>> in 179 c span was created as a public service by america's cable television companies. and today we continue to bring you unfiltered coverage of congress. the white house, the supreme court, and public policy events in washington, d.c., and around the country. c-span is brought to you by your cable or satellite provider. >> the 2018 medicare trustees' report released last week warns that without congressional action, the entitlement program is projected to be insolvent in 2026. the chief actuary for the centers for medicare and medicaid services outlined the report and projections during remarks at the american enterprise institute.

>> good morning. my name is joe antos, the wilson h. taylor scholar in health care retirement policy at the american enterprise institute. i want to welcome everyone to today's discussion of the 2018 medicare trustees report. the trustees' report was issued yesterday. and we're honored to have paul spitalnik, the chief actuary for medicare, to cut through the complications and explain what we all actually already know. which is the medicare is in serious financial trouble and the long-term and increasingly the long-term is getting closer. year by year. this year's report in many ways echoes most of the reports that i remember reading over the last

few decades. the message is, has always been the same. which is that at some point the program is going to face huge financial challenges, unless policy-makers take action. and unless the health sector finds ways to deliver appropriate care. more efficiently to patients. that of course is the latter part is important, not just for the medicare program, it's important in general for the health sector. so really i think the trustees' report does reflect an awful lot about what's good and what's not so good about what's happening in the health sector in general. interestingly, the trustees who with r in fact policy-makers, say that taking action sooner rather than later will allow for more policy options and will give the system and the public more time to adjust to necessary

changes. i'm not sure that's a message that every trustees' report has had. but it's certainly absolutely true and i would hope that the policy makers who made that statement would consider that over the next few years. the, the report and i would specifically highlight accompanying analysis of the illustrative scenario. i think illustrative in my mind, means somewhat more realistic, at terms of the assumptions that are made. both of the report and the accompanying analysis bring into focus the dangers of what i call short-term policy-making. these are policies that congress adopts that produce savings in the near-term, but may not be sustainable over the longer-term. in particular, the illustrative

scenario, points out, or addresses two particular policies that are problematic. in the first case, it had to do with physician payments. a legislation was passed several years ago to replace what was called the sustainable growth rate which threatened essentially 20%, 25% payment rate reductions to physicians through the medicare program. replace that, that threat with a new system and the new system isn't exactly a bed of financial roses for most physicians, indeed, as the instraightive scenario report says -- instraightive report says, the kinds of payment updates, the

think of them as inflationary increases, we're talking about numbers that generally are below 1% a year. and it's unreasonable to think that general inflation will be as low as 1% in the future and we all generally accept that health care inflation rises faster than general inflation. so we're talking about a policy that was put into place, that looked good from a cbo scoring perspective. but over the longer-term, it seems highly unlikely from a political circumstance, this is not something that trustees or the actuaries were saying, but from a political standpoint it seems unlikely to me, that politicians will be able to keep that kind of a schedule. even though it's in line. they'll change it they'll buckle under the obvious and probably reasonable pressure coming from

the physician community that they really can't live with such a modest increases given their likely cost of operation, rising much more quickly. the second policy again, short-term policy, created by the affordable care act is something called productivity adjustments, and basically the idea sounds good, only superficially. the idea is that the health sector should find ways to become more productive, that part is correct. no question about that. but to generate scorable savings for the affordable care act, obviously you have to have some kind of a formula. and essentially the formula ties payments to productivity improvements in the general

economy. and as the supplementary report points out, economy-wide productivity generally has been measured to grow faster, much faster than health care productivity. health sector productivity, there's some measurement issues, but the numbers are kind of interesting. this year, economy-wide productivity is estimated to increase about 1.1% a year over the long-term. the contrast, hospital productivity has increased recently by about .4% a year. and i guess the projection is essentially zero over the long-term. and similarly, other services at least measured productivity this is a very difficult issue, but measured productivity simply isn't rising nearly as rapidly as economy-wide productivity.

and yet, payments are going to be reduced, because of that factor. now, the issue is less a measurement issue than it is a feasibility issue. is it possible for the health sector to find efficiencies that will satisfy this requirement and then secondarily, will be able to detect it, even if they do? i have my doubts about the second. i have my doubts about the first. these are serious problems, not confined to the medicare program. and it's something that policy makers and health sector need to deal with in a serious way, quickly. one other point i found quite interesting numerically, is the power of demographics. the trustees point out that in essence they're pointing out

that the baby boom generation has a han awful lot of leverage in the health care program. as a baby boomer, i don't know how i feel about that. but it's a very large generation, obviously the boomers have been, reaching age 65 for a few years now, and this massive demographic wave will enter the medicare program, but leave the labor market, enter the medicare program. over the next 15 years or something like that. and interesting to me and an interesting statistics is that the trustees project that total medicare costs will grow from approximately 3.7% of gdp in 2017 to 5.8% of gdp by 2038. and then increase gradually the thereafter to about 6.2% of gdp by 2092. there may be other factors, but i see demographics there in a

big way. that's a sign of trouble. that's a sign of ongoing fiscal distress. it is the freight train coming at us, maybe not at 90 miles per hour, but fast enough and faster than policy-makers tend to react. and faster than i think we often see in the health sector reacting, to real changes in their circumstances. so it's a really serious problem. with that very positive note, let me introduce the panel. i sort of already introduced paul spitalnik, chief actuary for medicare and medicaid services. he has joined us, how many years has it been? >> my fifth year. >> fifth year. >> so but we're not allowing you to take the fifth. okay, that was, i'm an economist, i can't help it.

okay. then the next speaker will be bob moffitt, a senior fellow at the heritage foundation's center for health policy studies. and long-time expert, spent many years working on the medicare program and various aspects, spent a lot of time at hhs back in the '80s. next speaker is steve lieberman. steve lieberman is a nonresident fellow with the usc brookings schaeffer initiative for health policy. but in addition to that, steve runs his own consulting firm. and before that he was senior official at various important places, cpo. omb, and bunch of other places in between. and then finally, steve zuckerman, who is a senior fellow and vice president for health policy at the urban

institute. and steve promises to mix things up a little bit. and so we're counting on some good conversation. paul with, that, would you take it away? >> thanks, joe. provide an overview of the medicare trustees report that was released yesterday. i'm the chief actuary at cms and it's my privilege to represent the 90 professionals that support the board of trustees who evaluate the financial status of the medicare programs. >> what i'm going to do is walk through a current snapshot and evolution of the program. going to walk you through the formal evaluation of the financial status of the programs that we're included in the trustees' reports that were released yesterday. we'll take a broader perspective of the changes in expenditure

patterns, i think some of the panel members might expand on in their discussion. as joe mentioned this is my fifth year as chief actuary representing the cms in our role here. so cma is a number dwizible by five. i d divisible by five. to take a look at how the financial status of the programs have changed over that five-year program. relatively short period of time in terms of the context of the evaluation of the programs. but there are significant changes that are reflected each and every year so just take a little bit of a step back and see how those see how the programs are changing in the fairly recent past. >> i like to start with this slide. because one of the important responsibilities of the trustees' reports is to project

the financial condition of the programs. that projection looks out 75 years. and this slide to me highlights how challenging that prospect is. we do our best. we apply what we think are the best actuarial and economic assumptions to doing so. but if you were to stand in 1977 and try to look, just 40 years into the future, the likelihood that you would be able to project that pie certainly how that, that pie is distributed, it maybe you can get close on the total benefits, but it is quite a challenge to see how this program has evolved over a 40-year period. just to take a step back. can you see that in 1977, the program was predominantly an inpatient program.

health care has evolved, the reliance on hospitalizations of inpatient spending has deteriorated over time and has been replaced by many other services, you can see now the 2017, the greatest piece of this pie, are payments to managed care organizations. and obviously managed care organizations cover inpatient services, so if youy wr going to distribute their costs across different categories they would look a little bit differently. but in terms of where the medicare dollars go, the distributions have changed pretty significantly. and the one thing i'm sure of in the future, it will change again. in ways that we are uncertain of today. and so while these are the best forecasts that we can, we can make sitting here today, and they should be useful for policy-makers to rely on and to base their policy development

on. the one thing i am certain of is that the program in 40, 75 years from now will evolve in ways that we cannot imagine today. >> this is what the program is. medicare is comprised of two fundamental trust funds. they are financed very differently. they provide very different benefits. and they cover somewhat different populations. the h.i. trust funds, the one that's commonly discussed as going broke at some point in the future, is financed via payroll taxes, it provides coverage for inpatient hospital care forks skilled nursing, and some other services. but this is the one where there's the effectively the advanced funding. or the ability to build up trust fund assets, financed by 1.45%

of taxable payroll so employees and employers each contribute this 1.45%. in addition, high-income earners contribute an additional .9%. and in addition, finally, there are additional revenues that are deposited into the trust fund from the taxation of certain oasdi benefits, social security benefits. turning to the sni, supplementary medical insurance program, that covers part b and part d. part b provides basically none. but the medical services are not provided under h.i. it provides physician services, outpatient services, home health, diagnostic labs and the like. and part d is the program that provides prescription drug benefits, on an optional basis for beneficiary that choose to participate. the financing of these programs

are very different than the h.i. trust funds, these are financed predominantly through general revenues and through beneficiary premiums. these financing rates are set on an annual basis. and so being that these rates are set on an annual basis, there's not the notion of a trust fund imbalance. they are effectively annually set to be in financial balance. so there's not the same concerns of having adequate reserves in the smi program as there is in the h.i. program. being that these programs are financed so differently. it's important it evaluate their conditions differently. i'll walk you through that in a moment. we'll start with 2017 experience. so how did the projections of what actually occurred in 2017 compare to what was projected last year? >> on the income side you can see that for h.i., there was

significantly lower amount of payroll taxes. that were collected. this was predominantly through some of the assumptions that our colleagues in the office of chief actuary of social security, being that these programs are both financed on taxable payroll, our colleagues at the chief actuary are the ones that project the payroll tax. payroll rates, payroll taxes and the amounts of revenue that come into the various trust funds. as i understand it there's significant revisions in how the bureau of economic analysis evaluated some taxable payroll relative to gdp in prior years. so the amount of actual payroll taxes collected in 2017 was significantly lower than what

was projected in last year's report. you'll see this coming through in some of the projections. a lot of what the story is in terms of the changes with respect to the hi trust fund, from last year to this year is really a revenue story. i'll get into that a little bit more as we move forward. on the expenditure side if you look at all of the expenditures for the h.i., smi part b, smi part d, you can see that expenditures were close to what was projected. 2018, based on what we now estimate would happen in 2017, was within .4%, up to .8% of what was projected. 2017 was a good year to be a projection actuary. that's the foundation for how

the programs are evaluated moving forward. this is the broader picture of in terms of how the programs are financed. you can see that starting from the bottom, the tax on payroll taxes, the most stable and predictable fairly significant portion of the overall financing, you can see that that tax on social security benefits, is a growing portion of the financing as we move into the long run. and that's because some of the threshholds are not indexed. then looking at the larger pieces on top. that's the h.i. funding together with the premiums and the general revenue which is predominantly the smi funding, that's a growing share. the general revenue, the fact that general revenues is a large and growing share. there's a provision in the law

that requires to the extent that general revenue exceeds 45% of total financing. that there is a medicare, a finding of excess general revenues. and two consecutive findings means there's a medicare funding warning, which sounds very scary. that medicare fund something triggered this year. so there's a medicare funding warning in response to the 2018 report. all that means is that the president in next year's budget submission is to submit to congress within 15 days of that budget submission, proposals that will address that situation. and if you look at the top piece of the funding is this deficit. and the deficit is that there is insufficient assets within the part a, the h.i. trust fund and therefore, that's the amount of the shortfall that is currently not at, not funded. and i know how that will be

funded. we'll talk about that a little bit as well. >> when we evaluate the stats, the fact that the programs are financed differently, means there needs to be a very different evaluation of the trust funds. for h.i. most importantly are the assets, plus projected income adequate to the benefit cost and on the smi side, the fact that the part b and part d accounts are financed, the determination of their financing rates are done onnen a annual basis, they're automatically, automatically in financial balance. there's no long-term solvency issues. but the fact that these are funded through general revenue transfers, largely, beneficiary premium rates means that there's a large and growing burdens on both the federal treasury. so where our tax dollars go, as well as from the beneficiary

perspective. a larger and growing share of retirement income, including social security income is devoted to these programs. this tends to be the slide or the information that gets the most attention from these reports. you can see that this is the ratio of the balance of the funds. it looks like the balance that's in the trust fund at the beginning of the year, as a ratio to the amount of expenditures for that year. the short-range test is that this ratio should be over 100%. we've been under that level for a number of years now. as importantly, you can see that this ratio goes down to zero. it is currently expected, projected that trust fund would

be depleted in 2026 this year. that's three years earlier than last year. as i alluded to earlier this is predominantly a revenue story. the fact that as i mentioned earlier, payroll taxes, the amount of revenue coming into the trust funds, lower in 2017 that also feeds into future projections in that there are these lower ratios of payroll to gdp in the near future, as a result there's less income coming into the trust funds and therefore the depletion date is, is shortened by about two years. in addition there is the taxation on social security benefits. that is another portion, part of income stream into the trust fund. the tax cuts and jops act of 2017 decreased individual tax

rates, as a result, there is somewhat less income coming into the trust funds. over the next roughly seven or so years. that has an effect on the revenue stream and that does have an effect on decreasing the period of the trust fund. on the expenditure side, looking at the next ten years or so, in evaluating the depletion date there are some factors that increase expenditures over the next ten years, and there's some factors that decrease expenditures over the next ten years, those roughly offset, some factors that lead to increase in expenditures, are high projected medicare payments, there are the as part of the repeal of the individual

mandate, there is expected to be somewhat additional higher uninsureds, as a result of more uninsured individuals. more uncompensated medicare payments to hospitals. through the h.i. program. on the other side, there is a slowdown in the expected growth in in-patient utilization trends, which does offset most of those increases. i think i walked through that. so predominantly lower income. i think i hit all that. slightly higher expenditures. got all that. and on the factors leading to lower expenditures, reduced provider utilization growth, as well as some lower economic assumptions. there's a little price effect there as well. taking a step back, not just

looking at the depletion date, there's this notion of the 75-year actuarial balance. this looks at the present value of future income. and subtracts out present value of future costs, this is all equated and put on to a taxable payroll. denominator, so theact that taxable payroll comes down in most years, does not have an effect on the income rate it could certainly have an effect on the cost rate. the fact that we're projecting lower revenues in the future means that both the amount of income coming in is lower as well as the taxable payroll base is lower. so you can see there's not much of an effect on the income rate side. on the cost rate side you can see there is somewhat of an increase there. again that's largely a revenue story so we are getting less income so effectively that

denominator is a bit lower. in the longer range there are some more upward pressure on expenditures, that is mostly attributable to the repeal of the ipad, independent payment advisory board, was going to constrain some future cost growth. and repeal of that does have some upward pressure on the cost rate. so this is the full picture of how that long-range picture changes. so we had an actuarial deficit of .64%. the valuation period, the fact that we're taking out 2017, putting in 2092, just means that we are shift the period, shifting the relatively low-cost year with a more high-cost year. just shifting the period has an

effect. you can see that the largest effect is this base estimate. and those are two pieces that are included in that base estimate. the largest is the revenue effect, the fact that payroll taxes are lower in the projection period. that's roughly .13 of this difference. and you can see just putting out, pulling up the .13 out of the .18 total change that does explain the vast majority of the changes here. the other base estimate that's on the expenditure side, we had slightly higher expenditures in h.i. for 2017 and so we built that into the projections. that has somewhat higher pressure there. the private health plan assumptions, that's, there's some higher medicare advantage payments in this year's projection, as compared to last year. hospital assumptions, that's the slower rate of utilization growth. that's put in there.

other provider assumption, not just hospital, but other providers have slightly slower growth rates. other economic and demographic assumptions. the fact that economic assumptions are a little bit lower. so not as fast growth in the price piece of medicare payments. this legislative changes, the most significant piece here is the, the ipad removal. but there's the uncompensated care piece is also a factor in this legislative effect. so that's the big picture in terms of walking through the h.i. balance has changed from last year. this is the picture of the cost rate to the income rate. you can see again so the cost rates are the the amount that's actually paid is the same as the cost rate up until 2026.

in 2026, when the trust fund becomes depleted, the amount of revenue coming into the trust fund will still provide for a significant amount of benefits to be able to be paid. when the trust fund goes broke it doesn't shut down and there's no ability to provide any services at that point. in 2026, the amount of income coming into the trust fund would actually be able to pay 91% of the benefits that are projected. and you can see that that share of future income, that's coming into the program, changes somewhat over time, in 2042, it drops to 78% in 2092, it's up to 8 5%. i think the important part to tyke away here is that the shortfall is not all of medicare. or all of h.i. shuts down. there's a gap between what's coming in and what needs to be paid off. you could imagine many different

ways that this could be addressed. you can either increase the income rates, by the actuarial deficit. the .82% or alternatively you can reduce projected costs by 17%. and you would put the program in financial balance. can you see how these things changed from last year. and a little bit surprising as i mentioned before when you change the taxable payroll you have less income coming in but you are also changing the denominator by which you measure this. so there's not much change on the current law income rate and the current law cost rate has increased, largely because of the payroll tax that the taxable payroll change. but also because of the expenditures are projected to be higher. >> as jim alluded to in his remarks, there is an

illustrative alternative projection. this is that basically to demonstrate that long-range costs could be higher, certain costs reduction measures, prove problematic. the one that's most applicable for h.i. are the productivity cuts that jim alluded to. he did a very nice job summarizing in the long-range economy-wide productivity would increase at roughly 1.1%. whereas we think health care productivity at historically could only improve by .4% annually. the gap of .7% is not very big in any particular year. but when you look out over 75 year, .7% each year adds up to a lot. on the physician side. i haven't talked about physicians yet, the illustrative alternative also addresses the fact that price updates for physician in every year in the

future is specified. and even if you were to take the higher amount of the .75% per year for those that are participating in alternative payment models, that's till well below what we think general inflation is, cpi is much higher than .7%, much lower than what we think of whereas we don't have an sgr problem like we had a few years ago, where there would be a one-year, 20, 25% cut, these are again 1.5% cuts each and every year. you look out over several years, those add up fairly quickly. the illustrative alternative presents a scenario to present what the general statement is. and, and so the way it does that is the productivity transfers from instead of economy-wide productivity, but to

productivity that we sustainable in the health sector and physicians update transition to the medical economic index which is a fair measure, we think is a fair measure of what a physician cost growth should be. here you can see the previous slide if you were actually to trend, put on a line for what the cost rate would be under the illustrative alternative assumption is, you could see the effect of that roughly .7% per year. it adds up to a lot when you look at over a number of years. >> turning to smi part b, there's not a huge story here. i see that we are very close to the projections and issues report are very close to what they were in last year's report. there's slight upward pressure. mostly due to the medicare

advantage issue that i mentioned earlier. as well as some legislation, removal of things like therapy caps have somewhat upward pressure on the short-range part b the projections for 2018 are much lower than what they were in the short range for prescription drug program than what was projected last year. this is largely due to more rebates coming into the program , basically -- are negotiating more rebates from manufacturers as well as a decline. that is something that we see in any -- a decrease in expenditures are a major source of expenditures. a decline in spending for hepatitis c drug. that was a significant cost driver for many years. that has actually reduced.

similarly there has been a slowdown in diabetes drugs and that has contributed to the slowdown in the short range. looking at the change in the smi program the report is very close in the current expenditures. a little up and a little down. in the longer-range -- is still down because of the issues i mentioned earlier. d is up because that's where we have the ipad -- in there. looking at the full picture we are at 3.7 percent of gdp this is total medicare part -- expenditures in 2017 we are at

3.7 percent. looking out at the end of the projection period it dumbs up to 6.2 percent undercurrent law and importantly the washington alternative would grow to 8.9 percent under current law. even if there was not the alternative as being problematic, even under current law 6.2 percent is still a significant growth relative to where we are today. >>this is looking at over the last several years of history and going into the future to see a smaller subset of the program that i started. you can see the programs change significantly over a relatively

short time. this is a share of different services into the part a program over time including the share that was a treatable to inpatient spending has increased fairly rapidly in a relatively short period of time. it started with 77 percent and it drops down to --. and there has been a number of years of inpatient spending within the part a program, controlled growth in the inpatient setting is something that is project for the future. and on the top side you can see some of the other programs are making up for the share. this is really more of an inpatient story than anything else. >> looking at part c, you can see physician payments have been declining over time as a

share of part b. this is more of a byproduct of outpatients becoming a more significant portion of the part b benefit. that is a flipside of the inpatient --. services that might have been done inpatient are now outpatient and it is having an effect across the medicare program. the last one, looking at the change of the benefit structure or the distribution of benefits over time. this is pretty traumatic, part d started out for a number of years was a broad-based benefit , most of the benefit was going to a direct subsidy which means everyone that was part of the program was getting a benefit, to the extent that that distribution has shifted into

where most of the benefit is now catastrophic in nature. the largest share of part b payment is going towards catastrophic payments. that is a significant shift over a very short period of time. i think the effects have not played out yet but we will see what happens. this is a byproduct of very high cost drugs being used by a relatively small number of beneficiaries and it has really shifted the way the part d benefit has been utilized over time. again, this is my fifth year here. -- how have the projections changed over time? starting with the taxable payroll, that is really the biggest story. you can see from 2013 through

the end of the projection period the amount of taxable payroll being projected is substantially lower than what was projected five years ago. this is mostly due to a less ambitious recovery than what was originally anticipated. recovery has been strong but it has not shown up as strong as originally projected, certainly not as strong as the wage growth. when you translate that into hi income there is a direct relationship. you can see the amount of income coming into the hi trust fund over the next several years -- where was projected in 2013, this is significantly lower. >>at the same time, the spending in the program was also lower. it was a number of years of

historic low growth and -- and other expenditures across the program. this has led to reduction in expenditure growth. what's the best way to be wrong what it is to be wrong on income and expenditures because that gives you roughly the same place where you start. five years ago the depletion date was projected to be 2026, we are still there. there are a lot of reasons. more than just federal shorthand and it is unfair to take that shorthand, but i will take it. looking at other programs there is less dramatic happening in them. these projections are relatively close. the shocking part is it is relatively close. in this time in 2013 we had --

that was expected to have a significant cut and replace that with a different program. all in the same the projections have not changed in the last five years. on part d you can see the trend looking back, stop at 2016, we seem to be accelerating at a faster rate, that was really part of the hepatitis c engine -- expansion. the fact that we have now slowed down and the fact that there is this continued push toward generic utilization and slow down the --, while we are still seeing high trends at a high cost, the fact that the vast majority of drug use in the generic space has really

controlled the overall --, we are actually much -- then we were five years ago. the last slide i have -- i took on credit earlier. here is the place where we nipped it. this is 2013 the projection of ma healthcare enrollment. we have assumed that the payment reductions to make benchmarks that were being plummeted as part of the affordable care act -- with the acceleration of medicare advantage enrollment and that has not borne out. there is a very wide gap between what we are projecting five years ago and what we are currently rejecting. there is a number of policy approaches that were adopted to help push some of that up and

the ability for plans to accurately code or exuberantly code, there is underlying risk and that has contributed to the ability to not lose as much revenue as we had anticipated. the attractiveness of the program continues to be strong and i think some of the panel members might follow up on that. that is the end of my slides. >>that last slide reminds me of the trustees report. this is not -- report. five years ago the trustees at the time had considerable influence, over the assumptions

that are made at least they had discussion with people's who knew the numbers. >>i will say that the vast majority of the short range assumptions were developed in the --. there was a good dialogue around some of those assumptions. those assumptions are set by the office of actuary. there might be pressure but we are less perceptive of the pressure. >>very good. i feel better about that. >>thank you very much. i think this is wonderful. paul, thank you for the presentation. the medicare trustees report, ladies and gentlemen, is a treasure trove of great information for policymakers, analyst and the public. we are going to have a lot of

issues to talk about. i would be remiss to not mention two issues. number one is the timing of this report. bylaws, the medicare trust fund report is supposed to be presented to congress on the first of each year. this is a statutory requirement, not opinion or a guideline, this is what is supposed to be done. it is routinely late weather republican administration or democratic. that is a problem. the problem really is the timing of the report, the team does not have time to do the work that needs to get done or some other reason. nevertheless we need to have congress look into this. my own suggestion would be that

perhaps we have the trustee report at the end of the fiscal year, beginning in october. the president and his team can look at what could be done and incorporate the findings of the report into the budget session that takes place usually in february of the following year. it is a suggestion but i think congress should look into that. the second issue is that this report this year was signed only by the trump administration officials. this is a problem. the fact is we do not have two public trustees. when the bipartisan national commission on social security reform issued its 1983 report they remarked that adding two individuals from outside of the executive branch would be good public policy and help with confidence and the integrity of the trust fund. we really need independent folks

outside of the trump ministration, outside of any administration to contribute to the assessment of the medicare program. the current situation is not good public policy. that means that the president and the senate should get on this we cannot let this go for another year. with regards to the 2018 report the overview was comprehensive, my comment is i don't think we are seeing anything that would be a huge prize. the trustees determined that the trust fund would become insolvent in 20, 26 -- 2026, three years earlier and it does not meet the short-term or the long-term standards of financial -- they have been saying that for years. i don't think that there is any surprise here. the congressional budget office

said a couple years ago 2026 was the year that it would be installed in the trust fund. this has been going on year after year. i think in the media there is an unfortunate tendency to focus on the hi trust fund without looking at the bigger picture. i think there has been an unwarranted obsession on this in the media. politicians and pundits we use scary language, medicare is going bankrupt, the medicare trust fund is going bankrupt. that is not rational of what is happening. the financial dynamics -- that is not a realistic depiction. the hi trust fund has not gone bankrupt since --. i cannot imagine that it will go bankrupt in the next --. what this means, i think it is

important, medicare has serious financial challenges. it is better to address them sooner rather than later. congress is going to have to come to grips with this. this is not something that will go away. historically congress addressed this by raising the payroll tax . since 1966 we have raised the payroll tax about 10 times. the other option is to resort to reductions in medicare part a. my concern about all of this is i cannot imagine that after the scheduled payment reductions that are in current law by the affordable care act, my understanding it is about 800 billion over the next 10 years, how congress can continue to do this. in fact, if you look at the trustees attending, the language is pretty historic.

paul eluded to it, it says by 2040 simulations suggest that approximately half of the hospitals, roughly 2/3 of skilled nursing facilities and 80 percent of home health agencies would have total negative facility margin raising the possibility of access and quality for medicare beneficiaries. medicare spending is accelerating once again. the solvency of the trust fund is just one aspect of this. joe pointed out that the acceleration of spending is eating up larger and larger chunks of the gross domestic product. between now and 2042 medicare will go from 3.7 up to 5.9 percent of the gdp. whether you are talking about the alternative scenario or talking about the current law scenario that the trustees have

outlined, we are looking at a huge expansion of spending. cbo says over the next 10 years spending will go from well over 700 million dollars to 1.4 trillion. it is the biggest -- medicare is the biggest driver of healthcare spending and medicaid and subsidies -- federal spending will grow larger than any other federal spending category. today federal spending amounts to 28 percent of all health spending and by 2027 it will reach 40 percent. we mentioned the impact on --, medicare payment advisory commission makes a point that with their reliance on general facts dollars and -- other major programs are going to have a substantial effect. that all sounds rough and is

suggest congress and the president really have to get serious about this, there is very good news here if we are careful and deliberate. future debt as the medicare payment advisory commission tells us is very sensitive, even the light that's my slightest change in medicare and medicaid per capita spending. we can make modest changes and have a big impact in this area as long as we do that. the problem is if we do not do that we will be faced with serious problems down the road. the middle class are crowding out other budget parities. that is the biggest challenge. medicare is probably the biggest managerial challenge. this is going to be very tough because middle-class -- are the

most popular. americans love medicare. if you look at a survey more than nine out of 10 will say that they love it. surveys will show most americans have not got a real cool how -- clue how medicare is finance, what it covers and what it doesn't cover and what the future projections really are and what it means. that is why we have these trustee reports. the unfunded obligations are getting vigor and bigger. the medicare actuary released their unfunded obligation over the 75 year period. -- that are not paid for. looking at the current scenarios you're talking $37.7 trillion and under the alternative scenario you are talking $47.3 trillion. no matter how you cut it, young folks are going to have very big bills to pay.

there is a lot to talk about, i don't want to take up too much time but i want to say this. public education is really critical. people have to understand what the real trade-offs are. as i said, a lot of people love the program, but they are not absolutely clear in their own mind about what this means. in terms of the impact of the current trend on taxpayers and beneficiaries alike. the trustees have given us a great resource for further deliberation. i know what i would like to do. my preference would be to simplify the program, defined medicare part a and part b at a catastrophic benefit. make wealthier retirees pay

more for the benefit and perhaps phase out the taxpayer subsidies for the wealthiest retirees. raise the age of eligibility, i think that would have effect in the long term and change the economic elephants. i would take the success we had with medicaid advantage and define contribution approach and expanded to the entire program. i am not under any illusion that any of this will be popular but i think that is where we ought to go. the need for reform i think is as great as ever. the medicare trustees as joe pointed out it should be addressed urgently, not later on , not down the road, urgently by members of congress and the administration working together that would be a good idea. the medicare trustees have done

their job. it is time for congress and the white house to do their job. i will make an ironclad prediction in 2018 nothing will happen. >>thank you. >>it was more spirited but equally depressing. >>we can work it out. >>i would like to thank ai for organizing this and joe for inviting me to participate. i want to thank paul for the hard work that he and his colleagues do. when i was the ceo i know how hard the business is. in my 10 minutes or so i'm going to try to make a couple of brief comments about the baseline which after joe, paul and bob i will try not to repeat what they said and then i will cover four quick topics.

i think the summary of the situation is no surprise here, just worse. when i first got in the budget business i asked somebody, what do you think next year's budget looks like? he said same as last year but worse. this seems to be a reoccurring theme. what i would like to do is try to widen the lens and talk about baseline. the bad news headline is what paul said is the insolvency date for the hi trust fund is three years faster, not much change in part b and part d. the good news is those trust funds do not go insolvent, the bad news is we as a country are

on the brink of insolvency. as joe and bob and paul have echoed, there really are consequences to be able to come up with rational policy solutions to align revenue and cost and it dramatically reduces as time passes. a couple of quick facts. picking up joe's point. it is well-known that baby boomers are retiring 10,000 per day every day of the year. that is staggering. ppo reported that we have $1 trillion deficit as far as the eye can see it is hovering right around five percentage points of gdp which is close to unprecedented levels on an ongoing basis. we really are in unprecedented and uncharted territory with

that as a share of gdp will exceed 100 percent. we are projected to go into debt higher than we were at the end of world war ii. that has pretty staggering implications. if the smi trust fund cannot go broke, what it is relying on is a general fund which is in a serious deficit. just to put two more points of gloom and doom to keep the theme of the panel. healthcare cost has been low by historical standards and we can easily accelerate and observers believe it is accelerating. the cost growth is enormously important. i think it is fair to say that the trustee report is on the optimistic side of the historic range. part of that is what goes on -- what is unsustainable cannot go

on forever. the other point is that the threats are we have to have demands for higher discretionary spending, -- past -- tax cuts and either of those have -- to the budget. we are highly sensitive to the rise in interest rates and the rhetorical question is when will the positive business cycle end? after nine years of a positive business cycle, when will we have a recession and what does that mean? let me try to quickly touch on four point. the first paul has highlighted on with part b. major compositional change and as paul said in his slide, at the start of the program in 2006, 26 percent of the spending was projected to be catastrophic,

it is now projected to be 73 percent. 90 percent of --, that is nine out of every 10 prescriptions are covered by part d or generic which is an enormous change. as paul noted the growth of the restricted number of drugs which are typically called high cost and specialty meds now calls for the bulk of spending and that trend is accelerating. the last thing i would note is a piece of recent legislation, the affordable care act -- for branded drugs, it had pharmaceutical manufacturers paying half the cost, beneficiaries paying a quarter and health plans paying a quarter. that has now shifted and the beneficiaries are responsible for 25 percent of the cost, health plans are picking up 70 percent and pharma companies are picking up 70 percent.

health plans are down from 25 to 5 percent. it was surprise me greatly if the amount of rebates that they collect do not exceed the 5 percent liability. that has interesting implication. the other point is the administration recently announced -- on drugs -- i will give you my take away, it will not do anything about the high cost of drugs. let me quickly mention a couple of challenges. bob mentioned medpac. medpac reports on the medicare line of inpatient business, hospitals are losing, obviously there is distribution on this average, they are losing almost 10 percent. as steve will get

to that has interesting in public -- implication. we have heard a lot about the sustainability of the ongoing -- and the implication of access to quality. those are important things and i will not spend time on that other than to underscore my agreement. emerging policy issues are ongoing. medicare has a service differential issue which has the effects of driving independent physicians into hospitals as well as other issues driving consolidation. we have heard of issues in -- and the limited updates for the fee for service which is called the -- program and i think one could seriously question the viability of either one of those.

the big question is will alternative payment methods work ? will they work for providers and medicare as well as beneficiaries? if i could just summarize what are the challenges for fee-for- service medicare? what does the future look like? is it a brave new world where we have an emergence of payment methods, bundled payments and value-based payments? or does it look like the status quo where what we are doing is very much fee-for-service where we reward volume? i want to briefly touch on something that i think steve zuckerman will spend some time on, he and his colleagues wrote an excellent report that i recommend to everybody and it talks about ways to expand medicare. i just want to make two quick

points. one is it is well known that on average medicaid rates are well below medicare rates and commercial rates are well above medicare. just to illustrate the effects of redistribution and winners and losers. if we expand the number of people whose payment rates are dictated by medicare, imagine you have two hospitals, each has 35 percent of their patients on medicare, but for the remaining 65 percent they are the opposite, one is 50 percent commercial and 15 percent medicaid versus 50 percent medicaid and 15 percent commercial. in that case if we simply move everyone to pay medicare and make a simplified, clearly the hospital that has a heavy

commercial presence would lose a lot of top line revenue and the hospital that has a heavy medicaid presence would gain a lot of revenue. the second point i want to make is what we would call political economy. the more people are being paid in medicare the greater the incentives are for special interest to affect those rates. the lobbying and so on will become more intent with medicare. i look forward to steve's discussion about these. i am going to conclude by talking about medicare advantage which paul in his slide showed we are currently below the 21 million medicare enrollees who are in medicare advantage. that is almost 36 percent of all beneficiaries in 2018.

the trustees project that will increase to 29 million in 2027, at the end of 10 years. that is almost 30 percent of beneficiaries. again showing why it is important to refund those -- i will digress for a second. i recommend that everybody take a look at page 254 of the trustee report which is paul's elegant statement of actuary opinion and the second paragraph is very chilling picture about the viability of the current law. it is not quite -- it is politely saying there is fire out there and you better be prepared. getting back to this, look at the footnote, it turns out that we are at 39.2 percent of those beneficiaries who have full medicare, beneficiaries who have both part a and part b, 39 percent are currently enrolled not 36 percent. details matter and i think paul

for being clear about this. almost two out of every five people are currently fully insured with medicare advantage. i will stop by saying that we have a paper that we published on may 10 about health affairs and links where there is a lot more detail and analysis on ways to reform medicare advantage and make the ratesetting process look like part d. i will not spend much time on that because i will go over. we estimate that if we adopted a part d like structure and we also standardized -- to propose to have -- to of which will be standard in a region, one third

would permit innovation or innovative benefits that we think behavioral economics literature suggests would go far to improving consumer choice and make it easier for people to make smart decisions. our estimate is that it will save about $10 million. thank you. >>thank you. thank you for inviting me to the session. as joe knew when he called me, i am not necessarily going over the medicare trustee report every year. this is a unique opportunity and i will direct my comments less towards the trustee report and towards the idea that my colleagues have put forward that builds on some of the

growth and medicare advantage. the one thing that i will start with is i think paul explains something that was confusing to me when i read the report, about a lot of the moving off of the completion deep of the hospital insurance trust fund moving it up three years relating to payroll taxes. that seemed confusing but it sounds like there is a greater recognition that the recovery, in fact, has not been as robust as people thought. the other thing i found interesting is when you look at the lower taxes on social security benefits, some of the -- that has occurred and hospital spending, steve talked about issues of hospitals getting facility fees for outpatient services, the pendulum of

eliminating the mandate and leaning more on ensure individuals. the medicare advantage system and the payment model used in the risk adjustment, it is at the margin some of it damage the hospital trust fund. that is something to keep in mind. at the same time -- was taken out of the game. if there was anything that was going to put brakes on the payment that is not there now. >>the reality is history tells us that action -- entire payroll taxes, reduce payment to keep the hospital insurance trust fund solvent. i have no doubt that will continue to happen. i think it has been eluded to that when people talk about access issues to keep in mind

that medicare is part of the broader healthcare system. generally speaking medicare has done a better job of controlling spending per beneficiary than private health insurers. i think you have to take a broad look at this and not stay focused on the medicare program per se. i am going to say more about medicare advantage. clearly medicare advantage in recent years has been striving. the affordable care act reduced payments for medicare advantage and the expectation was enrollment in those plans would go down because they did not have the opportunity to provide extra benefits. ppo, actuary, everyone was flat out wrong. since payments were cut in the affordable care act, medicare advantage has grown dramatically.

it is now about one third of the program. even though congress and the administration may not be taking efforts to reform the medicare program radically, beneficiaries are doing that. why? probably because in a lot of areas of the country, medicare advantage plans are being overpaid, there has been issues about risk adjustment in medicare advantage leading to higher payment, there are quality bonuses in the program that may or may not be tied to research suggesting that the higher plans are better for beneficiaries. i think there air -- are a lot of issues around medicare advantage that need --. one thing that is important to recognize is private plans can come into the program and successfully compete with traditional medicare if those

private plans are using the prices that traditional medicare sets. they are using regulated prices. they are not paying commercial payers, they are not paying light commercial payers 198 percent of the cost to hospitals . those regulated prices or physicians at hospitals for other services, medicare advantage can draw on that and it allows them to compete with the traditional fee-for-service. seeing that, my colleagues and i thought that there may be something there, and i understand as was pointed out, there is some risk to medicare prices getting used broadly in the healthcare system and providers saying, we can live with the medicare prices and we can charge commercial plans a

higher rate. if more people get medicare prices --. i think that is probably one of the reasons that medicare for all, and a lot of people talk about, it may be a nonstarter. i think it could be a shock to the system. as we were thinking about medicare advantage and the affordable care act. we can see strengths and weaknesses to both programs. you can see the success of the affordable care act. clearly since the provisions went into effect in 2014, access coverage and affordability has increased. the nongroup market has increased they are not getting this underwriting. you have not seen a -- of employer coverage. no significant decline in employment.

jobs have not lost and spending growth has been restrained in the overall system. the affordable care act was not as successful as it could be. one problem with the affordable care act design is that the supreme court allowed the medicaid expansion which was the foundation of the affordable care act to become an option for states. states, right now it is hard to count, but about 17, 18 states have -- standard medicaid. marketplace enrollment has been low in some areas. premiums have been high and rising. premiums have been an issue in the affordable care act marketplace. there has been discretion in the and obama

administration on how it was implemented and that is caring through into the trump administration as to how much support there is for outreach enrollment assistance, and there may be a time, this is where we are coming at with this paper, there may be a time to think about something broader than fixing the affordable care act. as they say, we have presented what we are calling, because we cannot think of a better brand name, help america program. we are happy to have this program have another --. it is a comprehensive reform that as we get closer to universal coverage we think it will increase affordability and access to care, increase cost containment while limiting the disruption of the medicare for all type of approach and not leave huge increases in

government spending. we built it on the aspects of the medicare advantage program and the affordable care act marketplace is. one thing that we did which i think for some people it seems controversial, we would integrate medicaid and --. we would bring medicaid -- and chip into the market. current medicaid beneficiaries and people currently purchasing in the nongroup market would choose from the same set of plans. we would not do anything to the employer market, even though i understand all the problems with the tax exclusion of employer contributions to premiums, i am not a fan of them, we would leave that untouched and we would leave medicare as it is. the medicare cost plus sharing structure could be modified but we did not touch that.

we are not touching the va, we are at the -- indian health service, our idea is to develop a medicare advantage style marketplace with a public plan that would be fee-for-service just like traditional medicare, but also have private insurer options as you have in medicare advantage. we would cap medicare provider payment rates within the marketplace at medicare rates. both in and out of network that is all the providers could receive. we would improve premium and cost-sharing assistance. now there is a big concern if you are not eligible for tax subsidies and at the federal poverty level you are exposed to high premiums. we would just go right of the income distribution, as far as you want, no one would pay more than eight and a half -- 8 1/2

percent of their income towards a premium. probably keep the individual mandate, maybe restructure it. instead of having a tax penalty we would probably have it more as expansion of the standard deduction would be at risk if you remained uninsured. if you became insured you could then recover that the next year. i think we are not calling it an individual mandate, but i recognize the fact it is in one form or another. this is an approach that is less aggressive in single pair and may be more politically feasible. we would have a very large marketplace. we would have 117 million people in the marketplace.

insurers would see a large group of people and participate in the program. 69 million would be in medicaid, 16 million newly insured, some people would come from esi, we would allow people what is considered affordable -- from the affordable care act to move into the marketplace. there would not be a firewall, and continue the nongroup coverage. we would not get universal coverage, still 18 million people will be uninsured. about 8 million would be undocumented immigrants who would not be eligible for the program. financing, i will not go into a lot of details because i want to leave time for questions. we think federal cost would increase by 98 billion. employers would save money, households would save money and yes the expansion of medicare rates providers might lose a bit

relative to the marketplace, the current marketplace rates, that would be offset by increases in payment rates for all medicaid people. i will stop there with bright news building off the medicare program. >>that is extremely depressing. a little more politically feasible for some administration that is not currently in place. >>we are willing to let it go for a couple of years. >>this is the kind of thing that politicians do all the time. they sell this but there is no state. i think the trustees report and especially the alternative scenario illustrates the problem, if you can't make the

current system work, the current set of price controls work, throwing another 100 million people into the system, it is not a little nick, it is big. the question really boils down to, kind of like wage and price controls for physicians. that is what we are talking about. a lot of the business comes from medicare beneficiaries. medicare beneficiaries are at that age where they need more service. really, this kind of a proposal , which i agree with you to some extent is more thought out politically then most of the other medicare ideas. nonetheless, you are talking about a very politically important and economically important in terms of healthcare extremely important group of providers who basically would

have to take a gigantic hit. what is the right price? what should we pay people for? i don't know what the answer is. the fact is, you have to start from where you are. where we are is very different. >>i just have one comment about provider payment. i think providers would like to convince payers that the way they are structured in terms of their cost and expenses it is something that is --. we know that is not immutable. providers can adapt different payment rates. this is something

, there was a comment before about some of the productivity and it is not likely to reflect the productivity gains that are possible. i think that these productivity incentives i always say it is a nice way of saying we are putting pressure on providers to change the way they do business. that is in a sense what the medicare payment cuts are. certainly going back, i have to admit, i remember when inpatient prospective payment came into place. i remember when it wasn't called that because it was the only payment system. providers changed radically. they moved more care to outpatient, they reduced --. the idea that the system can't change, we know when people look at u. s. healthcare spending and spending in other countries, the high price in

the u. s. system are at the heart of the high spending. we are not willing to take that on and we are not going to solve the spending problem. seem would anybody else like to comment? >>the only thing that i actually agree with steve on, it is a rare moment. you mentioned one of the great distortions of the existing healthcare which is the federal tax -- exclusion. i have always felt if reinhardt and -- and all those guys could get together and agreed to take that on that we would actually be far ahead of where we are now. i remember talking with ube reinhardt who made the comment

that the proposal to establish an actual -- national tax credit system was not offered during that period of time. the thing is, the power of organized opposition to this kind of a change has created an awful lot of problems to the point that we ended up with the affordable care act largely because people who lost their jobs, changed jobs and do not have health insurance and they had to buy their health insurance after tax dollars and as you know from the economic literature, if you buy health insurance without tax relief on an individual market basis you can pay anywhere between 25 and 50 percent more for the same types of benefits that you

would have gotten at the place of work. i believe sometime, someplace, somewhere, not westside story, that we will arrive at some kind of an agreement. i do not see that happening now and i certainly do not see the trump administration adopting anything close to what you are imagining. >>we have said this to many people we do not see a congressional vote on the horizon. in part the complexity of healthcare. your observation about income -- my guess is 70 percent of healthcare spending is essentially income and labor. if you are cutting provider revenue, you are cutting people's wages.

reminded of what a partner of mine in healthcare in arizona said, in fee-for-service and physician for revenue centers and -- they are cost centers. i think we agree that economic incentives matter. joe's point about how do you get the price right is extremely important. i think steve and his colleagues deserve credit for a carefully thought out proposal. but it requires a lot of incremental improvements. just to conclude, i remember running the healthcare in san diego in the mid-90s which has the distinction of the lowest or second lowest -- rate in california and the market

changed dramatically from predominantly fee-for-service to predominantly decapitated. i had a group of family practice doctors that i manage. they were unhappy with their capitation. physicians are very practical problem solvers. most of them want to be at the head of the class. every friday afternoon the head of that group came into my claim shop and reviewed every single referral of the service that when outside of his group. i will not say that they stented on care but they scared the hell out of my medical director her and me. we have to be careful what we wish for. steve, as you acknowledged, a good news from budgetary perspective is that medicare rates are a lot lower than commercial and a lot higher than medicaid. how do you get that offsetting or savings is an interesting

question that you have done impressive work on. this is a big issue and it comes back to be careful what you wish for, if you do not have the price right many people learn how to make the system to their advantage. >>many of the changes that could be considered are no doubts, we all understand in this room that healthcare is complicated. if you talk about ideas such as defined contribution but go in the idea of supporting medicare the issues around risk adjustment that plagued medicare advantage will be more important in that kind of a situation. then traditional medicare would end up being a risky adjustment. when you talk about raising the age of eligibility for medicare than you have to think about what are the implications of that?

there is a lot of domino effect that happens. >>look, we did a lot of price regulation beginning in the 1980s. you mentioned the prospective payment system. we adopted that. that was designed if i recall correctly, we did that in the reagan administration. the idea was to introduce some kind of market discipline in hospital pricing. all the good intentions were there, restrain, growth of prices, you recall the carter administration talked about hospital cost and payment comprehensive -- it did not go anywhere. the point is, when we did that, one of the big affects was a massive cost shift of inpatient to outpatient we had to press down the balloon and we found ourselves with an explosion of

outpatient costs. it was not surprising that throughout the rest of the 1980s, the actuaries at cms and the reagan administration, they were basically sweating blood over the question about what we are going to do about the explosion in part the cost and we ended up creating this resource space that look like it was deported at of east germany. we depose that in 1989. now a lot of folks are looking back at that and saying, the bloom has faded from that rose and we are back to this idea of trying to redo physician payment and now we have something that looks like it is collapsing which is the medicare payment program which was enacted by congress in 2015 to the point that the proposal is the

medicare payment commission saying we should get rid of it. this whole idea that we are going to set the right price seems to be the problem. i don't think that we can all design the right price for these complex procedures especially 8000 procedures for physicians. there is of course the market. we have not had a market for a long time in healthcare and we may not get one. we ought to do everything we can to intensify the data market , but also establish a level playing field which we do not have in the current one. >> my comment would be i take a different lesson from the effective payment system. what motivated it was anything but --. the only reason i mention that is the crisis out of the shortfall and the hi funding,

that may become a distraction. >> let me make a point that requires a little less knowledge of history and that is the kinds of policies that generic medicare for all people talk about in the fee analysis addresses, they rely on the average price because they don't worry about the distribution, the point that bob is making as well with regard to physician payment. i don't think anyone can disagree that moving unnecessary admission out of the hospital and having people go to the proper site of service at the proper level of care is a good thing, having a shift from a to b in the abstract is a good

idea. how to do that is the problem. i don't think that any of these general proposals address that. the trustees report also has the -- character it is an aggregate explanation. you are not going to find the policy solutions, you are only going to find the scary thing that you knew 20 years ago, that is not a bad thing, there is a lot more work to do. with that, can we have a question from the audience? wait for the microphone and identify yourself. >>i am doctor peter mcmenamin, health economists -- recently retired from the american nurses association. when i was working for the nurses association and making

projections about the effects of the affordable care act, i had an argument that 2-3 million people would be on medicare for the rest of the century. i talked to former colleagues who were with the actuaries office. i got the project did numbers specifically, henry was right and i was wrong, my numbers were too low not too high. we are already at 3 million people aging in per year. we are not at -- that does not happen until 2019. for the boomer generation the average is 10,000 a day. what happens, and the reason there is a projected slowdown in the rate of growth in the aging population is boomers are not going to die. the deaths will catch up and overtake the aging towards the middle of the century. because

of the increase in deaths, the actuary said, i believe figured in but i don't think anyone has contemplated what having more than double the number of deaths per year in this country by 2088 will affect hospital operations, the market for funerals and that sort of thing. in the 2020s, because of the increase in death and assuming one third of death occurs and hospitals which is the historical average, the number of people dying in american hospitals per year is going to go back to more than 1 million per year. it has not been that high since 1982. the hospital finances, i suspect, will be affected

because all of these people will be in their last year of life, many of them will be and hospitals. my recollection is 46 percent of hospital revenues came from -- it could go to 60 or more. i suspect that will have an effect. for doom and gloom, the average age of the medicare population when we get to 2026 is still less than 80, but the increase in death will accelerate after 2026. i think it is going to stir up things, whether the trust fund is balanced or not. >>i think i am detecting investment advice in funeral homes. more broadly, what you are

saying is that the whole nature of the healthcare system will have to change. not just because there will not be enough bodies to fill the beds, it is because there will not be a sensible way to deliver healthcare. there probably isn't a -- to deliver healthcare now. >>they may not be dying in hospitals but in nursing homes if medicare does not get involved. >>i think we all have to worry about the explosion of hospital costs. as we all know healthcare is complicated and a lot of things can happen. there is a general dissatisfaction in the united states with end of life care. if you look at the survey research that i have, you ask

people, what would you prefer? people say i would like to die at home. i would like to be sure that i am comfortable and my family is around and have the opportunity to die at home, like our grandparents did routinely. instead, overwhelmingly people are dying in hospitals, oftentimes icu units and so on. there is in medicare a hospice benefit. the hospice benefit is a wonderful thing. i forget what the number is, a large number of people are taking advantage of it. the good news is more people are starting to die. as far as public policy is concerned, one thing that we can do in medicare is to encourage perhaps a new benefit, the -- of care benefits, not

necessarily hospice, it would guarantee people an option to take advantage of the services that are now in medicare part a and medicare part b. it is very fragmented and very disjointed. if we have created such a benefit we would have the opportunity to develop delivery for these people who the massive number of baby boomers who are going to be very disappointed to find out that they too are going to die. we could probably reduce cost toward the end of life. >>that is the critical thing. any benefit will not do much of anything unless there is a shift toward the more efficient -- >>right now 25 percent of the -- . >>we half to -- because of our

other viewers outside the room. please join me in thanking the panel for an interview discussion. >> the country. cspan is brought to you by your cable or satellite provider. next, a subcommittee examined to privacy and cambridge analytical drivers -- relationship with facebook during the residential campai