i think this is going to be a complete total policy war for the next four or five years. it is very difficult to get done. republicans didn't like the expansions. most of the republic states

didn't. i don't think it is good or bad. i am a fan of medicaid expansion. a lot of southern states didn't take it. this will be much more state versus state. when you get into medicaid, it is more about what happens in your state and protecting what you have. what's happened in the last 25 years due to a disproportionate share of taxes, is that the states have largely cashed out their money. there is not one state that can tell you that. all the money is fake. it is all phantom matches. now, you are going to get to the point where i don't think they will do a block grant but a per capita cap, because it has more bipartisan support. let's say you go to every state and say, we're going to give you

a per cap amount that adjusts to the inflation for the disabled population, anyonged population women and kids. look at what new york spends versus what alabama spends. alabama and new york did the expansions and alabama didn't. are you going to cap everybody where they are? the republicans control the white house and the senate. all those states get capped at the officially low rate and the ones that took the money, get capped at their rate. that's not going to happen. the obvious answer, let's give everybody more money. these are republicans. they ain't giving everybody more money. it is not going to happen. you are going to have a massive state by state formula fight in which republicans are going to be bailing out. i don't want to do this. i'm the last republican in new york or indiana or new york or indiana. i don't want to give that. in the past, every time medicaid

has gotten dicey, i did the first medicaid waiver, it was financed through a scam. dy a bunch of them. look at 100% dollars from obamacare or some baseline scam where they use provider tax. now, you are getting back into a world that will grow. i think they will cap medicaid or try to. per capita cap and get into a finite budget. they are going to say, all our southern republic states are losers and california is a pretty cheap medicaid program, are winners. we are going to find a way to budget neutrally and phase this into equity over the next 25 years. good luck on that bu republicans say, i will do "x,"

"y" and "z." >> tom uses the word scam in medicaid a lot. >> i can document almost every state in the country and can tell you stories until the kaos come home and bipartisan on both sides. >> we would not be calling those scams. >> they are scams. >> everybody in the audience knows that they have a providing tax or a donation that's a total scam. as a taxpayer, it is outrageous. if you are in your state, get as much money from the federal government as you can. >> in terms of what tom is talking about, again, i'm kind of focusing on it is our potential that we will go to a per capita cap. tom's explanation is that that might seem atrk tiftractive.

what are your thoughts about where medicaid might be going absent some significant medical changes? >> a couple things. hard to argue that there is going to be a big fight in congress to figure out if you were to repeal medicaid expansion and you have 17 states, that didn't really expand, to put something in its place, and take advantage of the enhanced match. >> in terms of what cms is going to do, in 2015, sima was involved in the development of this. the first thing cms i would suspect could do in terms of working with governments is to develop model waivers and in this instance might include something along the lines of a lot more personal responsibility, more premiums, more co-payments.

if you are able bodied, you need to work to qualified for medicaid. certain populations, if you want to get expansion dollars. you might have fewer mandated benefits. you might have less epsdt dollars for certain ages. some of the things that cms might do to make it easier for governors who are interested in participating the legislation in terms of changing medicaid dollars, cms can do a lot to make it easier for states to change up how their program works. the other piece they might fold in and this really is a piece left over from romneycare in massachusetts. what is it that you can do with other populations that are above the medicaid, 133%, of the federal poverty limit? what do you do if they are coming off the exchange and you

have exchange. can you incorporate some of that into a medicaid program in a waiver state? what can you do to increase the pool of individuals who can qualify to introduce the adverse selection and some of the concerns that john raised when he talked about what you are dealing with as an insurer, these individuals that were often very sick. it would be nice to help those who are providing care and paying for it to broaden that spectrum. capitol hill will have a large role into paying for who and how they are covered. >> one thing on medicaid. this is really back to john. leslie talks in terms of the

model waivers we might expect to see. it could look a lot like what indiana allowed to get them to agree to. you called it personal responsibility. a hallmark of that is premiums for beneficiaries in the expanded group of people covered by the waiver, fewer benefits. from your perspective, john, as somebody who presided overexpansion of medicaid, as well as now working in care first, what would be your predicted sort of impact if we were to see model wafer ivers i terms of access and coverage? >> to tom's point, i think it will differ by state. each state will have their own demands and their own circumstances. for those states who think medicaid is the greatest fiscal

drain of their current state budget, you might see coverage decline. the fact is that medicaid has been the greatest source to new coverage in the country through the afford ooable care act. different governors might want to keep the expansion and require premiums and co-payments that can bridge some degree of more cost sharing to the new population getting coverage. it is going to differ. back to tom's point, the dynamic is going to be when people argue for more flexibility, that means waving certain federal requirements and you get into a congressional debate and a federal debate that the medicaid program has national standards or that really is a state program.

ov oversight agencies come in with reports saying they aren't overseeing the programs very well. just because someone wants more flexibility, there are lots of rules, constraints and oversight processes that constrain that flexibility. different states, different governors will have different framing to how to think about medicaid reforms. somebody that comes from a fiscal discipline standpoint it reduce the state requirements and some may want to shift more federal dollars to tom's point to the state and some may think p there are other sources or goals to achieve the program? >> i think that will be interesting, to fill in the first year. i think you can talk about that repeal. next month, it will be effective. everything i can reading will be two months later. everything in law will be effective. the real issue is if you are sitting there with the new administrator, do you let all these whatever they are, 19 southern states that didn't come

in for expansions go through creative wafer. indiana took the money and they won 100% money. they did it to get more money. theoretically, the republicans didn't like any of that. are they going to let all these guys that didn't understand, before this disappears can let them come in and get their share, the creative wafer or are they going to say, forget t the bank is closed. we think it is fiscally irresponsible. they are probably going to have the option toss do that. how this theoretically conservative responds to that, i don't think anybody knows. >> one final thought, if you look at what donald trump is talking about vis-a-vis manufacturing and trade and how important it is to keep manufacturing jobs in the united states. i am not sure there has been a

lot of focus that the health care industry is a huge employer. in fact, more likely than not, the largest employer in nearly every congressional district in the country unless you have a big university or a big manufacturing plant. chances are the health care sector is it. i wonder if there might be a change of heart with the administration or a softening around some of this when you compare fiscal responsibility and the more traditional tea party republican focus with the we want to have more job s in this country and the health care sector is a provider of jobs, how will those go together in determining what the replace may look like going forward? when you repeal, the rules around repeal, we are not going to simply take what was passed in 2010 and have it go away. it is not going to work that way. we are going to repeal through something called a

reconciliation process. you can only repeal those things that relate to outlays and revenues, which is to say taxes spent. if it doesn't mainly deal with taxing and spending, you can't repeal it. there are lots of things in the affordable care act that will continue. the question i have -- and i need to spend some time with some budget people to figure this out. once you have repealed the tax and spending portions of the affordable care act, what does that do to something in washington called the baseline. what does that do to the baseline and how might that impact whatever it is the replacement looks like. when you replace, you are going to be spending more money. i think it is a lot more complicated than let's just repeal and replace. i think there will be big consequences for those dealing with what remains, in a large part insurers, who have pre-existing conditions, exclusion and guaranteed issue

problems on the individual market on the one hand and yet no longer have a mandate for individuals to have coverage. that, combined with, these are jobs and hospitals in large part, as a large employer, depend on insurers and the medicare program to keep their employees. it is going to be a lot more complicated than simply repeal and replace. it will be interesting to see which wins, fiscal responsibility or jobs. >> let's focus in on some ideas and concepts about what might be in replace. i agree with you, leslie. for the uninitiated, when leslie talks about doing it through budget reconciliation, the conventional wisdom is that this is the way it is going to have to happen. otherwise, there needs to be a filibuster proof if you don't use budget reconciliation,

majority in the senate for a repeal of the aca, which doesn't currently exist. there is an exception to that fort budget reconciliation process so everybody recognizes this is the likely vehicle. >> i was very involved in the 1990 budget deal. i think john was involved in the 1997 budget deal. these are big, big, big budget deals. one of the lessons for obamacare is that they did it by reconciliation. wup week they had the right numbers. they did it opn a party line vote. they would have probably found some way to pick off two moderate senators to make it somewhat bipartisan. when we did that in 2003, we had senator baucus, john was a staffer. we had nine democratic senators we got to go along with medicare part "d" and medicare advantage creation, including senator kennedy. it took the sting out of it. it was partisan but far less

partisan. it wasn't a knife fight. i think republicans probably will repeal it to create this cliff and you have to work with us to replace it. in my opinion, this is not going to be repeal and replace. it is going to be a giant tax reform bill, a lot of trade issues, medicaid reform. they are probably going to do like '97 and '90, a giant first reconciliation bill. they will have to have a handful of democrats. they will have a hard time passing it. i think they will repeal it quickly, because they spent six years screaming we hate obamacare. if they try to do replace plus these other tax prolicies, they are making a mistake. they will get a number of democrats that work on a global tax reform and budget, that will

take all yaear long. it will moderate everything. it will take all the edges off of what would be a more radical one-party reform. >> let's talk about the substance. i think if you read through the papers you see that, "a," a lot of people when they talk about what is the affordable care act, they learn it is a fairly complex piece of legislation that has a lot of different things, including guaranteed issue insurance products for eliminating the pre-existing condition issues. so, tom, i'll start with you and give everybody an opportunity to answer this question. what do you think are the two or three, if any, two or three sort of things from the affordable care act that we may continue to see in future legislation if there is a replace? >> i have been pretty consistent with my view from the mistakes at the beginning chlth they went to 400% of poverty, 67% of the

population. that was a problem for republicans. most democrats i knew and john would agree with this, thought we should go to 300% of poverty start. you say, that's not that big of a difference. that's 50 million people, the middle class. between 300% of poverty and 400% of poverty. that was a fundamental thing that set republicans off. i think our view was that the benefit structure was too much. they threw in all kinds of stuff you had to cover everything but the kitchen sink. the benefits were too plush and went way too far up in the income stream. 3 to 1 rate bands caused chaos in the insurance markets to begin with. most people back then thought we should do 5 to 1. that makes a big difference. a 26-year-old marathoner can only pay one-third of what a 63-year-old cancer patient can pay it completely screws up your insurance. they have to expand the rate bands and the republicans will

want to scale back the subsidy levels. this was intended to be a lower income and lower middle class benefit. i think they will scale all that back. how it happens, gently and gratefull gratefully, it probably won't be. i think they will talk about getting rid of the exchanges. the exchanges are dead and obama care is dead and we will get something called health insurance network. they are going to be back in the same pooling mechanism. subsidy levels will be lower. the income stream will be much lower. if they had done a little moderation six years ago, it would have probably been more sustainable. you live and learn. fundamentally, the structure of obamacare looks a hell of a lot like the structure of the 1992 george bush, the first, plan that i was involved with. we had health insurance networks. you are going to create insurance pools that work and they are going to have risk

adjusters. that's just a fact of life. the issue to me has always been, who do you subsidize, how much and what level of benefits? my view was, once you get above medicaid, many republicans, you should have a skimpier benefit that helps lower middle income people. i think this will look like a lot of new names and it will kilo 'bama cair. a lot more subsidies for fewer people across the board. >> i think we kind of heard tom's laundry list of what you might see continuing on from the affordable care act. i would sum it up as, there are going to be some insurance products that will be regulated. they are not going to be called exchanges. everything is in a name.

>> leslie, perhaps would you also, and john can comment on this. one of the hall marks of the affordable care act was the creation of what's called the innovation center. for those who don't know, the innovation center is a center for medicare and medicaid innovation, another one of the centers that were created. their charge is they have demonstration authority and funding authority to experiment with a lot of different things but alternative payment models for government funded health care. that's seen, i think. i think alternative payment models are sort of seen as a necessary experiment that we must do in order to address some of the disincentives that are involved with traditional sort of fee for service, for government funded health care

insurance. yet, cmmi or the innovation center sort of is a dirty word in terms of the affordable care act has negative connotations and if you look through various plans, you will see repeal of cmmi. are we going to really see that or is it going to be, well, we are going to have that stuff but it just is not going to be called cmmi? address that but i want to hear your two or three statements. >> first of all, sips nce 1973,e medicare program has had the ability to demonstrate certain pieces of the statute you could waive. there was a lot you could waive, which was the precursor to cmmi. there is no doubt that is going to continue. republicans may not like cmmi, because they didn't like the people controlling the $10 million. i am fairly certain that price was talking about how he wanted congress to have more control

over cmmi. i am not sure any of that would happen, necessarily. i do think that innovation will continue. republicans also tend not to like the traditional medicare fee for service program and want to change all of that. if you think of some of the things cmmi has done, bundled payments or the accountable care organizations, a lot of the concepts have been around for decades and supported by the bush administration when i was there and make a lot of sense if you are thinking about moving away from pay for service and doing more with pay for performance. this could happen to cmmi. you could have program that is focus on the dual eligible where there are 10 million plus people and depending on what happens with medicaid expansion, na number could go up or down. i any the need to continue to focus on payment models that change over time is simply not

going to go away. the question will be who has control over that, what do you have to do if you are going to make a demonstration or a project permanent in the program? that was one of the interesting things to me. if you liked it, it could become permanent. therefore, you saw the chronic care joint replacement program becoming more of a personal nma fixture. they could rule that out across all providers if it felt so inclined. it is a bit of a blend. you might call it something else. it may be that republicans now that trump will be president might change their mind about the concern they have. they reduce the funds that are available from $10 billion, which is fairly considerable. not surprisingly. you could reduce that. there may be less angst. the concepts that css is

testing, whether they be these or new ones will continue to go forward as it needs to. the program was created in 1965. a lot of it doesn't make any sense, the medicare program, that is, because they have cobbled one statute after another and the payment systems don't relate to one another. you end up with very odd incentives for providers to do things that are not very good for the taxpayer and frankly not good for beneficiary care either. i do manly we will have these programs in some way, shape, or form continue but it may not be under a quote, unquote, cmmi. >> so the innovation center gives cms tools that are incredible. there is funding. previously, demonstrations didn't have funding behind them. to leslie's point, if the team likes the results of the demonstration, they can expand them nationwide without going through congress. the tools are incredible and they are powerful.

my guess would be, whether you are democratic or republican, you want to keep those tools to fulfill your own priorities. the next team could think about changing how it pays for medicare private plan and more of a premium support type demonstration through those authorities. there is funding, much more flexibility to wave certain statutes. but requirements previous to the old demonstration. congress tends not to like things that are done by the other side. the authorities are tremendously powerful. i think any in team would want to retain those authorities. >> tom, do you agree with that? >> totally agree. i happen to like a lot of what they have done. they have done a lot of bupdling. a lot of what cmmi has done is stuff that republicans have been pushing for for years. republicans don't like it

because it is a $10 billion a year fund. we had an $80 million budget when i was running it. we couldn't do anything, it depend on who is running it. republica republicans probably once they get behind the wheel and imagine, we may not want to spend $10 billion. we could theoretically do premium support through cmmi. once they are aware of how powerful it is for the program, i would be shocked if they didn't say, hey, let's repeal everything but this and quietly keep it. it is a very powerful set of tools. >> a related question to me involves macro which brought in a course which replaced sgr, the sustainable graduation rate, which was not quite so sustainable, led to year after year after year of bailing out the physician and dropping the payment. we are on the cusp of this now starting to come like the way in which doctors are really going to be paid, a significant portion of that involves alternative payment models. this isn't an affordable care

act program but do you see macro continuing the way it is? is it going to get potentially changed legislatively? i'm not sure if there is any sort of regular la torre tinkering one would see in the program as well. >> i think there are a couple of things. keep in mind about the future, macro. i think 90 some senators voted to support macro. i think it had bipartisan support. even if you are not a fan of how it was crafted or that it wasn't physician friendly or the like, there is tremendous bipartisan support within the house and the senate for this direction. to tom's point, the concepts are things that democrats and republicans have supported for quite some time. the challenge will be that the physician community based upon final perceptions doesn't understand what's coming and what's being required by cms.

i think if you were to ask the average physician that's managing a tremendously busy practice, they don't know what this law is or what they have to do to get ready for it. cms has put out models that are well-defin well-defined primarily for the primary care community and not too many for neurologists and cardiologists to go into. physicians are going to have to make a choice. do they stay in the old world or move to alternative payment systems. those concepts really haven't been defined yet. i think there will be tremendous pressure to delay and modify macro given that most physicians that are practicing don't understand what the congress put in place. the agency will take a first test. do they proceed with macra or

modify the timetable and work with congress to modify and slow it down. i think there will be tremendous physician pushback. i think some of the physician community see the nominee for congressman price as a sign that the physicians will have a greater voice in how macra is defined. >> and price has already complained about macra. a lot of this is mandated by the statute and to john's point, it is unlikely that all of the sudden they are going to change. what are they going to complaining? i do totally agree with john that the likelihood of a delay or some changes around the margin as to how it is implemented, maybe they redefine how one qualifies for an alternative payment model so that you can get out of the varying factors that will relate to frankly how most physicians are paid under macra when they don't qualify for an apm.

so those things, whether data collection starts in january. you don't have to collect data in january. next year, if you are a physician, your data will count towards your reimbursement in high likelihood in the future. so i do envision a delay, even though it may not be a statutorily per miss i believe a and at the margins where cms has flexibility, there will be a big push to use that flexibility and alleviate some of the burden an maybe smooth over things for physicians as implementation comes. >> tom, anything to add? >> i tote little agree with these guys. most members of congress think, i ground through that doc fix for 12 years. we had 90 senators vote for it. i don't want to open thaup can of worms. i think most of them believe we are moved on from the specifics

of doc payment. i think they are going to move on to other issues and not want to grind back into this legislatively. i don't think it is likely to come up as a major issue. >> i want to ask one more round of questions. i started off by saying let's assume no huge legislative changes at least when we were talking about medicaid. let's talk a little bit about. i think everybody know that is the individual mandate is on the chopping block. from the obama administration perspective, that was such a key component. that's what they went to the supreme court to defend, of course. i guess i would like to have tom and/or leslie talk about what they think -- leslie, you said it. one of the keys is helping individuals into pools, whether we are talking about private insurance pools or whether or not we are talking about medicaid.

obviously, medicaid can be dealt with in terms of expanding to groups of individuals. what do you see as a possible alternative for the mandate and what do you think about their potential effectiveness. i am going to ask tom the same question and john can comment too. >> so if you look at all the varying pillars to make insurance work, the key issue for an insurance plan to work and one of the reasons why i think from the beginning it was not difficult to see that the affordable care act was likely to have issues with something called adverse selection where sick people signed up and not nearly enough healthy people signed up to support those who were sick. while there wasn't an individual mandate, the first year of $95 is simply not sufficient if you are looking at a several thousand dollar insurance

premium as an individual, even with subsidies. geez, $95, i'll take that all day long. if you are 26 years old or 27. if you are 26, you are probably on your parents plan. if you are 27 years old, you think you are invisible, never going to die and never going to need health care services. those are the people you need to sign up for the plan. if the number one issue to have a functional insurance market is to avoid adverse selection, i think there are several things one could do if you want to keep, as many republicans do and frankly you may not be able to repeal pre-existing condition exclusions and guaranteed issue, which is to say the insurance company has to offer the insurance, at the during open enrollment to anyone who comes in without having a pre-existing exclusion. it becomes a couple of issues. the medicare program mass a late enrollment penalty that applies to part "b" and part "d."

you are automatically enrolled in part "b" and you opt out. in part dfrnl"d" you sign up. i can tell you from speaking to probably hundreds of thousands of medicare beneficiaries, they hate the late enrollment penalty. there is not a mandate for medical part "b" or dfrmts but there is great take a break for both programs. there are a couple things you could do. first is, do you have a policy that has fewer essential benefits as they are called now or mandated benefits where you have something like a catastrophic plan so that individuals who want a less expensive insurance plan can sign up, it is still affordable, yet it can help protect them from bankruptcy or at least help cover big hospital bills. that's one piece. the other piece i think. i don't know, mark, if you mentioned this or tom mentioned this is the community rating.

it is the age rating. age bands are 3 to 1. the youngest age cohort can only be a third or the oldest is a third of the youngest. the other way around. three times the youngest. if you are going to have -- the question is, and one of the things that i have been considering, in fact, i was saying, hey, john, i would like to run this by you. could you do something with rating so that if you signed up, you could still encourage healthy people to sign up. by that, let's say you signed up three years late, normally, you would have a late enrollment penalty. bha if you change that and said, rather than using a penalty that you did some kind of experience rating and community rating so that those people who wait to sign up until they are sick end up paying somewhat more or there is some combination to pay more. if your healthy and you sign up late, because you are healthy, you don't have that experience and you wouldn't be penalized for signing up late. if you could have some sort of

program from a premium perspective that you still encouraged healthy people to sign up no matter how long it takes them but if you only sign up when you are sick, you end up paying more in premium. there could be some things you could do on the policy side in addition to having a catastrophic plan that might encourage people to do more. then, you figure out how to make prevention as cheap as possible so you have preventative benefits cheaply and that you have risk pools for those who are really sick, something calledary than a risk pool, i would call it specific reinsurance for individuals who spend over "x" number of dollars so it could be funded through the state or federal government. >> tom? >> i hate to agree with leslie so much. it just kills me. >> that's true. >> first of all, it is amazing how politics changes policies. you go back 25 years ago, republicans were offered

individual mandate an democrats were offered employer mandate. now, republicans hate individual mandate. i think given the politics, they are going to get rid of the individual mandates somehow because it is tough politically to keep in and the reality is, as leslie said, the individual mandate for the last couple of years is variable teeth. people aren't getting audited over it. they are not paying the fines. from what i can tell, the fines are small. lesscy said, leslie said if you come up with a bigger benefits package and open up the rate band, what's going to happen is the older, sicker people who are below 225% of poverty, their rates go up, they are not paying them anyway. what you are going to get to make the plan more basic and open up the rate band is the 27-year-old who can buy a catastrophic coverage will get it a hell of a lot cheaper. that's going to prove the insurance companies have been pushing for that for years.

the other thing they can do is have open seasons. you can enroll any time you want. if you have cancer and get sick and you show up in april or may, you can get in. people can pick and choose too much. to some degrees, as an insurer, you want to have certainty what your population is. they should say, here is an open season. you are in or you are out. people have to join before they get sick. there are a bunch of things they have to do to make the insurance pools better. the individual mandate because of politician is gone. it was originally the idea of the heritage foundation. >> so, john, you probably are going to give us maybe a different view of all this. >> two points to add. i think there is a notion that the exchange population tends to be a very stable population similar to medicare where you sign up with the exchange and that's your insurance product for many years. the fact is that most people go through many life decisions. they sign up for the exchange because they are going through a transition, they are going through a period of

self-employment. they have changed jobs and those jobs don't offer coverage. our experience at care first, the average person for the exchange stays about 7 to 8 months. so this is not a stable population. the exchange is forever. so you have to think about how you stabilize the insurance market with that life dynamic of people going through different life changes and then choosing coverage based upon those life decisions. so it is not like medicare where you sign up forever but it is a very fluent process. what's going to happen at the end of the day, there is going to be competing proposals that are debated in congress. the official scorekeeper will be cbo and cbo will crank out estimates to say the number of people that will lose coverage or gain coverage based upon different proposals and without the mandate with the aca, the cbo won't assume that they have

much coverage that the policymakers at the time wanted to have. when you lose these tools, particularly with a population that is very trancy torre, then you get, mechanically, they score and say, "x" million people will lose coverage. that will be the fundamental debate at coverage. will competing proposal will guarantee people the best they can a chance significance to something better? >> i'm sure there air lot more questions that folks have. we have about ten minutes left in the program. let me open up to the audience. you are looking at three of the individuals who presided over some of the biggest program changes for cms ever in the last, certainly since the inception of the program. they have world's of experience. >> i understand we are now at

18% of gdp as health care. is there anything on the table that is likely to arrest or reduce the increase in total health care as a percent of gdp out of all the political change? >> who wants to be first to take that one? >> i first started working in the senate in 1980. my boss said health care is 5.6% of the gdp. it is totally outrageous. it has to be stopped. people want health care. it is the one consumer good they are willing to pay for. it is probably never going to stop growing. i do think the aca will be rolled back 30%, 40%, the spending will be rolled back. you can debate how many people will be dropped from the rolls. i think you will see a slight slowing in the growth due to a rollback of the aca.

health care is always going to keep growing. it is a service people want and one that the government is going to keep subsidizing. 18.6% of the gdp, my guess is, it will keep going up sgchlt will when i was at cms, it has been nine years now, it was 16%, 17% then. so i think the trend is likely to continue. to tom's point, maybe it slows the rate of growth. maybe it is not 25% by 2025 as some have predicted. i think ultimately, whether it is the aging of the population, whether it is improvements and paying for better devices an better drugs as we have dency to do or a lot more people with chronic illnesses. those will continue to put

pressure on our gdp even if we do some reduction in medicaid. the medicaid rolls on the exchanges, for example. it gets back to my earlier point about fiscal responsibility versus jobs and what wins out over the next several years. this 18% of gdp, roughly just under a third of the federal budget goes to health care, which i think is largely misunderstood. >> there are two things right now that are driving overall national health care spending. number one is that the country has decided to expand coverage the last eight years. the other dynamic we haven't talked about on the panel is the changes to medicare that were part of the affordable care act and part of the part "d" law passed during tom's time at cms has restrained the growth to overall health care costs. so medicare per capita spending

is at a rate that no one thought would happen 10, 15 years ago. we are about 0-2% per capita rate compared to 5-7% previously in the overall medicare program. if the next administration decides to change that by paying providers more and health plans more, that will add more cost toss our system. it will cause that 20% gdp to go to 21, 22, 25, what have you. there is a huge choice for the next team to make. do they want to continue the policies that have been in place to restrain cost growth of the medicare program to help balance the federal budget that have brought more value to the overall health care system by taking off some of the overpayments. necessary a huge choice that we haven't talked about again in addition to how to think about coverage expansions going forward. >> so let's go to this question

here and then i'll come back to you. >> i wonder if you could speak to kind of the position of coming in as a new cms administrator, owning a program that your boss says is fundamentally flawed and would like to get rid of it right away. the other smart people say that aca is going to have to continue for at least a couple of years. it is kind of like, i own it, i have got to run it. on the other hand, we want to take it apart. how do you balance kind of the responsibility of doing it, doing the business the right way in the short run versus what you assume your boss in congress long-run. >> the law is the law. one thing that i would be surprised we don't all agree, people forget, there are 50,000 contract employees and p cms employees. i think when i was there, there were 12 political ploy yes.

figure out the really good career people, i am sure most of them were democrats. they didn't act that way. they were great to me, very a political. the agency is based in baltimore, so it is kind of dewashingtonized to some degree. a lot of people did very good and did what you told them. they are going to make the trains run. figure out quickly, that's a big place. spending $1.5 trillion. the biggest agency in the government by a long shot, way big thaern the defense department spendingwise. figure out the 10 or 15 top career people you can trust to make the trains run on time. it is a big operation. congress is going to change the law. until then, you have to keep running these programs. >> the part "d" law was very popular with democrats. i think a lot of folks wished that the obama administration would have changed the part "d" benefit, the structure, how it

operates in 2009 when the president came in. the calculus is that it was pretty popular and to change the part "d" benefit to, disrupt it would have created disruption, created pushback by the beneficiary community. any team that goes in and kind of understands that people are receiving benefits, that people are used to t they are signing up and educated about the law, it is a very difficult proposition to think about the transition, particularly at a time when you have other priorities are you a priorities you are trying to achieve. the ultimate decision that the president made was not to change the part "d" benefit but to tinker it and change it and make it stronger and less confusing. that's just one reality. once you step into a new agency, you own these laws and then you have to think very hard about the transition and the pushback that will happen and the backlash that will happen once people that are receiving a

benefit believe that they are going to lose that benefit. >> not only that, you don't know what repeal and replace is going to look like. it is repealed and you don't know what replace looks like. it could be it is a continuation of what exists today. you don't want to kill something that you might have to rebuild. that means you have to work with those individuals who are on the outside, whether they be insurance companies or providers that are helping make the program work in as much as it is currently. you are going to want it to work better if it is going to continue in some way, shape, or form going forward. because you don't know what replace will look like, not only is it incumbent upon you to do what you can, because it is currently the law. that alternative may also rely on what is there today in order

to be successful in the future. >> if we are predicting that coverage may be roll back, about 30%, the benefits get skinnier, obviously, we have spent some time talking about destabilizing the health insurance market but this morning, we haven't yet th insurance market. this morning we haven't talked about the potential for destabilizing the hospital side. do we envision as the rate of uninsured go up or predicted as put together replacement, are we going to see a refocus around dish, how that's calculated? because while we may have a lot of folks left out of insurance, i don't think we're going to have hospitals wanting to turn them away and obviously under an emergency situation they can't. so i'd be interested in any thoughts you all have in that regard. >> so you know, i'm a little biased. i used to run a hospital association for years. so look, the fact is the hospital sector, in my opinion, is going to get changed more by

the move towards medicate capitation and medicare t capitation and medicare advantage than anything else. you're moving into a world of risk where doctors are waking up to the fact the way they save money is keep people out of hospitals. we own hospitals. volume of hospitals will drop. it's going to get tougher on the margins. it will happen slowly. that's a matter of going to 32% with medicare advantage, under republicans probably 50% quickly. medicaid already 80%. hospital will change and inpatient bed model will change and that's going to create pressures. how congress responds to that, republicans created medicare to begin with, hesitant to throw new subsidies at hospitals but they are going to have to be sensitive -- biggest employer in every community in the country. certainly look at senator grassley in iowa, the percent of

their hospitals. something will be done. less affirm ca and changes in these benefits than changes in the market and in-patient system is changing. >> changes in medical practice. the ability to perform minimally invasive surgery and get someone out of the hospital within 24 hours so it doesn't qualify as inpatient stay will have a really big impact going forward. hospitals traditionally when benefit originally passed in 1965 and what a hospital looks like today and will look like in the future can be entirely different yet medicare payment systems haven't kept up with the practice of medicine. and that may or may not be an opportunity that congress takes up in the next four years but it certainly, i suspect, will be something that we'll be focused on whether cmmi or congress. >> let's give you one little example of sensitivity of cms administrators to hospitals. when senator bacas was chairman

of the finance committee, he at a hospital, jordan valley hospital, i think this three beds, cms administrator, not many, wanted to shut down. i talked nonstop got to keep that hospital open, shut down the hospital. here is the deal, shut down hospital, i'll shut down the regional office. my point is members of congress, democratic finance committee care a lot about hospitals that's not going to change. cms is going to care a lot about hospitals. >> so i'm not a former administrator, no one asked me about the question. i agree with tom that there's doing to have to be some sort of consideration for loss of -- hospitals good morning to potentially incur greater amounts of uncompensated care. if you look at i think the ryan plan, they talk about

reestablishing dish, combining with medicaid dish. ultimately hospitals will be sharing in pools of money whereas before medicare dish was this never ending thing, could just get greater and greater and greater. i don't think that will happen again because i don't think we'll subsidize hospitals that way. it will be a shared pool. i'm mindful we're probably out of time. i know there are probably additional questions. i do think we'll have an obligation from the committee to make sure we're on schedule. i think we're currently taking a break. so i'll just volunteer for these guys, if you guys have questions to ask individually. i'm sure they will be happy to tell you that. thank you all very much. thank you very much to the panel.

this conference from the american bar association taking a short break, as you've heard. when they return live, conversation on physician assisted suicide. wait for that to get under way. some of the discussion from earlier in this forum with former medicare and medicaid officials. >> so let me kind of kick off the first question and hand it off to john. john, you were probably the most recent member of the panel to experience the transition to go

through a transition from, you know, a republican administration to democratic administration. give us a sense for what is really happening now within the transition from your perspective, what do you think they are doing. some of the things i'm interested in learning, do people come in with already a blueprint with what's supposed to happen in terms of health care policy, to what extent is it being created now and any insights about the current transition, trump administration wants to you give your thoughts about that. >> i served on the transition team during 2008 and 2009. i'm sure that every transition team works differently and are driven by the people who are running the transitions, their priorities and their policy goals. but i think the one observation that i had is that the transition teams tend to spend a lot of time thinking about how to fulfill campaign promises, how to implement those promises that were made by their

candidate. i think the reality is, particularly coming into the health care, particularly coming into cms, there's a mix of discretionary decisions that a policy leadership team wants to do and things they have to do. medicare, for example, has firm statutory deadlines. there are things that have to be decided on on january 22nd, whenever the new team comes in. so a transition team has to think about two things at the same time. number one, how to fulfill the campaign pledges. i think health care really wasn't part of the national conversation other than to repeal the affordable care act or to preserve it. there was not a real reach debate about the future of medicare. there was not a rich debate how fraud, abuse, core cms programs should operate. the transition teams need to think about two things, number one, fulfill campaign promises

and how to implement campaign promises and number two, how to get ready for nuts and bolts decisions. you may have a very well thought out plan how to implement those discretionary decisions but you're going to get hit with crises from day one. for example, during my time coming into cms in 2009, there were public health crisis that cms had to respond to. there were medicare regulations that had statutory deadlines, pentup decisions from the previous team that still had to be decided. transition teams need to be staffed, prepared to function, prepared how to make day one decisions. so a team will come into cms on january 22nd or so, and they are going to be faced with decisions that first day they come in. some words of advice to pass onto current transition team,

absolutely think how to fulfill campaign pledges and campaign proms but from the first day in the agency to make decisions and get ready to deal things you hadn't planned to deal with. public health crises, hospitals going bankrupt. things will pop up on a day-to-day basis. teams have to be ready from day one to react and handle those things that pop up. >> so tom, john talked a lot about campaign promises and campaign pledges. when you transition, then, to -- in the bush administration, i guess i have a two-part question. what were your sort of, did you guys have pledges and promises you had to keep. and secondly, what do you see as current pledges and promises the current administration made in terms of -- i guess we'll limit it to medicare, because of course there's an enormous number of other promises made about affordable care act

changes. >> i think it's totally different this time. so i had two transitions, i was in the '88 transition because i was involved in the '88 campaign. we won, picked gayle to be administrator march or april, it was late. it was a different scale. health care issues that big. much more issues in the health care world. i was not involved in the 2000 cam maybe. i worked four years for president bush senior. called into the bullpen in 2001, old bush flunky to do the cms job. i got picked, first time talked to tommy thompson january, confirmed in may, so moved much, much slower. a cms administrator nominated before secretary of state was one of the first two nominations shows that health care -- we had big health care issues back then but repeal of employees whether we like it or not was one of top issues. you can't escape it. i think john