changing process and so one of the things that i think rather than do you sort of as peter said, you look at we've actually increased the amount of protections because it's under 702 as 0 we use to have it under the fourth amendment. one of the things i think is important is to make sure we truly are talking about the same set of facts to the extent that those are not classified and we really worked to do that. so whether you think you should have a warrant to do the u.s. person query or not based on sort of how we think about these things, what i think has been really positive is the fact that we are now talking almost about all of the same -- nina and i can totally disagree on this. we're disagreeing based on our own policy perspective as opposed to truly different facts. that's where we want to be in

terms of that transparency. i don't know if i can defend whether or not there should or should not be a warrant. that's sort of what the standard is today and whether that should be going forward or not. but we can now have that discussion, which i think is a really important aspect of sort of where we're going in that space. and we'll have to sort of test how trarns parent can we be so that we're not -- so we're not giving up means and mefd but we are able to say, okay, how do i bring these two -- what appeared to be dispart activity. i want to have surveillance, how do we bring those two together and how do we build those. and so, you know, that is part of what our democracy is meant to do and so my -- i'm not going to defend one thing or the other, but i do think it's important that we're able to start having that conversation.

you know, i think when we conceptually liez that, we have to understand the arm is very similar in those circumstances. if i'm a journalists and i'm worry about information getting out about my sources or i'm an attorney who is worried about attorney-client privilege, you know, the effect of intelligence has an effect on that and, you know, we've seen that people say that's we've seen documentation or reports after talking about the effect of knowing that the nsa can collect information having a real effect. i think that's one of the reasons that, you know, we argue for higher protections and closer to that criminal context, for that person who has the effect, it is the same. the information, you know, they may -- their speech may be chilled. the information may be used in a

criminal prosecution similar to domestic criminal law enforcement. i think we can't use the reality the effect can be the same regardless of some people. >> so your chance to ask some questions. if i can just ask you to speak into the mike so the reporters get it. if you can identify yourself, that would be great. >> okay. there are a number of other factors that i was wondering if, you know, and peter, with your group, that you were considering when you were going through your reviews such as the impact on american businesses, on the global scale. we've seen, you know, you safe harbor kind of take a hit

because of that. and i the impact of the u.s. reputation and reliability on being able to actually aspouse freedoms then not having other countries say, ha ha, you do this or that. with that part of your consideration, not just the privacy versus security, but also the multitudal other factors. >> you guys did look at that. >> so our charge for the president and the fifth thing trying to stop leaks. so our report has a lot of recommendations about u.s. place. one of the ones and some of them are sort of obscure. one of the ones is that we recommended a process and white house has adopted it for sensitive intelligence collection including heads of state. that there be a white house process that's more thorough

that includes state and includes commerce rather than having at the extreme low level saying let's go in and go after this head of state i don't think it worked that way before. now, there's a more thorough priorities process before that happens. and that's bringing in foreign affairs and other kind of concerns. another -- there's a whole set of other safeguard, some of them are in ppd 28, a lot of people in europe think the u.s. business get a commercial advantage. united states does do for sanctions against iran, because otherwise it's pretty hard to enforce sanction. it's not used to be handed off to u.s. business. and it says that exclusively. there's been -- if you go through and i've got writings up whichever recommendations have been accepted or not.

there are numerous ways i think administration has thoughtfully made changes to say, this is how we're trying to have an overall information infrastructure that works for multiple goals. we have to an internet that works for free speech, and for many many other things. our statute has the board focus on the appropriate and privacy and civil liberties. and the policy analysis in this context is sort of meshed one the fourth amendment reasonableness test. i will note a number of our board members have engaged in conversations with leaders from other countries, particularly in the eu and have travelled and spoken on forum there is and they have pointed out in that context and in those engagements that other countries also treat

their own citizens more favorably and the surveillance context and have also pointed out that none of them have an oversight entity and oversight board. so our nation is actually trying to take steps to conduct that oversight and to maybe we have one up on them in that context as well. >> by the way, i don't know what that description everyone sitting does to me. i'll look back at that. >> and i'll say say, i'm not sure. anybody would describe me as being the national security person here, you know, i guess it's all a matter of -- >> it's the name of your employer. >> my name is richard golden. i have a question for nima.

if i'm an attorney -- is the judge who might be hearing this motion, because it's a constitutional issue, is the administration's current policy any way relevant. >> it's irrelevant that you might not be able to make the notion that allows you to file the motion for suppression. if i don't ever get notice because the government's interpretation have derived is narrow and let's say incorrect from acle perspective. the individual defendant doesn't get notice, can't take it to their attorney and their attorney can never file that saying this evidence shouldn't be mpermitted in court. so i think in that sense, it is very relevant how the government is interpreting derived, you know, i heard illusions that they use potentially use poisonous tree sort of analysis. we don't have the legal opinions

that say here is how we interpret our notice obligations we know in certain context that government said actually we don't have notice obligations. so i think that -- i don't know if i answered your question. that's sort of how i think it's relevant to actual people who are effected by this collection. >> hi, my name is sharon, i want to talk about something that's prebecky richards, i'm so grateful that you are there. i was a target of prison surveillance. and then i kind of had a nervous break down and i just cried and i didn't know what to do. i tried to get lawyers and tried to get help people saying you're not suppose to go about it and i went to the members of congress that weren't aware of this type of surveillance happening. i get it. but what i wanted to always find out are political and i found

out in my situation, people that wanted to be future political appointees, people connected have access to this data. is there any way that we can protect that data, the present data on american citizens, they said, you're like a rape victim, you need to get some justice and maybe the only justice i can get is to make sure that political appointees, people that want to work in politics are get an appointee are not viewing prison data are access to be who is targeted. thank you, if you have any comments i'll be great. >> let me start and rephrase the question, i don't think there's any basis for a potential employee to have access to raw intelligence in the community. you can tell me from your reviews whether that's true or not. but perhaps the underlying port of the question is how do we protect against abuse of access to intelligence data. >> i mean, that's a really important question that we worry

about all day every day. we have a number of layers of processes starting with training our employees when they walk in the door with what the authorities are, what are u.s. persons, how do we protect those and then having compliance checks all the way through the process, whether it's something as two people have to put their eyes on it before we decide that we want to target an individual for collection or whether there's things like these technical sort of post query reviews. there's a number of these safeguards in place as it relates to specifically raw and that's just within nsa. and then you have a number of these oversight organizations that are then making sure that what nsa has said they're doing in those protections are in place, are also being checked whether it's by justice or odni, whether it's by congress or now by the privacy oversight for it. there are a number of various specific oversight mechanisms

put in place to make sure that how we're using the raw signals intelligence is consistent with the authorities that have been provided. and employees have the ability to talk to anyone with the inspector general, they can actually come to our office or our general council's office. if they have any concerns that either they have done something wrong or that they feel someone else is doing so that there's a place for people to have those conversations. >> sharon peter, we raise this idea political, being one of the things we really want to avoid. >> okay. i hope, i mean, what you're saying is a sad story and i don't know the facts of your story, our review showed beginning around 2009 there was a big spike up in the compliance office at nsa and we also, specifically, did a lot of look to see whether there was any sign of political targeting of any of the nsa stuff. now, we had, among our five

members, to people with years and years of experience in intelligence community and we looked for this, if we found political tampering that's super worrisome. we found no evidence of political tampering with the intelligence information at all. so i'll just say, i was looking and something i've worried about for years and written about for years. i found no evidence to think it's being used that way based on our review. >> and the boards review similarly do not find to any such abuses of that kind. >> i think that, you know, the question also speaks to a broader problem, which is lack of redress, right, when we talk about let's say people overseas. the redress act is not going to provide that much, there are national security sessions. what are your omnis for redress. to me i think that's an area where we need to do a lot more work. >> yes, sir. hi name is ericson, thank you

all for being here today. so, i heard quite a bit about so the recommendations for former rounds defining the conditions under which certain queries can be conducted. there's also been at least some reference made to internal training procedures, you mentioned post query review. i wonder if there's been any conversation about more post hock analysis of the way the data is being used. there many things you can do aside from querying it and for all the same reasons that collection has become ewe b-- themselves generating data about how they're interacting with it. have there been any recommendations made about how that kind of logging and other data can be used to actively monitor how the systems are being used, apart from some of

the aggregate met tricrics that talk about reporting. they actually do investigations on how this data is used. thanks. >> you didn't. so i'll just say that there are a number of different -- within nsa activities that occur, also our inspector general goes through and looking at different ways that the information is being used to be sure it's consistent with the authorities. we also spend quite a bit of time in our office, as privacy office, by the staff, we're part of the senior leadership at nsa. we're not sort of buried somewhere down that i report to the director, we look at some of the questions, just a query, i have a selector and it's pretty simplistic approach to doing p foreign intelligence. we want we have an equal

responsibility to be consistent with the authorities provided. we have a number of different mechanisms, i think at the level of actually the use of the data. i think your second one had to do with are we looking at audit laws and seeing if things are being consistent with those uses and there are different situations that will actually be used. >> so the board in its report do not make any specific recommendations with regard to audit that is certainly something that we look at generally, at a higher level, though, one of the board's recommendations in the 702 report focused on efficacy. recommended that the government should -- for assessing the efficacy and relative value, so not just the 702 program, but more generally are you -- are you getting what you're looking for so when you have any kind of privacy intrusion to make that worthwhile as you balance that should have some program itself

should have some value in getting the counter terrorist, you know, in certain purpose for which you have this program. and so at that level, looking at the use, is it appropriate, is it effective is where the recommendation. >> something more specific and -- that i didn't check. you know, you have people do research and sometimes you're still in the process of checking everything. in connection with the loud retrospective look. >> and -- and it's different. yes, that's to have it. so the board did recommend in the context of targeting that it should have more information

about actual practice. >> so that's what i thought was perhaps responsive to the question. >> thank you. yes, sir. >> thank you. and thank you for the -- for a great panel. i'm adam. i'm the director of government relations with the american library association. for those -- what do they care about privacy and for 140 years is the foundation of democracy, essentially, if you have a chilling effect, you don't have

intellectual freedom. i've been given in the natural t tendency of the discussion, on the one hand, we have nima who i am proud to work with, in support of reform, of 702 and other traditions, saying, on behalf of the public, becky not unreasonably and with respect to the analysts say trust us. so how do we bridge that gap is the question that's going to pose. we certainly have a perspective and i'm asking this question from that perspective, which is as somebody who has been around washington for a long time and run all kind of issue campaigns and done a little gorilla fighting, what you want to do is figure out what the other side is saying and how do you under cut their argue ms. becky, if i were you and i was thinking, well, we want to maximize, what maximizes trust, well what's the other side saying, warrants, so why isn't,

my question is, finally, why isn't the intelligence community, maybe it is saying how do we absolutely maximize the use of warrants and so the people trust us more so we won't have to get a warrant every time we want to query information about somebody overseas. in other words, isn't the bridge for that divide processed in between from a trusted entity like the courts and, therefore, why wouldn't we want to maximize the use of things like the warrant as nima has suggested. >> as a practical matter as was noted in the transparency report. there are 94,000 targets under 702 that are there. and so as a practical matter, i would agree with you that we want to -- trust is not an acceptable answer and i think -- >> forgive me, just to clarify,

94,000 warrants would be tough to arrange. with respect to u.s. citizens. >> i'm sorry. with respect to u.s. citizens. okay. so, again, so if we're going back to u.s. person queries and -- for 702, i will -- i'll just say that there are many different prospectus on it, i'm not going to give you one way or the other. but i hear what you're saying. you know, we had roughly a little under 4,500 u.s. person terms that were used in 2015, so i don't know what that would look like in terms of the process associated with getting a warrant for every one of those or how that would work, so i i'm just going to not answer. >> can i pick up on the 92,000 for a second. >> sure. >> so the target of prison plus upstream according to the transparency report are that

92,000 in a year. so you get numbers like one in a million for something for people outside the united states depending on where you do it. what's the population of baltimore, 3 million or 4 million, that means 3 or 4 people in all of washington will be targeted in 702. so the scale there's been talking about mass under prison and upstream and matching that to three or four people in the whole baltimore washington area is a pretty different image. >> and i appreciate the scale and recognize, no person in washington would be targeted. >> i think i was -- i just was giving. >> if we were in paris, it would be ten, right, or whatever. and that might not be enough in paris given they've had some problems there. >> that person might be in context with, we can't forget all the people. >> those are the targets, but that would be warrants true, also. >> if we had trap and trace order you would get everybody they talk to. >> absolutely, and you have a different protection in certain

cases. >> yes, ma'am. >> i'm one of the drafters of 702. one of the things that we didn't -- when we wrote statute we were careful in considering and thought about a lot of things that have been raised here, use of foreign intelligence. but because the intelligence committee jurisdiction does not include judiciary and use in the law enforcement context, the ways in which congress thought about protections for u.s. persons were not as clear and were not as well articulated and carefully thought through as they were on the intelligence community side. i know p club has gone back and looked at some of the cases where 702 information has been used in their 702 report. but i think the concerns about the use of u.s. person information in the law enforcement context and the failure to notice and how that information translates into -- how intelligence information gathered absent a warrant

translates into a law enforcement context where a warrant is required, is the concern that makes most persons really nervous about the statute. and so -- i'm curious, did p club go back and look at these questions or do you intend to go back and look at these questions about 702 information and whether or not, not just in the law enforcement context, but in other contexts where rights are abridged like the right to travel, or 702 information was used, how was that used, was notice provided to the u.s. person, what were the appropriate protections there and sort of relatedly when will the p club release their 12 triple three rule. >> so i'll take the second one first, i don't know. on the first one, as nima pointed out the administrations policy is to provide notice, at least current policy is to provide notice when section 702 information is used in a criminal proceeding. and as i mentioned a little bit

high level before, this is an issue that split our board. all the board members called for additional restrictions on fbi queries of that -- that run across 702 data in the nonforeign intelligence context. so we're looking at foreign -- this is collected for a foreign intelligence purpose, foreign intelligence crime, that was, you know, a one side, but looking very much at this issue of nonforeign intelligence-related, more traditional crimes or drug crimes and so forth, how could this information be used when should an agent have access to it. and all the board members they agree there should be additional restrictions. those range, members brandon collins wrote they required for supervisory approval for foreign agent who was not in that foreign intelligence space would

be appropriate kind of enhanced protection, then chairman and member wrote that they wanted to have approval for those kind of queries. it's a difficult question and it's something that split our board. >> did you take a different view of the application of the constitution to foreign intelligence, versus nonforeign intelligence of crimes on u.s. soil in saying that, well, if you need supervisory review for foreign -- for nonforeign intelligence crimes because you thought there was a -- did you think there was a lesser constitutional standard because of some additionally weight given to the president and nationals security base, were you applying the same constitutional standard for foreign intelligence crimes occurring on u.s. trail as nonforeign intelligence crimes. >> well, the entire -- the constitutional analysis is all under the reasonable totality of the circumstances test and the board made clear, though, that they analysis was similar to

policy analysis did ultimate draw finite conclusions. in this context on the recommendation into looking at the fbi queries, it's how the members wave the consideration. so this information is being collected for foreign intelligence purposes, that is the predicate that they are showing when they are doing the collection in the first instance. so it is more closely tied to that purpose and when you look at a second dare use for a crime that is not a foreign intelligence crime, so it's more divorced from what showing you did make at the front end that's where they felt additional protections were required, because it was further removed from the initial foreign intelligence purpose collection. >> can i just make a point about baselines and status quo, again, so one baseline would be any time the government gets about any american you need a warrant. another is the government often comes across evidence and all sorts of ways without a warrant.

and so it -- when 702 is related to information you might pick up about a crime from somebody who is walking down the street, either in the united states or paris and the government might become aware of information that doesn't need a warrant there. you have to decide whether 702 any time it touches u.s. person goes all the way to warrant or whether some of it is you stumbled across. you can have different views depending on whether you think it's natural for the government to see evidence in front of their eyes or whether there needs to be a warrant to do that kind of access to information and 702 is in the middle because it's targeted for people information that's collected that's happening outside the united states and so that's a long way toward not warrant land. and if you assume it's all warrant, then they'll be pushed back, you'll say usually they don't have to get warrants there. >> we'll have time for one more, sir. >> one more national press club,

just quickly -- nima thank you for bringing up american journalists and sources et cetera, et cetera. so two quick questions, one is -- well, first amendment issues freedom, of course, addressed in any of the discussions that you all had and were there any specific thoughts about how to handle that. and also more particularly, did anyone bring up the issue of impending national shield law in which congress has been batting about for a while and the fact was held up by the snowden revelations, stalled the further discussion congress whether that came up, all of the second part is less important than the first, thank you. >> so keeping it explicitly sort of addresses some of the first amendment questions and certainly what i would say is that those -- when you're looking at the question of privacy, the first amendment are naturally the first step. depending on sort of the uses,

you really -- it's -- those match nicely in terms of doing the analysis and considering what those are if the government has not collected information that would be first amendment, you're not going to have sort of those same sort of first amendment concerns. you know, there's different places that will be more sbin waited and in that process. ppd 28 explicitly was putting that out there to address the foreign community in those questions. >> and one other thing, to the extent a lot of these rules are to try to protect our democracy against abuse by over surveillance, that has a lot to do with first amendment, whether you have free speech, whether you can speak anonymously. whether you can and your friends decide what you want to do and take action politically. so first amendment protections were very much in our rapport as part of how you try to keep a democracy from getting abused by too much surveillance. >> i hope you'll all join me in thanking fantastic for lively

resolve. editor of the blog ground game writes that on saturday new hampshire is once again donald trump's political home. his fourth visit to the state in four weeks and james pin dell is joining us from boston, thank you very much for being with us. >> thanks for having me. >> what's going on in new hampshire. why has this state become so critical to both the clinton and trump campaigns? >> you know, a lot of ways new hampshire really matter in presidential elections if you were to go back to the 2000

election, the state was decided by about 5,000 votes or less and that really was rough vote if al gore had won new hampshire instead of george bush that year, we wouldn't be talking about in florida. it's been a lesson that both campaigns and both parties have been engrained in themselves ever since that pivotal year, but looking at donald trump, there is something highly unusual about all of his events and all of his trips here to the state. as you mention, this is a sports trip -- fourth trip in four weeks. it is highly disproportion gnat prepare -- compared to everywhere else in the country. this race is coming down to four big states, big swing states, north carolina, florida, ohio, and pennsylvania. the polls there can make it very good argument that donald trump has a chance to win and can win a lot of ek toir ral votes, in terms of thinking over the past

month and may look a little differently at this current moment. but donald trump has never led a poll in new hampshire, in the general election. and it just has four electoral votes. it does have a lot of people scratching heads. >> so in donald trump's quest to get 270 electoral votes wharks is his path to victory and what role will new hampshire play in that path? >> he's got two paths and they are getting narrower and narrower by the day. one is to sweep all of those four big states that we mentioned, i mean, ohio, pennsylvania, north carolina, and florida. if he does that, he gets there. the other way is to in day two of those states and then a collection of a lot other smaller states, iowa, for example, he's doing well in. nevada, colorado, and then you have to -- new hampshire, that's the way in which he can do it.

but, again, it's so disproportion gnat the amount of times he's been here. he's been here eight times since the california presidential in june, basically the kick off of the general election and for perspective, that is more trips than he has spent in states that are much bigger like arizona and georgia combined, with -- in those two states and a couple of others. you spend more time here than any other swing state outside those big four and he's had more campaign events. in new hampshire in the general election so far, mitt romney did four years ago and as your smart listeners know, mitt romney basically lived in new hampshire in that 2012 campaign in his lake house in wolf borough. so it's highly disproportion gnat to see so much time here.

one is that the trump campaign sees these polls showing her up by 4 or 6%, they think the race is tighter. second which i think is really honest, it's just closer to new york city. when trump went to schedule an event sort of at the last minute, he can get on the plane and come to new hampshire, he knows his staff can put together he has during the presidential primary, he can get back on his plane and sleep at trump tower. >> let me ask you about the senate race in new hampshire, one of a number that determines who controls the senate, which party, the democrats or republica republicans, how is that impacting the overall tenor and what impact do you think it will have on turn out in new hampshire. >> you know, a lot of races are critical, you know, this race, as you mentioned, it comes down to really just two states, pennsylvania and new hampshire in terms of those contest, this contest in new hampshire is

remarkable for so many reasons, it's the most expensive in state history, the most high profile race in american history of two women in terms of the importance of it and the both that's sitting u.s. senator versus a city governor both are well informed on a policy running really smart campaigns and the first question at every single debate in the general election for these two candidates has been about the presidential race, even as it was today. the presidential race is over shadowing everything that i just said really dramatic and impressive about this context. >> we can read your work online, who covers politics and you can check out his blog, titled ground game. he's joining us from boston, thank you very much for being us. >> thanks for your time. >> watch cspan's live coverage between the third debate on wednesday night. our live debate preview from the

university of nevada, las vegas starts at 7:00 p.m. eastern. the briefing is at 8:30 p.m. eastern and the 90 minute debate is at 9:00 p.m. stay with us including your calls, tweets and facebook postings. watch the debate live and on demand using at first ladies, in paper back, published by public affairs is available at your book seller and also as an e book. next white house council of economic advisers chair jason fur man joins other white house officials from the obama and george w. bush administrations to discuss health care policy and its effect on the u.s. economy. this was hosted by the center at george mason university, just over an hour and a half.

>> on behalf of the center at george mason university, i want to welcome you to this important discussion of the effective rising health care cost on economic mobility and economic well being. my name is bill, i'm the vice president for policy research at -- and on behalf of the scholars and the staff, again, welcome to this great event. it's not unfair to our times to suggest that we live in the era of health care policy. there's little else that i've heard about in the past 20 years. every time i turn around is health care policy. few issues have dominated the past 25 years quite like this national health care policy debate that we've been having and that is clearly true of the

past eight years. this policy debate largely has centered coverage issues and that concern continues to appear in the national health care discussion as evidenced by what is happening in the presidential contest right now. at this time the post aca world analysts are focusing anew on unintended fix from restructuring of insurance marketplaces to the economic affix of rising health care cost. this last topic is the subject of our program today. i have the growth in health care cost effected the economic welfare of insured and uninsured americans. is this increase in cost offset by the benefits of newly extended coverage. as the rising cost of health care insurance effected the distribution of earnings in the

united states, these will be the questions among many others tha panels here later this morning. to get us going, we are extremely pleased to have with us a person who has been commenting on health care and economic policy in this town for a long time and i refer, of course, to robert samuelson, gentleman who doesn't need much of an introduction and encourages me to not only say nothing about him. as all of you, robert writes for the washington posts primarily on business and economic issues and has been associated with the post since 1977. he began work at the newspaper in '69 as the reporter left and came back. he has become known for power commentary on economic and fiscal issues, as well as general economic commentary.

robert received a bachelor's degree from harvard university and he has written several books. please join me in welcoming him to the podium. [ applause ] >> thank you, bill, i appreciate the short introduction and i hope you won't hold my harvard background against me. a friend of mine, rich thomas, the former chief economic correspondence news week where i worked for a number of years, coined a law, he said all bad ideas start at harvard. before i start, let me clear up a couple of other common misconceptions, although i write about economics, i'm not an economist, i'm basically a newspaper reporter who was booted upstairs to write a

column. second, although i have a famous name in economic samuelson, i am no relation that i am to paul samuelson nobel prize winner. i am told, however, that he did have a son named robert j. samuelson, if so, it's not me. now, let me get down to business. the subject of today's conference is actually quite simple. it's a question. can we govern health care sector or can it govern itself. the answer is not at all clear. governing means making choices, usually, unpleasant choices. if everyone agreed on everything we wouldn't need politics or legislative bodies, we could run that country by the computer because there would be no agreements. but of course we do have disagreements and differences. economists have devised the convenient framework to explain how most material choices get made. they've divided most goods and

services into two broad categories, public goods and private goods. private goods are regulated by the market, people vote with their -- vote with their feet and their pocketbooks. if people don't like old fashion newspapers, prefer to get their news from their tablets or smartphones are not to get their news at all and newspaper circulation will decline in perhaps one day disappear. i maintenancely like the result, indeed, i don't. it's the verdict of the market. its choices are dictated by consumer preferences and incomes, if you can't afford a mer say dez, maybe you'll by chevrolet or bicycle. most choices are made this way because most goods are services are private goods. not all. we also have public goods and services that are provided by government. most obviously, but also much research and development and various types of regulation, regulation of the environment,

financial markets work by safety and pharmaceuticals to name just a few obvious examples. how we decide, how much and how little what we launch is by political choice, elections and legislative action. if you think government is not spending enough on this or that public good or over taxing to spend too much on unneeded public goods, you can try to change the out come by voting for a new set of public leaders. this is, obviously, a messy, in exact and not nearly as decisive as the marketplace, but it is a process. so we have two well-defined methods of making most spending choices, the private market and government. the health care belongs to either of these two groups to share some characteristics or both. half of our health care is supplied by the government. far more accurately paid for by the government. best examples are medicare and

medicaid. and in this sense, medical care resembles the public good. on the other hand it also resembles a private good in upper middle class families routinely described as having access to better medical care than poor people. but it resembles neither in one sense. there's no obvious way of limiting it. people regard medical cares are right to be supplied to anyone who needs it when they need it. this attitude stretches back for decades. gallup pole in 1938 asked respondents whether the government should be responsible for the medical care people who couldn't afford it. response was 81% of the public said yes. writes are almost by definition, open ended. i have a slightly different way of describing our situation. though it may just be another label for the word "right" in any case i call unethical.

it is something that in the view of most people and as a moral matter must be provided for those who are sick, injured or worried that they might become so. to withhold care is immoral. unlike private goods -- unlike private goods, care should not be attributed to income and preference. unlike public goods we should not put a ceiling on health care spending. people should get what they need, when they need it to survivor and enjoy life. no one should be told on an operating table that a procedure has to stop because the hospital has run out of money or about to pierce some budget or won't be reimbursed by insurance company. health care is not that sort of public good. it is, as i said, unethical good. this may seem defense and desirable approach for any individual, but it's less defensible and desirable for the society as a whole. it has led almost inevitable

rapid es scalation because thers effect and are crowds other important and private spending. more total compensation is devoted to health care squeezing wages and salaries. other government programs are taxes and/or deficits are raised to satisfy the demands of prior health care spending. the original question i posed, can the governing health care sector is even more complicated than this implies. americans want three things from their health care system, first they want universal coverage along the health care as a write or ethical group. people shouldn't be deprived simply because they can't pay for it. next, they want total atonmy for doctors and patients, doctors want to be anlt to provide whatever treatments of drugs, and other therapies they think desirable without being second guessed by insurance companies

or government bureaucrats. likewise, patients want to be able to pick the doctors and hospitals of their choice. they don't want to be dictated to. and finally, americans want to help control, they don't want ever rising health care to reduce their standard of living, especially since motel -- most health spending to a very small portion of sick people. the top 10% of health spending cases account for 67% of the cost, roughly two-thirds. the health spending of healthiest 50% of the population accounts for 3% of the cost. the trouble is that we can have two of the desired out comes at any one time. you have yuan ver sol coverage, if we get doctors and patients totally free choice, they'll almost certainly be hired there will be no reason to withhold treatment, diagnostics or medications that might do some good. if we withhold some of these

treatments to control cost and restrictions backlash that essential care is being denied, the same is, again, true if we failed to provide universal coverage which despite obama care is what we've done. modern medicine is compound to all of these difficulties in two ways. technological advances and medical care are often more expensive they replace on the fact that there were no previous treatments and specialization of medicine, which often reflect these technological gains means that no one is truly in charge often means that no one is truly in charge of patient's treatment because he or she suffers from multitude of ailments and has as a result of multitude of doctors. i don't mean to imply, although it probably seems to imply. and my wife has often told me i've a glass half full.

i don't mean to imply the efforts to control the costs are futile. our medical industrial complex is strewn with rules and practices. or the conflicts between goals can be obscured because they are complex and not obvious. or the conflicts can be justified because they only limit waste, whatever that is, and don't compromise quality of care. still, the job is inherently difficult, because whatever health care providers, government regulators or insurance bureaucrats suggest is logically bound to threaten one of the three goals americans hold. it's been a frustrating process, perhaps not futile, but certainly difficult as i suspect this morning's session will confirm. thank you very much. [ applause ]

>> thank you very much, bob. that was a great way of starting the morning. appreciate that. we're -- now i'm going to call to the podium my colleague, who is the senior research fellow and program director that -- of a programm -- he also has major responsibilities for a number of other issues at the foundation. i don't know what we would do without him. he frequently appears on radio and television. he's an expert on baseball history and that commentary is welcome this morning. chuck was a public trustee of social security and medicare from 2010 to 2015 and served prior to that in several economic policy capacities in the george w. bush administration and received a b.a. from princeton and ph.d. from the university of

california, berkeley. please join me in welcoming him to the podium. [ applause ] >> well, we are very fortunate this morning to have the opportunity to hear dr. jason ferman's insights on health care policy and its relationship to the economic experiences of individual americans. it's my pleasure to introduce him today to you. as many of you probably already know, dr. ferman serves as the 20th chairman of the president's council of economic advisers. he's been with president obama since the beginning of his administration, previously holding the position of deputy director of the national economic council that. is a very important around wonderful position. i can personally attest. it can held only by the most brilliant of people. prior to that, he's held a

variety of posts in public policy and research before coming on with president obama. he's done work at the world bank, a senior fellow at the brookings institution. he has had various stints in academia, including a position at nyu's wagner graduate school of public policy. his research covers an extremely wide range of areas, including fiscal policy, tax policy, health economics, social security, and domestic and international macro economics. he's the editor of two books on economic policy and holds a ph.d. in economics from harvard university. now, some of you may already know, and others might be amused to know that he's also an accomplished juggler, and not only in the professional and intellectual senses, but also in the very literal sense of the word. this has special meaning for me, because a couple of years ago, my own wife gifted me with some juggling balls, along with an

instructional booklet and some research indicating that juggling was an excellent way to sharpen one's mind. you can draw your inferences about what was implied there. so i've attempted to teach myself new juggling tricks, but has resulted in very humbling failures. so i think of this of my daily reminder that dr. fuhrman is smarter than me. so with that, help me welcome dr. jason fuhrman. thank you. [ applause ] >> i'm not going to hold myself up against a quantum chemist. but thank you so much, chuck, for that introduction. thanks for organizing this discussion today. and i thought i would start with something really simple, because when we talk about health care, often our vocabulary flips around. i want to talk about the

difference between cost and spending. cost is how much it cost to buy something, how much it cost to buy a shirt or a candy bar or a meal at a restaurant. and in those contexts, we rarely get the word wrong. spending is how much it costs for something multiplied by how much of it we spend in total on shirts, how much we spend in total on candy or restaurants. and that spends on both the price and the quantity. when it comes to health care, these two have somewhat different evaluations. as a general rule, any time we can slow the growth of cost, that is the growth of prices, in this case, the price of an aspirin or the price of a treatment for heart attack, that's probably presumptively a good thing and something we should be happy about.

when it comes to spending, price times quantity, it's a little bit more ambiguous. and in particular, it depends very much on the circumstances. there's been a lot of research on how much we get out of our health spending, and i think the answer to the question is, you know, it depends, and it's all over the map. some economists have talked about us being on the flat of the curve, that for each additional dollar we spend on health care, we're getting an extra screening, which at best doesn't do anything to diagnose a problem, and at worst, may even lead us to undertake some form of costly surgery that leaves us worse off because of the side effects associated with it. and that world it's possible to reduce health spending by reducing the quantities without

making us worse off and possibly even making us better off. but there's also substantial evidence that, for example, people who don't have health insurance are spending too little on health care. they're unable to get preventative care and the type of treatment they need. for them, additional spending on health care would be a positive, not a negative. so we have a health care system that, in some respects, is doing too little. maybe too little prevention. too little for the people uninsured. and in other cases, is providing treatment that may be wasteful, unnecessary, and in some cases, harmful. so a lot of the trick is both how to improve the efficiency of health care, the growth of prices, and then also look at spending and how to have, you know, more of the good health care and less of the health care that's causing the problem. if you look at the record of the

last couple of years, what we've seen since the affordable care act was passed in march 2010 is that health care prices, as measured by something called the personal consumption expenditure, has risen at a 1.6% annual rate. that's the slowest rate of growth of health care prices since the -- in over 50 years for comparable period of time. and that is unambiguously good news, that the price we have to pay for, you know, all the different things we want in health care is growing at about the same rate as overall prices, excludeing the volatile categories like oil, which is something that historically hasn't been the case. historically we saw health care prices increasing faster than

every other price. when we look at total spending, that's grown faster than prices have grown and premiums have grobe faster than prices have grown, because the quantity has grown, and it's grown in two senses. one is, we all get better treatment today than we did 5, 10, 20, 30 years ago. but second of all, more people are covered. in fact, millions more people. 20 million people have gotten health insurance since the affordable care act passed. notwithstanding all of that, what is really remarkable is that health spending itself has come in well below what was expected. if you look at the nonpartisan actuaries that estimate health spending, in january of 2010 before the affordable care act was passed, they projected this year we would be spending $3.7

trillion on health care. instead, the latest estimate is that we're spending about $3.35 trillion this year. that's 9% less than what was expected. and that's despite those 20 million people that have gotten health insurance in the wake of the affordable care act. so understanding the causes of the slowdown in both health costs and surprise on the down side for health spending, what could be done to help it continue and its economic consequences i think are really important and there will be a whole panel here that can help discuss and debate that. in terms of the causes, i think there's a variety. originally, people thought this was something temporarily caused by the reception.

as we get further and further away from the recession, i think that explanation becomes less and less tenable. it's more likely something in our health system. i think a lot of things are going on. you see innovation in the private sector. you saw a slowdown in health costs going in the years prior to 2010. but you've seen that slowdown accelerate since 2010. i think in particular the way in which we reemburse in medicare has played a role. the way we've done delivery system reforms that are paying less for fragmented and often duplicate care, but instead are paying on a more integrated basis that encourages providers to save money and improve quality, something we're now doing for 30% of payments in medicare with a goal of 50%

eventually. and the way in which the private sector has adopted a number of these practices that we see in the public sector i think has played an important role. i think it's notable that the affordable care act is certainly a divisive topic. there's all sorts of really heated views on the question of the affordable care act. i certainly think it's one of the most important laws we've passed in this country in a very long time. others disagree. but a lot of these delivery system reforms that were in it, ways that let you, for example, design experiments that -- about how to reimburse in medicare for example, bundling treatments for a given treatment. or reimburse on the bases of how care is better integrated. a lot of those ideas are really bipartisan, and were supported

by both political parties. and we saw a lot of those ideas incorporated into a form of how we pay doctors within medicare but past congress on a bipartisan basis last year, and gives us a number of these same delivery system reform tools to use in the reimbursement of physicians that we already had in other parts of medicare. none of this happens automatically. a lot of what we have now are not a specific game plan of what we're going to do each year in health reimbursement for the rest of time. instead, what we have is the ability to conduct pilots, to experiment with different ways of reimbursement. and when those are successful in either improving quality without hurting costs or improving costs without hurting quality, scale them up in medicare. a lot of what you're doing in

medicare then can be faken advantage of and built on by the private sector. so it's not self-executing. it's something that will require certainly this administration has put all efforts into it, but will require the next administration and after to continue to take advantage of these tools to try to figure out how to better provide care and do it in a more efficient manner. this all matters quite a lot for the economy, which is the topic of today's discussion. in particular, i can think of four reasons why it matters. first of all, it matters just because a large fraction of what we consume is health care. it's nearly a fifth of our nation's gdp. and right now in a number of

respects, we're consuming it inefficiently. that may be due to distortions that come from public policy, whether it's the tax system in health care or public programs. it may be as some democrats -- or more progressives would emphasize failures in the market for health care. or additional research and development is a public good that has a spillover. so no one insurance company has the resources and has the incentives to figure out the full set of innovations, but the federal government does have that scale and can help contribute an effect to that or indeed can help expand the production possibility. so you're talking about something that's nearly 20% of the economy figuring out how to

spend your money within that 20% more wisely, will basically mean you can potentially get more for your dollars and be better off. so that would be the first economic importances inherently. second is it plays a really important role in the labor market, and in the short run, the evidence is, when health costs slow, that employers don't pass all of those savings onto employees right away. it lowers the cost of compensation and it allows employers to hire more people and results in more jobs. the third economic point would be in the long run, i think the savings -- i think health costs passed through from employers to employees. it may seem as if the employer

is paying part of the premium, but they're paying you a lower wage. so really it's all coming out of your pocket. so if you slow the growth of health cost, that helps increase the pace of growth of wages and raises income growth, which is one of the challenges we've had as a country for many decades. and then the fourth and final way that health costs and health spending matters a lot is it's a substantial and growing part of the federal budget. and the federal budget, while the deficit has come down a lot over the last six years, that deficit is projected to rise again in the future, and we have, going forward, spending that exceeds revenue. to the degree that you're able to bring down the growth and the cost of health spending, you can help better align those two and have fiscal sustainability.

and that's part of what the affordable care act is a down payment on, lowering the deficit over time by trillions of dollars over the coming decades. but a lot more work remains to be done both on the health side and in our judgment in a balanced fashion with additional revenue to deal with our budget problems, as well. so i think it's through no accident that health care has been a major focus of some of the brightest minds in economic policy and public policy for the last many decades. it's a really vexing and complicated issue. it's a really important issue to the overall economy, to the job market. and to our fiscal situation. but i think it's one where we can make progress and we can make progress drawing on ideas

from across the political spectrum to inform our delivery system, to give the private sector more incentive to adopt those reforms and get more of the good spending, less of the unnecessary and wasteful spending and slow the growth of prices. in your next panel, you'll hear from four of those brightest minds helping to figure that all out. thank you. [ applause ] >> well, thank you very much, dr. fuhrman, for getting our first panel off to such a got start and proposing some interesting questions that we'll now have the opportunity to discuss. i would like to ask our four panelists to come and join me on the stage and we'll get going.

>> well, we have a very interesting first panel for you. it's my privilege to act as moderator. i'll try to be as unobtrusive as possible. as we have talked about, we want to discuss the various ways in which national health care policy influences fundamental aspects of americans' individual economic well-being. each of our experts is going to start by giving brief remarks on the order of 10 minutes or so and we'll open it up for questions and unleash what i believe will be a very interesting and informative question. sitting directly to my left is

dr. douglas aikens, president of the american action forum. he's probably best known to most of you for having served in 2003 to 2005 as the sixth director of the congressional budget office. prior to that time, he was the chief economist on the president's council of economic advisers, and also where he had previously worked from 1989 to 1990 as senior staff economist. he's built an international reputation as a scholar doing research in areas of applied economic policy and entrepreneurship. at syracuse, he was the trustee of professor of economics, and associate director of the center for policy research. long before that, he came up through the ranks of the richland township public school

system in pennsylvania. our second panelist, dr. jared burnstein, senior fellow with the center on budget and policy priorities, where he's been since may of 2011. he served from 2009 to 2011 as the chief economist and economic adviser to vice president joe biden. he's well known to many of you as having served at the white house, including federal and state, and he's the author of numerous books, including his latest "the reconnection agenda, reuniting growth and prosperity." he's a frequent on-air commentator and hosts his own blog. and holds a ph.d. in social

welfare from columbia university. our third panelist, jim capretta is a fellow at the american enterprise institute where he holds the milton freeman chair. there he studies health care, entitlements, as well as global trends, aging, health and retirement programs. he served as associate director at the white house's office of management and budget from 2001 to 2004. again, i had the pleasure of working with him there. he was responsible for the portfolio that covered health care, social security, welfare, labor and education issues. prior to that, he was the senior analyst at the u.s. senate budget committee and the house committee on ways and means. he was a senior fellow at the ethics and public policy center. he has a masters from duke university and a b.a. in government from notre dame.

continuing, we have matt feebler, chief economist at the council of economic advisering. he specializes to a large degree in health care economics. he served as senior economist, and has a ph.d. in economics in economics from harvard. before that, received a b.a. previously, he worked at the center of budget and policy priorities. as chief economist, his expertise informs not only health care policy, but every aspect of budgetary and economic policy. with that, i would like to turn it over for the remarks of our first panelist. >> thank you. thanks for the chance to be here today. i'll remind chuck that if this goes poorly, i have his prom picture. >> it was the '70s. >> it was a real low point for everyone.

this is clearly an important topic, and i think what's interesting is we have these sort of two very important problems in the u.s., one of which is poor economic growth and the second is the budgetary outlook. on the economic growth front, from the end of world war ii to 2007, we grew about 3.2% a year. but even with population growth, the baby boomers and so forth, the economy grew fast enough that gdp per capita doubled roughly every 35 years. so you can imagine seeing the standard of living double, and that was the route to the american dream. the projections now are that the u.s. economy are going to go 2% of the year. this doesn't double for roughly 70, 75 years. so the american dream is

disappearing over the horizon. at the same time, we have a budget outlook which is quite daunting. it's still true that whoever wins the 2016 presidential election will inherit a budgetary outlook whi, 16% of t deficit will be interest of borrowing. so we're heading into a death spiral, which is unacceptable for the nation. health care lies at the heart of this. on the growth front, it's an enormous fraction of the economy. long-term growth is griffin by how many workers do you have and more importantly, how much does each worker produce. that's productivity, and the

health care sector is a low productivity sector. as jason mentioned, with haeed a health care sector that's characterized by spending where we spend too much on some things, too little on others and misuse a lot of spending. so that leads to a low productivity sector. as i'm an economist, you want to try to focus over the long-term on getting better productivity growth. that should be a fundamental challenge to the health sector. it's also true that if you've got a 2% growth rate and roughly 2% inflation, the resources in dollar terms are about 4% a year. if you look across the array of federal health spending programs, growth rates are 5.9% in medicaid, medicare. so we've collectively

stop doing the misguided payment policy. we don't know really where to go on the improving payment policies. what's interesting to me is that i think there's a consensus, whether they realize it or not,

across the spectrum on what the future looks like. on one side of the aisle, it's called the independent painted a visery board and if medicare gets too big, you have to stop it from growing. you should bundle things, and they're just going to build bundle by bundle to better care. so budgets, bundling, and quality outcomes. the budget is -- you say this is how much you get for this senior, and you have a bundle, it's called everything. you give them an insurance package and you cover everything, and you have a quality metric, but you pay for quality outcomes in exactly the same vision as the democrats have.

so i'm optimistic that we can look these sort of two competing visions up for reform and make a lot of progress in years to come in having a health sector with higher value and better productivity. >> terrific, thank you. dr. burnstein? >> i'm going to speak from the podium, because i have some quick slides. this is a very different quick little fautalk here. i want to bite off one little piece here, which is the affordable care act, and jobs. here if my presentation is a success, the next time you hear somebody say the aca is a job killer, you'll walk away in disgust, because it's not. there's no evidence to support that. and so that's what i would like to take you through in the next couple of minutes. i wrote a longer piece on this a

while ago, and my motivation was partly driven by the fact that when we were working on this, i can tell you that the many people involved never thought as the aca as a jobs program. so the idea that we would defend it as a job creator is certainly not what was intended and not what i think has been achieved. so i want to be very clear that i'm not saying the aca is a jobs creator. outside the health care sector, if you're going to newly cover 20 million people, the reason i thought the aca didn't have much of a case to -- for this accusation of job killer is because the employer mandate affects few employers. about 30% of workers are in

firms that have less than 50 full-time equivalents, so they don't face the mandate. of the 70% that are above 50 so would face the mandate and would employment disen sentive, 95% of them are already offered coverage. if you look at the percent of workers right on the margin of that 30 hours per week, under which the mandate would not be applied, it's a fraction of a percent. so looking at the magnitudes of those who would be affected -- whose employment would be affected by the employer mandate, you wouldn't expect much traction there. then you have to ask about the impact of subsidies. subsidies fade as income rises. but on the other hand, the high marginal tax rate on medicaid,

which would lead folks to stay on medicaid pre-aca, that has been very much diminished this states that have taken the increase. so long story short, it's really an empirical question. so in the next five minutes, i'll show you the slides that look at the impeeric. on the left side, each dot is a state. and on the x axis, we have a measure of obamacare's penetration, which is the increase in insurance. the increase in the share of people in the state with insurance that's plotted against employment growth. if you expect a greater traction in obamacare, greater penetration from obamacare was a job killer, you would expect that correlation to be a negative one. in fact, it's a positive one. now, again, a lot of things are going on. a lot of moving parts. one of the things that's

happening is this a period of significant job growth. and lots of people with jobs have employer sponsored insurance. so in some sense, a positive correlation is baked in the cake. so ben spielberg, who is here, we took out the employer sponsored insurance from each dot, from each state and are now looking at insurance coverage on the right side that wasn't esi. and there the slope is flatter. but it's still a positive slope. again, i think that what you're kind of looking for here is, is there a negative correlation? so far the answer is no. another little test is to ask yourself where has job growth been? what is the comparison of job growth and states that took the medicaid expansion and states that didn't? and you can do this two ways. you can either just take each state as an experiment and say

what happened in one state versus another state? the states that took the expansion, that's their growth rate in 2014 and 2015. by the way, your choices don't matter here as long as you're starting when the aca came into the system. there you see the bars are essentially at equal height. now, you might say i don't want to treat every state as a single experiment, i want to wait by individuals. so you want to say essentially that i'm doing this experiment in the first place with the probability of scholars reaching into an urn and picking out a state and saying based on whether you took the medicaid expansion or not, has your employment growth rate been different than states that didn't? the answer is no. the second case, you're reaching in and pulling out a person. in that case, it doesn't make any difference. so the results are all the same.

now, where there's really an incentive here is the idea that you have an incentive as an employer to shift people to part-time work to avoid the mandate. therefore, what we should seal is an increase in involuntary part-time work. so some people have said it's not a job killer, but it's moving people from full-time to part-time work. not so. what you see here is the blue line is the actual share of involuntary part-time workers, and that's been falling since the expansion got under way. of course it has. so you have to ask yourself, is it falling more slowly than it would were the aca not in the

picture? i measured the model up to before the aca began and forecasted it forward and you see it's the same. so based on a counterfactual, at least in this simple exercise, the part-time involuntary share is falling like it always does in a downturn. this is very interesting but dense slide. so don't try to read all the words on this. i just wanted you to look at the circled part, which asks employers themselves, from a survey that was just completed, this is 2016. if you look at firms that are large firms with 200 or more workers, or all firms, which is 50 or more ftes, the part i circled, the top part shows what share of these surveyed

employers changed job classifications from part-time to full-time so that employers -- so that their workers could be covered. and in fact, that was 10% for large firms and 7% for smaller firms. so that was part-time to full-time, exactly the opposite of the predicted dynamic. and, in fact, there were a smaller share, 3% and 2%, that went the other way. so you could argue that they were responding to the incentive. but the magnitudes there are far smaller. so in conclusion, no evidence that the ac sarvea is a job kild little evidence that it's shifting anyone from full time to part-time work. thank you. [ applause ] >> thank you. jim capretta. >> thank you, chuck. glad to be here for this very important event. i do think it's an interesting

way to frame up this question and talk about it. it's an interesting way to look at the problem and of course, i think probably the most important way to look at it, which is we don't want a health system that in some ways makes our economic process pecks worse off. it should be working in tandem to improve our prospects. the question is, how are we doing, what are the problems and what could be maybe done as a remedy? let me just start by saying that the obvious point, which is that an additional use of resources on health is not necessarily a bad thing. if the opportunity presents itself, and one has earned an additional dollar and the choice has been made to expend some portion of that additional dollar on more health services for one's self or one's family,

that probably, you know, more or less is a good thing, we would think, in most circumstances. so when one looks at the united states, and the united states is spending well above our peer countries in terms of use of health resources on -- use of resources on health care, it's often observed that we're wasting a lot of money and i'll get to that in a second. but that's not obvious on its face, that it turns out that the richer the country, the more that is spent on health care. that's observable across all the advanced economies. there is a correlation there. so one would expect the richest country to spend a little more on health care. so that's not necessarily a bad thing. the second aspect is we wouldn't really question this if we knew and felt and understood that the use of resources was taking place inside of a functioning

marketplace, to the extent the people in a free market that is working well are using additional resources on health, we would say good. that means that they found that's better than an alternative use and we wouldn't question it much. for a lot of different reasons, and we've already tiptoed up through here today, there's plenty of reason to believe that the united states doesn't have a functioning marketplace for health services. the united states government subsidizes health insurance enrollment through medicare and medicaid, but as doug mentioned, through the tax preference through employer paid premiums. so you start off with the fact that the vast majority of the count country is enrolled in health

insurance because of a large subsidy associated with that enrollment. so the price of the insurance has been reduced substantially through governmental policy. the second thing that's going on, of course, is that the government has gotten very involved in regulating the terms of the use of services and also the prices that are paid in many different circumstances. the federal government through the medicare program and the state government through the medicaid program. so a large portion of the use of services by patients is governed by a regulatory structure that has put in place in some cases very arbitrary limits on what the prices that are paid for services. so we don't have free floating prices in a normal way in a health system by a long shot. so the result is that, for a lot of different reasons, one can

look at the system of health service purchasing in the united states and say it's not a, of course, a functioning marketplace in the normal sense, as robert samuelsson indicated, it's not a government or private market. it's sort of some mixture of the two, but in some ways, a dysfunctional mix of the two. which is why many observers of the health system come to the conclusion after looking at all of this to say, yes, we wouldn't normally object to someone spending some additional resources on health if we thought it was a good use of money. but when we look at what's going on, it seems like there's a lot of waste just by objective observation, that if someone was spending their own money for some of these things and they were told, you know what? if you spend that $500 on that additional utilization of health services, it's more likely to make you worse off than better off, most people would say why spend $500 on something that's

going to make me worse off than better off? but believe it or not, a lot of studies say resources are being spent on things that tend to push people to adverse health rather than better health. so it's a complicated situation because of the entanglement of government policy with the normal aspect of deciding whether something is being spent in a good way or not. when health spending is distorted and low-value services are purchased by consumers or through the insurance plan paying for them, premiums are artificially higher than they should be. therefore, people are spending their own resources indirectly on the premium for insurance. that means that they have those less resources to spend on things they would have valued more than low-value health care.

the second thing is that we have a major distortion in our fiscal situation, that if there is this much waste going on in the health system, then our fiscal situation is a lot worse off for not very good reasons. because the united states government drew four avenues, again, the tax exclusion, medicare, medicare, is basically subsidizing most people now into health insurance. and it's putting our fiscal policy into a much worse position than it needs to be. taxes are therefore higher than they need to be. deficit spending is higher than it needs to be. people are internalizing the future fiscal disaster doug alluded to, to some degree, in their current purchasing assumpti assumptions. so there's lots of reasons to

worry about the distortions that are associated with poor allocation of resources in the health system. often the united states debates on health care almost always boil down to -- no matter where it starts, you can figure out what's going on by trying to understand is the policy that's being proposed to sort of correct and move things in a certain direction, does it pull more towards the government deciding how to mix this allocation of resource problem, or does it pull more toward trying to have the market function a little better with consumers making some better decision making about the use of the resources. washington and policymakers and the health care community are divided on that question. so a lot of people believe it's a hopeless cause, going back to a lot of theoretical thinking

about this. it's a hopeless cause to have a functioning market if by definition the government is going to have to get involved and do the best it can to weed out low value care. which is why you have in the affordable care act, many measures that have been enacted over 40 years, lots of interventions where the government is trying to decide is this going to be a good use of resources, should the price be higher or lower. so the government is knee deep into this. because a lot of decision making has been made to say yeah, it is hopeless, let's have the government regulate it and decide. on the other hand, there would be people like myself who say it's true that it's going to be difficult to have a functioning market in the health sector, but we better try, because the alternative is lots of misallocation by government regulation rather than by the marketplace itself.

so if you look at what the government is doing in the health sector, there's not a lot of good evidence -- in fact, there's lots of evidence to the contrary, that it gets the answer right. that it gets the prices right in medicare regulatory policy and the decision making about how to steer physicians and hospitals to organize themselves, as they're trying to reform. there's not a lot of evidence that the government knows the right answer, either. it's a complicated thing to deliver a health service to a patient. so this is the conundrum we face. i will conclude just by saying that the -- there's a famous paper on economics on the many reasons why the health system does have problems functioning in a totally free marketplace. i agree with much of what's in that kind of assessment. on the other hand, there's also

lots of empirical studies that show that people behave in the health system kind of like you think they would when presented with choices. that they tend to like lower cost, high value health care. and that when they're spending their own money, they're much more judicious with it than when they're spending someone else's money. and so some of the normal rules of a market economy do apply in the health system. i think we would be better off trying as much as possible to move more in that direction opposed to relying entirely on the government. thank you. >> thank you. >> thank you for having me. so i want to spend the second half of my remarks circling back on the main thread that i think has run through the prior remarks about how to solve this sort of fundamental question how we're getting value for our health care dollars.

but i want to touch on one item. i think one other sort of important way in which health care costs impact family's economic hilives is the large, catastrophic expenses and corresponding effects on financial security. so i think it came up in the opening remarks, and most people here probably know, on any given year, 5% of the population will account for about half of health care costs, which means in any given year, a small number of families are potentially facing extremely large health care burdens. so in thinking about economic consequences, that is something that families don't have effective protection, it's going to have large consequences for them. they're going to need to forego medical care or other valued goods and services.

and another thing that recent research has emphasized that in some cases they are going to get that medical care, but they're not going to be able to pay those bills. those things are going to be passed through to collection agencies and it's going to impair family's access to credit in the future to buy a home or a car. so this is one area where policy has a direct role in ensuring that families are well protected against catastrophic costs. discussions often are focused on expanding insurance coverage and we have good evidence that insurance coverage is a good way of protecting people against catastrophic expenses.

only have to go back to 2010 that 1 in 6 workers in employer coverage had no limit on their annual out of pocket spending. it's very hard to believe given that fundamental purpose of insurance is to protect people from tail risks, that that was a market outcome. there are good reasons to think this is an area where market outcomes might not be efficient. you know, an out of pocket maximum is very likely to appeal to sicker individuals relative to healthier ones. so this sort of adverse selection pressure is on that type of out of pocket maximum are likely to lead to it being underprovided in a private market. we also know that thinking about low probability events is a place where consumers often struggle. and, again, we're talking about these catastrophic events that

are going to affect a small fraction of the population each year, it is plausible this is something that would be underprovided. so this is another example where sort of policy has a role, the affordable care act requires that all private insurance policies, regulatory intervention of the type that is talked about, and a place where we think is market failure, the aca required all private insurance policies to include an out of pocket maximum. and the spread of out of pocket maximums and employer coverage since 2010 mean there is's an additional 20 million people now enrolled in policies that have out of pocket maxes. so i say that just mainly to emphasize obviously can't require out of pocket maximums

again, but an important dimension is how we're protecting people and doing that is more than just a training coverage. switching gears, i want to agree with what's been said, that the most important way which the health care sector affects the broader economy is by consuming resources that could be used for other purposes. and as jim said, that's not necessarily a bad thing. the important thing is we're getting value for those incremental dollars. so the question is how to do that. as jason alluded to in his opening remarks, there were hopeful indicators that we're making progress on that front. we've also seen sort of encouraging signs of

improvements in terms of other things. but there's clearly a lot more to do. i think the interesting thing is in some ways, the two items at the top of my list has more o r overlap, which is i think the sort of top of the list is continuing the progress on payment reform in medicare. i think it's the sort of failings of traditional payment systems, in terms of encouraging by orienting payment around hospital emissions. i think the administration has made a decent amount of progress in deploying payment models.

if you can sort of provide that overall bundle of care more efficiently, you can share in the savings and we're going to hold you accountable for the quality outcomes you are achieving. earlier this year, about 30% of traditional -- were mostly accountable care organizations. that's up from virtually none about six years ago, but we still got to find ways to tackle that additional 70%. i do want to say that i think that's a strategy -- i agree that i think medicare is a good place to start here in some respects. i think it's a strategy that has implications for the system as a whole. we now have lots of evidence that when a patient comes in, the first thing a physician asks, is this a medicare patient

or private insurance patient. if you're a private patient seeing that same doctor or that same hospital, you're going to see improvements in the type of care you're receiving, as well. i think the other thing we're hs getting increasing evidence of is when medicare changes its payment system, either the he feel or the structure, that tends to be adopted by private payers, as well. so payment reform in medicare is a way to drive changes system wide if the way care is incentivized. and then i think the final piece is this, is that we know the broad sweep of history, a big part of what drives spending is changes in medical technology. to the extent that medicare is paying in a way that in places at least encourages use of low value care, that's going to

create incentives for the development of medical rnd to skew towards lower end technology. the other sort of policy piece that i think is really important is retaining the affordable care act, or what's commonly known as the cadillac tax. -- from discouraging private engagement and the payment reform efforts. just talking about increase progress couple of

speakers talk about how a very high proportion of overall health care expenses are felt by a small percentage of individuals and families. given those two facts, should we be focusing less as a nation on expanding the raw numbers of those with comprehensive

coverage, and should we be focusing more on simply limiting the catastrophic exposure of people now currently with or without insurance? and i guess that's the first part of the question, which is a yes or no question. the second part is, if yes, how would we go about doing that? anyone want to take a crack? >> yeah, i think you're on to something there. i do think that the public interest really is making sure that everybody in the united states, as much as possible, is enrolled in an insurance plan that protects them against a major medical event, where i agree some of the literature would indicate some inability of the consumer to understand the ramifications of such a huge event on their finances. predicting actually it turns out that it's true that, you know, 5% use 60% of the resources, but it's a little harder to predict

who that 5% is going to be. it's not the same 5% every year, and a lot of people get cancer, that's a major medical event. so i think the policy should be directed as much as possible in that direction. also, you can do that in a way where people then have a more -- on the margin, an incentive to buy a plan in the event they do have a catastrophic event, instead of unmanaged, open ended care, they enroll in a policy that says if you have a major event, we're going to have an integrated system of some sort. that would be the best sort of public policy on goal. and then, you know, below that, i think there's been an overemphasis on trying to design

every possible permutation of primary care, other thing where is the evidence is weaker that we can know in advance that an intervention is going to definitively push people towards better health over time. so i think a little more consumerism, market driven approach there would do some good, as well. >> i might disagree with the view that is sort of the primary focus should be on catastrophic protection. i think catastrophic protection is really important. i do think if we think that catastrophic policy is one that has an out of pocket maximum of $7,000 or whatever, which is the sort of single policy maximum in the aca, for many families that's just too much out of pocket exposure. we know economic models, you write them down and people develop these savings, that

would be the shock that they're able to bear. in practice, many consumers don't have that sort of wealth and that's likely to mean that's sort of catastrophic policy is not a good fit for them, even in terms of the purely financial. i think we also know moderate costs can be a good tool for discouraging overutilization. we also have evidence that as cost sharing becomes more excessive, this sort of care isn't necessarily the low value care, a lot is the high value care. so i think there is a sensible role for cost sharing and for making sure that we're not sort of putting an emphasis on kompbl, b -- >> i would underscore that. you're referencing ken arrows article from the 1960s, which was extremely important in the

sense that it suggests health care is really a different beast when it comes to consumers being able to rationally shop for the best bargain. and i suspect many people here, myself included, have been in a situation where you have a system that's beginning to nudge you towards more skin in the game and consumer shopping and you've often felt invcapable of doing so. so i think arrows' insight was health care is different in this regard. it doesn't mean there's no room for skin in the game, but it does mean it can be pushed too far. one of my concerns is that the increase in high deductible plan is moving in that direction. according to the kaiser family foundation, something like 65% of the employer sponsored plans with firms of over 200 workers are now high deductible plans.

and as matt just suggested, that can have a downside. it doesn't just disincentive people of finding ways for useful health care. so you have to be mindful where the edge is on that approach. >> i guess i'm more sympathetic to where jim came down. what i would emphasize when you think about this is, it's easy to say health care and somehow make the mistake of say thing's just one thing out there called health care. there's an enormous array of health services that range from very acute and emergency style care to highly elective procedures and shouldn't be thought of in the same way. one of the things i think allowing for some catastrophic backstop, you want to make sure that there's a catastrophic

backstop and some flexibility in plan design and innovation that gives you better choices that people can make to cover the kinds of things they face at that point in their life cycle. that, i think, is what the privatization does better than the government. the government bakes into the cake these are the choices you're going to have and the innovation is quite poor. so i think we really do have to worry about the catastrophic backstops but take advantage of innovation over time. >> before we open it up further, i would just like to pin you down on one more specific item. we've had a couple of criticisms uttered of the tax exclusion for employer sponsored insurance and references to the cadillac plan tax. is that our best available antidote to the esi tax distortion or should we be looking at a different approach going forward? >> who gets to answer that? >> whoever wants to volunteer.

>> we have a cadillac tax because when campaigning, barack obama attacked john mccain for proposing to get rid of the exclusion. that's the only reason we have it. the back doorway to get rid of the exclusion. just get rid of it. it doesn't add up from a tax policy point of view. so scrap the cadillac tax, tap the exclusion in some way, index that cap, and get the incentives lined up better.