this year. there's no shortage of big health care things that have to pass the committee. >> that's absolutely true. thank you so much for joining us. we really appreciate it. i'm sure that other people may have a question or two as you walk out the door. thank you very much for your help. [ applause ] texas representative joe barton discussed the future of the replacement bill. this is 45 minutes. >> thanks very much. our next panel, we're going to

get under way very promptly here. it's about repeal and replace with what? we've got a little bit larger panel. moderated by erin mershon who is one of our staff writers that specialize in health care. bill cassidy is a republican senator from louisiana. joe barton is a republican congressman from texas. he's the former chairman of the energy and congress committee. david merritt is the executive vice president at america's health insurance plans and clay alspach. thank you very much. >> thank you for being here today. i'm erin mershon. i think we have a fantastic panel here set up to talk about

the policy and the politics of repeal and replace. obviously been a busy time. i think we are waiting for just a moment for congressman barton. unfortunately, dr. mark mcclenon couldn't make it. it's been a busy time in washington. it was only a week ago that house republican leadership put out the legislative text of the replacement man. on monday we got a cbo score that showed as many as 24 million people would lose their health insurance coverage under that plan. as far as we know, i think speaker ryan said last night he is still planning to bring this to the floor for a vote next week. it's very timely panel. i'm excited to jump in. i think the first question is probably the burning question on the minds of most of us here and that is can this thing pass the

house? you want to start? >> clearly i'm the b team on the house. there's a delay. clearly they're working through it. as the speaker likes to say there's two more committees. i'm concerned on the senate side. i'm a doc. i've been working with the uninsured. these are my patients. the structure of someone 60 years old making $20,000 a year doesn't get adequate assistance under the health care plan to help him or her buy their insurance. if they fix that, i think there's path forward. we'll do some things on senate side. >> you want to jump in? >> i think mr. barton will have an opportunity to speak on the medicaid side as well. i know there's been some concerns expressed from the freedom caucus and other members regarding the lack of work requirements. the starting date for 2020 date

moving that earlier as well as ending the match, the 90% match for the expansion population. i think that looking at the calendar they still intend to move forward next week. there is the idea that the rules committee that can make changes in order to improve the bill, which is part of the process. this is a legislative process. i think what you're seeing right now is the sausage making process in public, in the press. there's a lot of conversations that are going on. what they're trying to do on the republican side is is that right cassidy mention is improve the bill. that's a good thing for everyone that they are trying to undertake that exercise. >> david, you want to give us your take? >> you can't talk health care without talking about politics these days. we look at it as an opportunity. the individual market has been challenged for a long, long time. that's why it was addressed in the aca in the first place. we look at this as a good

opportunity to try and bring some short term stability as well as long term improvement to a market that really does need it. we welcome the discussion and hope it can move forward. >> all right. we will -- i'd like to dive deeper into sort of what's going on between the moderates and conservatives up on the hill and hopefully mr. barton will make it here any minute. let's start with you dr. cassidy, fill me in. how do you see the fight playing out? as we start talking about some of the chainnges that you and cy mentioned, moving the date they would freeze enrollment from 2020 up to 2018. is that something moderates can accept in the house.

how do you sort of find that balance between finding something that both groups can sort of accept here? >> i'm going to push back a little bit on how you framed that question. >> all right. >> because there's implicit is that one side has a con sefbtive approach and one a moderate approach. conservatives are about fiscal responsibility. now whatever we come forward with must have fiscal responsibility. i just had an article i authored and put in the hill. i said there are three myths about obama care but let me tell you the truths. one that americans are not -- americans are already entitled to health care. congress has established that. two, we're going to pay for health care. i worked in a hospital for the uninsured. as long as the doors are open, if a diabetic, a schizophrenic, a car wreck came in, we treated.

now, it's a hospital for the uninsured. people said it's free care. it is not free care. it is passed to somebody. the guys that made the policy over here kind of acknowledging that. the truth is and conservatives are about truth is that congress is already entitled folks to care. i can give you a litany of programs that support it. it's going to be paid for. the question is it better to give coverage as somebody diabetesed managed as outpatient and they just come to the er when it's out of control? i would say the conservative fiscally responsible solution is to give coverage. the only way you control cost is if you have appropriate coverage. not the bells and whistles of obama care driving up costs for all making it unaffordable but something that empowers the patient. i push back because i think in this case what the people whom you call the moderates are

actually proposing the fiscally responsible conservative approach. i do think it will be common ground. i think we will find common ground. it's just that we have to come to a common understanding of the facts. i think that's the process we're working through. >> excellent. congressman, thank you so much for joining us here today. i'm dplglad you made it. >> for once i'm later than the senate. >> we've been talking a bit about sort of whether the house package to replace the affordable care act can pass the house. i would love to hear your perspective on that question. >> can the house package pass the house? that's quite the first question. we got a lot of witnesses here so i have to be careful what i say. >> and these tv cameras. >> i'm part of the whip team and

we whip the two bills that pass the energy and commerce committee in the ways and means committee. they are going to the budget committee today. i would have to say there are lot of undecidedundecideds. it depends on what the president decides to do and how strongly he supports the package as is. if we make no changes to it, i would say it will not pass the house. >> interesting. can you fill us in on the kinds of changes that could help it get there? >> there's a division in the house amongst the republican conference. there's the conservative faction which i'm part of that thinks we need to strengthen up the bill some. we need to restrict the medicaid expansion program. end it sooner. not allow continued expansion. i have an amendment that would

do that. there's large group that thinks there should be a work requirement for the healthy adult part of medicaid. there's a lot of concern the bill as it is configured doesn't eliminate the essential benefits package requirement. i think those would be the three big things. concerns about the medicaid expansion requirement for work for healthy adults in medicaid and what was the third one. clay used to do the briefs for me. the restrictions or elimination of the essential healths benefit package. we want to pass it. there's not anybody in the house on the republican side that doesn't want to send a bill to senator cassidy and his colleagues in the senate. >> let me ask you.

we were just talking about the balance between some more moderate members of the conference and some more con se servetive members of the conference. i'm especially when it comes to that medicaid amendment, i was speaking with members of the tuesday group last night. nonstarter. they both used that same word. i'm curious to hear what you would say to them with that effort of yours. >> i would explain to them what my amendment really does. it doesn't take anybody that's on medicaid as a healthy adult off. it simply says in the states that expanded medicaid they cannot continue to expand their healthy adult medicaid population beyond this calendar year. it doesn't kick anybody off. it says as of january 1st, 2018, you can't continue to add people

to your healthy adult medicaid part of your program. the second thing it says, we go back to the traditional state federal medicaid match which is about 58-42 under the healthy adult medicaid expansion program, the federal government paid 100% of the cost. this year it's at 95%. it fazes down to 90%. it stays at 90% in perpetuity. that doesn't make sense. your healthiest group on medicaid, which are the adults get a 90% match. your traditional medicaid recipients, your disabled, your women with children, those groups the states pay on average about 42% and the feds pay on average about 58%.

they voted for this when it came to the house and senate why we think we have to protect a program that was a bribe to the state to expand their medicaid population to young, healthy adults is beyond me. >> let me ask you since you say you whipped the voter last night, were you seeing more hesitation from among the conservatives you said you're a part of or some of the more moderate members or both? >> i only have to whip four people which i'm one and steve is two. it's not like i'm flogging the whole conference. there's a lot of good will for our leadership. we understand the dilemma. we want to work with our

president. >> i want to ask a bit. >> you've got a senator right here. >> how big of a role do you think the white house is playing right now and how big of a role should they be playing to bring this thing through to the vote in. >> i think the white house is key and interestingly we're fortunate in two of the key white house intermediaries. the director of the management budget is one of my coaches on congressional baseball team.

most presidencies to the extent they have experience from the hill is on the senate side. in this case with the vice president that i didn't mention, some of their key people are house members and we have a lot of interaction which i think speaks well for the end game when it comes time to make the final decisions. they know the rhythm of the house and the mood. i think the president will be able to intervene in a way that has a very positive result. >> dr. cassidy, you want to answer that same question. >> the president o's role? >> yeah. >> the president on the campaign trail said he had four goals. he could continue to cover folks to kind of same numbers. caring for thoes with

pre-existing condition without mandates at a lower cost. that's what he got elected on tlands he said after being elected. the folks that really have suffered over the last eight years in an economy that's not worked for them. if he stays true to those principles one will be he'll do very well politically. i'm hoping the president hangs with that. >> i got to press you on this. congress barton has been pretty optimistic about getting this through the house. is this thing going to make it through the senate? what does it look like as that happens? >> we don't know what they are sending over. there's more concern on the senate side that coverage continues.

our country has lots of programs to help people get medicare. medicare, medicaid, va, tri-care, ryan white. disproportionate hospitals. i could go on. there's this group that tom price calls the vulnerables. they don't make -- they make too much to qualify for medicaid but when someone is making 15,000 a year, they're not going to have be money to put up as employers contributions. those are they. i think that's concern on the senate side. they have the same kind of advantage as somebody who is making $180,000 a year. we want the same sort of consideration.

that's on average about $5,000. the question is are we going to give that benefit to persons with lower income. just feel like we need to make sure that someone making $20,000 a year has enough assistance to purchase insurance. >> let's talk about process though. the senate will amend this thing. i think we've heard a deadline of getting this done before the april recess. how likely is that? do you see this going through committee? how does that senate bring its package together? >> it's not going through committee. that's been said. we may have judge gorsuch in the interim. senators are putting their amendments together. speaking among ourselves trying to get support and understanding for those amendments.

the house bill will come over. it will be amended and go to congress. the likelihood of finishing by the 7th, the leader has told us if we don't get it done, plan on staying over easter. sometimes that sort of advice. >> so congressman i think what dr. cassidy has outlined are some changes that might make the bill a little more moderate. do you think the house can pick it up after that and make it happen? >> we're always optimistic in the house. just to see the senate act is always such a refreshing spectacle that if they do make changes that's the normal process and of course over half the senate at one time was in the house including senator cassidy, who was an excellent member, and somebody that served on the committee that i'm on when he was there.

we have good will and we want to get this done. we do hope at some point in time our friends on the democratic side decide to participate in a positive way. if that happens we'll get a bill that the president can sign and the american people will be much more comfortable with than they are with the affordable care act. >> i want to give our elected officials at least a chance to take a breath. and david, i want to kick this one over to you. under this current plan what happens to the insurance markets in 2018 and 2019? walk us through the scenario here. >> before we get to that hearing, congressman reminds me of what newt used to say to the freshmen when they would come in. democrats are our opponents but the senate is our enemy. i can see that in real life here. as i said before, we're very optimistic that we can actually have both short-term stability as well as long-term improvement. it's no secret that this market has been trouble, particularly on the individual side, for many

years. so we're hoping that working together collaboratively in a positive way, really looking at solutions, can fix this market once and for all. the thing that plans need and any policy needs is certainty and clarity. as we've been debating back and forth as time has gone on, one thing that health plans really do need is that level of certainty because the product development cycle is fairly well set and the window is actually closing very rapidly for products that will be introduced to the market in 2018. there are lots of hoops that plans have to jump through at the state level. there's lots of actuarial research that goes into pricing and planning products for the market. there are a number of positive steps that have been taken already. both from the administration side but also the house side that can deliver some of that

short-term stability. the trump administration, you look at the proposed rule they put out a few weeks ago. very positive steps, trying to big that certainty and stability to the markets. trying to close some of the loopholes that have been exploited and gamed a little bit that have driven up costs for everyone. mimicking the employer market in the open enrollment period. there were definitely some steps that were taken that were very positive. on the house side in the legislation other positive steps, looking at cost-sharing reductions. so the folks that senator cassidy was talking about who earned $15,000 a year, maybe they earn a little more and they do get a subsidy, they still have out-of-pocket costs but these cost sharing reductions reduce those out-of-pocket costs. that's a very positive step that's in the legislation. making some of the reinsurance payments from last year and funding those this year, those

are things that bring stability to the market and give plans more encouragement to enter the market in 2018. we think there are a number of things that can bring that certainty and clarity in order to have more affordable choices in the marketplace starting next year. >> give us a sense of changes you'd like to see. >> we always like more certainty. so the longer this process goes on, it doesn't deliver the certainty we would need. so i think within the next month or so if there is a package folks can actually plan on and start the process of rate filings with the state and rate review, we will see i think some positive movement. so the calendar is one of the biggest concerns at this point. some of the things we also look at that can be improved, senator cassidy mentioned one of them on the tax credit side.

in the house proposal it is just age adjusted. and that certainly can be effective for some. but when you look at actually affording health care coverage, if you only have it on age there is a block of the population that will hit real consumers when they actually can't afford it. they earn too much to be eligible for medicaid. and the tax credit based on age simply can't cover the policy that they choose. so we hope that at some point there can be that improvement where it is age adjusted but also has been income component to it and we think that will deliver the resource that's folks can use to purchase effective coverage. >> could i comment on that? >> please. >> one of the things he said that i don't think too many people realize, we had an election this past move and all republicans i think without exception promised that if they won and we controlled the government that we would

repeal -- at a minimum repeal obamacare and most of us said we also wanted to replace it or reform it. so when people go to vote in the off presidential elections next year, their health care and their cost of coverage if they have health insurance are going to be a key decision maker in who they vote for but as he just pointed out insurance markets don't operate on election cycles. so the quake is pretty well all baked on what your health care and your health care costs, if you have health insurance coverage, is going to be. and the political system just simply can't operate as quickly as the consumer decision-making. when you go to the polls next year you're going to say am i better off or worse off with my

health care insurance? and the two components are the cost to you and whether the plan meets your needs. . next year's health care costs are going to be based on the affordable care act. they're not going to be based on all these reforms and things that we're working on right now. so we probably hopefully are going to have a much more affordable, much better quality access to care system but it's not going to be for another three years, or two years at least at the minimum and the election's going to intervene before that happens. >> let me add in one thing, though. there is another positive provision in the bill that can affect rates very quickly. the health insurance tax that was in the affordable care act originally, $110 billion in premium taxes on many, many health insurance plans. small businesses, seniors on medicare. and is that has been delayed for

a year but is now repealed in the package that is moving through the house. and that on average is about a 3% increase in premiums just on that tax alone. if that tax goes away, that is something that can deliver very short-term benefits but a very positive package. >> and we repealed the requirement you have to have insurance and the requirement that has to be provided. some of the things are going to have an immediate effect and hopefully a positive political effect. >> the so-called continuous coverage requirement. i know there are some discussions on the hill just this week i think about potentially dropping that provision from the bill. by obviously it's an important one when you couple it with some of the pre-existing conditions protections. i'm curious to know the perspective on what would happen if that was dropped from the package. >> well, it's no secret that the mandate is one of the most unpopular pieces of legislation that we've seen in a long, long time. how effective it was to actually

bring people into the market is under some debate. some think it was fairly effective. others think it didn't have an impact. what we know about health insurance and this goes for any insurance, whether it's car insurance or home insurance is you can't have folks who just buy coverage when they actually need care. it's literally like buying auto insurance after you have a wreck. so in order to keep costs down for everyone, you have to have folks who utilize medical care. those folks senator cassidy was talking about who needed it, a diabetic, someone who needs treatment for whatever behavioral illness -- whatever they need, you need to have folks who have insurance to cover those costs but then you also need folks who have insurance in case they need to seek care at some point. that's how you balance out the risk pool and actually lower costs for everyone. so if you have a system where folks don't have the mandate but can still sign up for coverage when they actually need it, it's going to raise costs for

everyone. so we think there has to be some type of continuous coverage incentive. the 30% premium charge for not having continuous coverage, that's certainly a start. we think it can be effective, at least help mitigate the loss of the manned cate. but i think we can be constructive and find solution that's really do work because we share the same goal as congressman barton, republicans, the senate, that we want lower costs and better quality and more affordable coverage for every american. and we know that in order to get that you have to have more people that have coverage. those who utilize care and those who don't. so we think that provision is important. but we certainly want to have a constructive dialogue on what else might be needed. >> there's another way to get at that, by the way. which is in the patriot freedom act, the replacement plans that susan collins and i, lindsey graham, capito, rounds, i'm blanking, to my sixth person.

isaacson have put forward. and that is to allow states to automatically enroll folks. and in the house plan it appears as if that provision is allowed. they could say listen, all you young immortals, we're going to give you a credit sufficient for the premium and you're going to be enrolled unless you call us null don't want to be. that's what is done in medicare part b. no one says it's a mandate. they just end up on part b and a few cranky folks think theodore kaczynski living under a car hood calls up and says i don't want it. but as a rule you do that. now, we have an insurance company model. what if we had automatic enrollment of these young immortals and they said that by itself would lower premiums by 20% even keeping in those who are less healthy. there is a mechanism in the patient freedom act -- by the way just endorsed by capreta and antos in the health affairs org blog post and they said it

should be looked at as a way to restore actuarial balance without a mandate. >> i want to ask one big picture question here and then kick it to the ans for questions. so be thinking of those. but what i want to talk about is some of the health reform priorities that i know were on a lot of republican wish lists but have not made it into the house package for reconciliation rules and anything else. i know health services secretary tom price was talking about, changes in the health benefits. there's a very long list. by want to ask at least in terms of the changes that might need congressional action, things that might need to go through regular order, might need to get 60 votes in the senate. what do you guys think are the chances for something like that to really happen in this congress? that's where the so-called third phase, third bucket of health reform here. how likely are we to see a lot of changes there? you want to start?

>> i'd be happy to. i think that question remains -- is going to be uncertain until we see the bird rule effect in the senate. because there are some components of the house legislation that arguably may not make it through. but that question can't be answered till the senate parliamentarian, she makes a ruling. but i think that phases that folks talk about, i think the administrative phase is a critical phase, especially as you see the construction of the house bill. one of the key components we haven't talked a lot about and i think is one of the fundamental changes, the big change that will come about because of this legislation is really the per capita cap and the change to medicaid. that's something that senator cassidy has been working on for a number of years but it's going to require a lot of work from health and human services, from cms to implement it. and i think that's where there are some open questions around flektsability and what other pieces could be part of this. but this puzzle in order to put it together you need not only

the pieces from the house legislation and senate legislation that gets signed but also the administrative portion as well. in terms of what happens with phase 3, i mean, the issue there, the hurdle is the 60-vote threshold and what actually can move through. so i think the idea for the house is you're going to be voting on medical liability reform or mccarron ferguson reform or wellness changes or association health plans. but as to whether those can get through the senate that's an open question. there are some -- there are some packages that are going to have to move through the senate and the house on the health care side. we haven't talked about the chip program funding or the medicare extenders or other piece that's are going to have to move through. those can provide vehicles for some of those changes. but i think what you're going to see is the repeal and replace is the big step but there are going to have to be a lot of subsequent steps in order to

really implement this legislation and do it in a way that the folks, the authors really want and what their vision is around it. >> senator cassidy, you want to jump in on the senate side? >> i'm not sure what i can add to that because obviously, there's stuff like the essential health benefit which would probably not be judged to raise or lower expenditures. so therefore, it does not pass the byrd rule. can we get a 60-vote threshold? let's step back a little bit. ideally, we do have something that's bipartisan. i think it's fair to say that there's been nothing overarching in our society that has been passed and endured, if passed on a partisan basis. and i think obamacare is the latest example. so i've spoken to democrats and would like them to come in and potentially influence the product. clearly, if some did they would have great leverage. now, that said, when susan and i introduced our patient freedom act, chuck schumer criticized it

before he introduced it. he hadn't read it. there's no way he could read it because she and i had the only copies so to speak and he was already criticizing it. so clearly there's a big dynamic on their side to sit on their hands. what i tell my colleagues, though, is this is not about politics, it is about the patient. it is about somebody who if we get it right will have a happier fuller life and if we don't will have a life of decline. that's what this is about. so i hope folks don't just sit back hoping for political advantage, they step forward so the patient is advantaged. >> anyone else want to jump in on that? >> i'll jump in on one quick thing. the packages moving through the house obviously addresses a lot of things. there are two areas it doesn't address and that's a good thing. one is the employer market. there are almost 180 million people who get their insurance through their employer. this is not to say it can't be improved. certainly on the cost side it can be. but that market has been relatively stable for the past

eight or ten years. we've seen historically low cost growth. so i think by leaving that that certainly was a positive thing. leaving aside medicare for the moment. that certainly needs improvement in the long term as well. but something like medicare advantage has actually delivers better value, better services for seniors and taxpayers. and i think setting that aside for another discussion was a positive. in the third bucket they've talked about, one area we can address is the rising cost of prescription drugs. if you look at some of the headlines in the past year but look at the consequences those costs have on families, it's enormous. introduce i introducing more competition into the drug market is enormous. fehbp, 25% of their costs are

now prescription drugs. we released a bit of research two weeks ago that showed a breakdown of the premium dollar and prescription drug costs account for 22% of spending and that doesn't even include the prescription drugs that are dispensed in in-patient hospitals. so that bucket is enormous and growing. and i think there can be bipartisan solutions to address the cost of prescription drugs that can deliver more competition, more choice and hopefully lower cost. >> i'd like to comment on what senator cassidy said. for things to last they need to be bipartisan. he's totally right about that. but since this happened in a non-partisan -- in a very partisan way, the creation, it's almost certainly going to have to be changed in a partisan way. so there are many members of the

house that think we ought to give the bird to the byrd rule, so to speak, because we just don't see democrat senators awful a sudden having an epiphany and ziegd to work. through the good graces of senator cassidy and others there's always that chance. but we're very skeptical in the conservative wing of the house that you're ever going to get to that third bucket, so to speak, or that third phase. you know. hopefully, it will happen but i wouldn't bet my premium dollar on it. >> i will say the rule is statute. you can't just kind of waive it. with that said, i also agree with what joe said, who by the way was somewhat of a mentor when i was in the house. >> somewhat, notice he said.

>> which is we shouldn't bank on a third bucket. whatever we put forward now must be able to stand on its own. >> that's true. >> with that i think we should open up for questions. we've got a few minutes here. does anyone want to jump in? i'd just ask you that introduce yourself before you jump in but i think there's a mike right there. >> my name is brian hewlett. my question for the legislators is when the aca was passed or when we were going through the process late 2000s, bending the cost curve was one of the key discussions. the current ahca bill has a lot of discussions on -- or a lot of proposals on coverage reform but we're not addressing necessarily -- doesn't seem like we're addressing the root of rising medical costs from the consumer perspective. what are we doing in terms of the alternative payment programs and just all the things that were in the aca to bend the costs or even bring it down? >> you want me to answer or -- >> can we both answer, you go first? >> sure. >> hopefully if you recreate a

true health care market with lots of competition and lots of consumer choice, that's going to bend the cost curve because consumers will pick plans that meet their needs and that they think are affordable. it's difficult to create a true transparent health care market because so many people get their health insurance through where they were. but if we can create such a market we're not doing away with the individual exchanges, we're simply not making people mandatorily have to participate. i think that will happen. if you in any way reform the essential benefits package requirement, that's going to bend the cost curve. as has already been pointed out, you eliminate the taxes, that's going to take the cost curve down. and i think if you eliminate a lot of the regulatory red tape that doctors and providers have to contend with that efficiency improvement will bend the cost curve down. >> i'm going to -- are you

through in. >> yes, sir. >> if you will, there's a couple components, at least several components to what you just asked. let's speak about medicaid first. part of the cost driver in medicaid is that states are incentivized to pass costs to the state government, federal government. and for example, if they recover waste, fraud and abuse they have to rebate to the government that portion due the government. it is a disincentive for the state to go after waste, fraud and abuse. but the hospital puts up a provider tax. the state uses it to draw down more federal dollars. the federal taxpayer is out more. so the per beneficiary payment is something that actually addresses that. just as the state goes to a managed care company, says you get x number of dollars for someone who looks like this, the federal government goes to the state and says you get x plus a little bit more for someone who looks like that. there is tremendous potential in the per beneficiary payment.

by the way, i think it was the w administration, correct me, that went to rhode island, gave them a block grant i think for long-term care and rhode island brought their costs down and improved outcome he on a block grant. empirically this works. private insurance. if you will, several aspects of this. first, how do you increase competition among insurance companies? i think we're inviting competition to return by the deregulation, et cetera, allowing flexibility. so that can lower costs. if you have only one insurance company, costs are going up. secondly, we have to lower the cost of health care itself. one thing we have in the patient freedom act is price transparency. now, there's lots of examples of how the opaqueness of the pricing mechanism keeps the power in the hands of the provider. we need to give it to the patient. one example, in lasik surgery, laser eye surgery, that has come down over the last ten years, as everything else has risen.

outcome's better, lower costs, because there's total price transparency. it works for jeans. it can also work for a mammogram. so i think that is another component. i could go on but i'll stop. >> we have time for one or two more questions. >> senator cassidy didn't say opaqueness when he was in the house. he's picked that up in the senate. >> if good morning. i'm john weston. i'm with the jewish federations of north america. we represent a great deal of non-profit providers across the country including in louisiana. wanted to dig a little deeper in the per capita cap issue and the recent cbo score saying that there would be a 25% cut in medicaid to the states should the current bill go through. we've got grave concerns about what that means to provider rate cuts as well as to the economic impact to states. we do know of one major hospital not unlike the one that you practiced in in baton rouge,

senator, who is thinking about pulling a $1 billion contract in the city of cleveland and building a new hospital because they just fear that they're not going to be able to make their ends meet. can you talk a bit about what the per capita cap might mean? yes, it's going to contain costs, but what it's going to mean to provider rates as well as to the overall economic effect for the nation. >> let's speak a little bit about the medicaid expansion. if bronze-level plan somebody's getting about $4,200 to subsidize their care on average. and on traditional medicaid about $4,000. and these are the sicker patients. they all use it. under the medicaid advantage if you pull up cost reports of these managed care companies, last year they were getting on average i think $6,000. and this coming year 6,300. so on the medicaid -- the medicaid expansion programs if you do apples and apples,

35-year-old on blue cross, 35-year-old on medicaid expansion, the medicaid -- the managed care organizations are getting about 107% of a 100% actuarial value blue cross policy. let me repeat that. on the medicaid expansion look at the s.e.c. filings, the mcos are getting about 107% of what a blue cross 100% actuarial value policy would cost. now, they are paying medicaid rates with a medicaid provider panel. and getting 107% of an act warial blue cross policy. john, if you speak to me about the rates, i will tell you for traditional medicaid it pays a provider below cost, disincentivizing, even eliminating their ability to see such a patient. that, by the way, just parenthetically, though, some of that is the problem of the

states. there's one state i know of that i think's illinois. in fact, i know it's illinois that pays its hospitals in such a way and its private providers in such a way as to incentivize hospitalization. that's wrong. it's bad for the patient, bad for the payer. if you will, the way to correct that is the per ben fickry payment. where the state of illinois doesn't have the ability to continue to pass costs to the federal government. rather they get a budget and they figure out it's cheaper and better to treat them as an outpatient than to hospitalize. but let's also look at this medicaid expansion. there's a lot of room there to actually lower costs and preserve care. and if it doesn't preserve care, it's not the fault of the federal taxpayer, who right now is paying 107% actuarial value of a blue cross policy. it's a state regulator which is not looking at that contract and reshaping it to the advantage of the patient. >> i think you also have to make sure you define what a cut is.

the house per capita cap for medicaid increases spending to the states, increases funding. but it's not unlimited like the current system. so that cut is -- if you do what the house did and it becomes law, states get more money. they get more flexibility, but it doesn't go up unlimited like it does under the current system. and that's what they define as a cut. it's really more money. >> i hate to cut us off but i will say we have a fantastic panel on medicaid coming up moderated by my friend carrie young. we will get into mor details there. thank you all. thank you for for watching. [ applause ] now from the same forum, republican congressman brett guthrie of kentucky talks about his state's role in administering the medicaid program. this is 45 minutes.