haven't solved that.

>> i wouldn't disagree with joe. for the most part, as cost sharing has gone up it does, unfortunately, look like people with lower incomes often have higher cost sharing than people with higher incomes except by choice if they go in to an hsa plan or such. so we have some serious issues with people who have insurance being able to really effectively use it. we did a paper which you can find on our website which shows that a substantial share of people don't have savings or liquid assets to actually pay the deductibles, much let the out of pocket maxes in their policies. and including families where everyone had private health insurance -- or private coverage, yes, private health insurance. so this is an issue we have to keep paying attention to over time. and one of the ways that the aca

addressed it but to a minor extent is that people who are lower income also can get subsidies but that's certainly not everybody, and that's certainly not people who are lower income in employer plans who may be facing high cost sharing. >> great. so before we take our last question or two i want to remind you that you have a blue evaluation sheet in your packet. if you would kindly fill that out, and those of you who are congressional staffers you were also handed a yellow survey that we would be happy to have back from you at the end of the briefing. so we have a question about how effective all payers claims databases are in affecting prices and consumer behavior. what is the potential of these databases before anyone on the panel answers that question, particularly it would be good to have an explanation as to what that is. gerry, 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 toes 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. whether or not -- i've not looked close -- there's a couple small states that are trying to pull together some actual price information, and maybe jeff can say more about this. i have downloaded it from one of the states, and it was -- it was an -- it was daunting and so i haven't explored it as much. but, getting more information about price certainly lets people know where they stand, lets us understand more about what things actually cost, which

is a good thing. it's not clear we know how to affect it giving, you know, any of it other than by publicizing it given the way we pay for health services. but it's certainly a move forward to better understanding what's going on. >> i'm certainly no expert in this which i think gives me credibility with you, joe, is that right? >> absolutely. >> no expert at this. >> i think we need to form a committee. >> okay. >> but i just take what gerry has said. this is a very, very complex. i think there was a time when we thought, well if we could just mass these private sector payers with public sector payers into one database, we'd have what we need, and clearly it's only a step among many steps. as we look at the need for information it's a high need performance, comparative performance on quality and cost

is opaque in health care it needs to be transtransparent. it's going to 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 per procedure and a lot of that needs to be bundled in terms of hospital and multiple physicians involved in that care. and patients also need to know especially now that they're incentivized with high deductibles and copays what the comparative cost is. and i would submit very important to also know comparative quality so i would say it's a step in the right direction but there's many more steps that have to be undertaken. >> okay. so this will be our last question. and we talked a little earlier

about the high cost of waste in the system. and of course, fraud is a big part of that. so if we have -- the question is what role health care fraud, and medicare fraud have in 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 as you know, multiple percentage points of health care spending i'm not sure fraud is a big part of that. i think it's -- it's millions of dollars whenever you do a report or tens of millions of dollars which is important, and it sends bad snals, and it doesn't -- and it reduces people's confidence in programs, public programs, private programs and it often

can result in people being poorly treated, as well. but it's -- compared to $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 that i think will continue throughout -- for a long time to come. the annual white house correspondents' dinner is this saturday. president obama's expected to speak. also saturday night live's cecily strong will be this year's entertainment for the dinner. we spoke to the president of the