>> this fall, enter the home to

america's highest court from the grand public places to those ornl accessible by the nine justices. the supreme court coming the first sunday in october on c-span. >> karen ignani is our guest. president and c.e.o. of america's health insurance plan, the trade organization here in washington which she has headed since it was founded in 2003. she has spent her entire career in health policy. thank you for joining us. >> thank you. >> let me introduce our two reporters. jennifer. for the water post and "washington post".com. let's start. >> you've been quoted as saying august is going to be a make or break month for health care. the president has said the same thing. so far we've seen a lot of anger, hostility and questions on what is in the bill.

if it continues at this pace through the entire month, what impact will that have when congress returns? >> i think if it continues down this path, august will be a lost opportunity to develop in consensus that needs to be developed on the part of the american people. and i think the important crucial thing for the president and for leaders on capitol hill on both sides is to break down the components of health care reform and talk about where there is consensus. because, frankly, people aren't getting a sense that there's consensus and there is on important elements which i know we'll talk about. unfortunately, all of the stories are process stories about who is disagreeing with whom as opposed to where do people agree. and in my view, and i'm hoping we're going to be talking about this, we're agreeing throughout the country on about 80% of what's neffsrifplt and looking back over history, the we've

never come this far. this is not the case for 1993, it is the case today. and it would be a terrible lost opportunity. so i think rather than villainizing, rather than conflict and focusing on conflict, a real strong commitment needs to be made to educate and to help build that consensus so that when members come back they get a sense of yes, we can, basically. >> at the same time, insurance companies have been villified in this process and have been accused of stirring up some of this hostility in the town halls this year as well as in 1993-1994. is that the case? >> it is not the case. we put out a very clear statement last week, i sent a letter to the four leaders on capitol hill at the top of this week. we want people to know that our members are in fact, the men and women who work in our industry, who get up in the morning and do disease management and help people navigate through a complicated deliverry system are angry about what's been said about

them, number one. number two, we have urged them to go to town meetings, tell their story about what they are doing every day and participate in the dialogue. we are not responsible for unfortunate tactics that are going on and we've made that very clear. there have been a number of assertions out there with no evidence and we want to make sure that people hear from us directly about what we are doing and what we are not doing. we feel strongly about the issues but we also feel strongly that there is a responsibility for comporting one's self-in a particular way, which is respectful, providing information, and again helping toshed light on the fact that our industry strongly supports the elements that the president is talking about today, this weekend, and this week about insurance market reform. we've offered those proposals. we believe in those, we stand behind those proposals. >> let's talk anti insurance reforms because in the past month the white house has began

calling it health insurance reform. they've really begun to emphasize very strongly essentially policies that would curb the excesses of your industry resigs preexisting condition discrimination, moving toward the community rating. what's interesting is that you have agreed to most of these regulations. >> all of them. >> aside the one notable argument being over the public option. but besides that. so why did this have to happen in a political context? why couldn't this have been done voluntarily if it was recognized? >> this is a very important question you're asking. and i think as you know a number of states have actually moved forward with market reforms over a period of about ten to 12 years. and we've done a very thorough analysis of what happened. massachusetts is a great case in point. prior to the passage of the legislation that everyone is familiar with in massachusetts, they tried insurance market reforms without getting everyone in. without having everyone

participate. essentially the market blew up. people who are in the market individuals who are getting insurance ended up with very high rate shock because the folks who had the lowest risks decided not to participate. so a number of states, you could talk about kentucky, washington state, a number of the other new england states. we've learned and massachusetts learned from its own experiences, which is why they're so focused on getting everyone in. when we saw what happened in massachusetts, that's why it's such an important question you're asking, we realized that we could bring reform to the political system springing off the platform that massachusetts reallyshed a light on what was possible. that the people in that state recognized that it was unfair to subsidize people who refused to participate. once that principle of getting everybody in is established, it changes everything fundamentally. and indeed, we challenged ourselves. last year we went out on a listening tour about a year ago

all across the country. we presented our proposals and we heard very clearly that people wanted us to do more. they wanted us to talk about guarantee issue, getting everybody in and making sure they staid in. they want d us to talk about portable and they wanted us to make not a voluntary contribution or commitment to that but they wanted us to be clear and transparent that we would support legislation to do exactly that. that had a material impact in all of our processes and discussions. and at the end of last year, in december we came forward with a very comprehensive program which in fact is the building blocks of what members of congress are talking about today in the area of insurance reform. so we're proud of that. we can contribute to it. we can help educate people on the importance of this and how it works. >> so to be sure i understand, your argument is that universality is the game changer that once you have everybody in the system then you can begin to restructure.

but until then, if that condition is not met then these won't work because sick people or the healthy people won't come in. >> and this isn't a hype thesssiss on our part. this is a view that now has been born out with experience in a large number of states. we've done a report, it wasn't done by us. we had a third party do it to make sure that it was being objectively looked at. and if you go around to the various states that had gone down this road without having everyone in, that's the experience that was found time and again. the other thing to talk about particularly for viewers is we are talking not of course as all of you know not about the employer market. we're talking about the individual market where people are choosing for themselves to have coverage. there's about 17 to 18 million people in that market. that's the conversation that all these issues are about. >> you said the insurance companies are the first to

offer some of these proposals for reform. but some lawmakers, senator schumer, has said that the insurance industry needs to pony up some dollars. we've seen the pharmaceuticals and hospitals saying we're going to contribute x amount of money to health care reform. was the health care sector approached from the how or senate finance committee? was that ever discuss d? >> i'm glad you asked this question. there are three points. our members, our board members and our community were the first to step up with saying that we were proposing a comprehensive overhaul of the way the insurance market works. no industry has proposed a comprehensive overhaul of how it works. we're proud of that. we think it's important. it needs to be dobe and we're squarely behind it. two, our industry was one of the first in working with consumer advocates on the concept that as a country what

the president said that health care costs are crushing the american economy are true. we strongly believe we need to have cost containment and bend the cost curve. we weren't the first in the line there. in the process we joined with a number of other groups in a coalition. and as part of our contribute, we pledged that we would support comprehensive administrative simplification. from that timet that was in june, we have been working with the various committees on capitol hill. and as all the bills come out people will see that our commitment will be fulfilled. we said it shouldn't be a voluntary effort. it should be required. and it will be part of the proposals that will be moving forward on capitol hill. it's in the health committee draft, it's in the try committee drafts on the house side. and there will be even more administrative simplification savings in the finance committee proposals. we've been working hard to

contribute to that hard to identify those savings. i think the only disappointing thing, and i think this is a disappointing thing associated with the whole issue of cost containment. cbo can only score what is on bunt costs. we know from david at harvard, from deloit that looked at a number of studies, we know from a number of consulting firms that what we are putting on the table will amount to hundreds of billions of dollars in ten years in systemwide savings. meaning stream lining everything the way eligibility is determined, the way sclames are queried from a physician  perspective. real time adjudication which won't mean a lot to lay folks listening to this program but will mean a lot to physicians and hospitals. those are the kinds of things that we've committed to game changing. we've been standing behind them. you'll see this as part of what

emerges. and we've been looking at ways to try to help in the transition as we move people into a system who have never been part of the system to make sure that underlying costs don't rise for people who are already there. and you'll see aspects of these particular pieces of legislation that will involve our taking responsibility to help smooth that path. so we're very proud of that. we're going to be talking a lot about that. and it's a very, as the question you just asked me as well. so all of those things we committed to in the context of the cost containment coalition. and you'll see that as part of the pieces of legislation as you're moving forward. >> just taking your point, i still want to understand a process point. given what you've just described as your seat at the table working with committees all this year, why is it that your industry was specifically singled out by the speaker of the house for criticism? >> i think i have this

old-fashioned rule, which has served me very well. pass it on to my family, my son. i think someone should never answer to someone else. you should pose that question to the speaker. i hype they size that it is consultant driven, poll driven. a page out of the 1990's approach to health care. except we're on a different page. we've worked hard to hear, learn what the american people had to say. and they sent a strong message to us and frankly other business leaders this year. they said we expect business leaders to stand up and identify solutions to problems. so we didn't put our head under a blanket and decide to dodge and wait and then comment and maybe be able to productively comment or maybe oppose. we went on a quest to contribute to health care reform. we've taken that very seriously. we've offered comprehensive proposals all the way through. the country can in fact learn and take advantage of the cost conat the same time proposals

-- containment proposals. so still much more to be done in the area of cost containment. we continue to talk to mobalings. so why the decision -- members of congress. so why the decision was made, i think it's a distraction that unfortunately masks the fact that there is consensus on elements, key arkt tech tur elements for health care, getting everybody in, providing the kind of reforms the president is talking about that we support and a number of republicans and democrats support, making sure there are subsidies for working families and expanding medicaid that beeve never come this far. so to have the focus be on covering the villifyication on who shot john and who said what at town meetings. no individual around the count vi getting the message that there is strong support for reform and that is ashame. and we can't afford that because when members of congress come back from recess they're not going to have very much time. if they come back with a

message that is just going to be too hard because people don't support basic elements, that's a lost opportunity. >> let's talk a bit about 1994 playbook and the differences from there to today. one of the reasons that speaker pelosi and others don't trust your industry is that you were sort of a point of reform. this year you've been much more engaged and very clear it is essential that something does pass and we move forward. so what are you putting behind that? do you deny contributions to mebs who aren't construct jive? what is the meat of that reform? is there any reverse strategy that people with look forward to? >> i appreciate this question. we made a commitment to play a productive role from the beginning of this year. the president invited us to the health care summit and we stated very, very clearly that our members were commimtted to

contributing to the process. we would held to that all the way through. as part of that there was a technical component which we fulfilled identifying a way to achieve insurance market reforms and cost containment and frankly the country has scratched the surface. i hope we'll talk about that. but we'll need to. the third issue is making sure that we stand behind what we say. so more than now two and a half weeks ago the ind of the third week of july we put up a commercial that talks about the fact that illness has no geographic boundaries, no boundaries with respect to economic status or race or whatever. but if affects everybody. and we are committed. we know there are important thing that is can be done by way of getting people into the system, keeping them there. and making sure they have a safety net. so taking all of the work that

we've done, packaging it and putting real dollars around a commercial that communicates to the american people about where we are and what we support. so it's just taking this outside the beltway and people inside the beltway are familiar with with what we're doing. but that we thought was very important for the august recess. >> one of the proposals being put forward is a cooperative establishing insurance cooperatives. which you guys have spoken out against and republicans don't seem to want to support. is that are cooperatives something you can support? and how do you think that would play against private insurers? >> there's no way to know what, how these entities will be defined. so let me give you just a broad answer, because until we see details obviously i can't give a specific answer. but they will be under the auspices of some way of the government. whether they're at the federal

level or the state level. government pr say has no ability to negotiate with providers, with doctors or hospitals. the only arrow in the quiver is basically to use administered pricing. so we fear that although the terminology is more benign than a government run program, the effect is pretty much the same. and that we've been talking about, we've been very consistent about because we don't think that government has the ability to negotiate. so we've been very clear from the beginning, very out front about our concerns about a government run option. and we are going to be similarly clear about the concerns about if you have, you can have benign language but if it gets down, it devolves down to the same thing then we're going to have similar concerns. and, by the way, now it's taken a bit but physicians around the country and a number of

hospitals around the country and certainly employers have expressed some of the same concerns that we've been expressing about a government run program. so this is a discussion that members of congress need to have. and we support the fact that they need to have this discussion straight up. >> let's talk about the government run program in theory. obviously the insurance industry has been opposed to it. and the counter argument is that we are having this discussion because the insurance industry has failed to rein in costs for the last couple of years, that there have been a number of practices that should be curbed. and at the same time medicare has its own problems but does have a higher satisfy vn rate and has done arguably a better job controlling costs over the past few decades. so why should we trust you to do this if you can outcompete the government option that would be great and we would prefer to be with a cheaper etna. but if it goes the opposite way that there's not been a record

of success here that we should believe that we should throw in all our chips with you. so i guess the argument there is why is that not correct? why should people believe that they don't need this sort of potential emergency exit from the system? >> i think the first thing is a number of individuals that began several years ago to develop a government option had no idea that our community would come forward for such aggressive regulation. and i think had they, they may have gone in a different direction. so the question is if you have regulation of the type we have endorsed that's transparent where we are accountable, the question is why is it needed, number one. number two, in terms of -- let's sake it seer yatyim. in terms of traditional medicare to medicare advantage which is people over 65 to people over 65 you will find very similar satisfaction rates, in some cases higher satisfaction with medicare advantage. if you compare the specific

co--population cohorts. if you look at the kinds of cost containment and quality improvements, none of the elements that we have introduced with physicians in a clabtive way, namely disease management, care coordination, paying for quality has been actually successfully introduced in medicare. g.a.o. did a study saying that imaging in medicare is rising, excess utilization in traditional medicare and they ought to adopt the techniques that private sector plans have. unfortunately another members of congress said don't incorporate those techniques. so government has a difficult time getting through the politics. during patient protection we brought health care costs, this is post the 93-94 period, we brought health care costs down to zero. and in some cases below zero. the message we got from politicians was that we were too aggressive in using utilization review and networks and the kinds of things that

people now seek to replicate in accountable health care organizations and so on. so what we did first, we sent a message that if we take off all these tools health care costless soar. we were right. so now we've begun to reintroduce the rates. if you look at the rates over the last six years you'll see them coming down gradually. we've taken pharmaceutical expenditures from 15 to 20% down to 4 and 5. that's a very significant reduction. some plers are getting three. not taking tools away or not taking options away from individuals but letting them weigh the consequences. that's one example. care coordination, ken thorpe has written so compellingly about doing care coordination in medicare. i can show you now we're just about to release a study that looks at ark data which is government data comparing care coordination and what we're

doing to get a unnecessary utilization down, hospitalizations within 30 days down, how we're getting emergency use down and days per thousand down. because we are coordinating care for people with chronic heart problems, diabetes, et cetera. and we work with physicians in a collaborative way. government is using none of these tools. so in terms of sustaining the health care system we need to have a balance of public and private. nobody in our system would disagree with that. and you want to try to get the best of both. we think the private sector tools could be embedded but it's going to be difficult to get through the politics to do it. we think having a regulatory system that's clear and transparent will allow, we're only talking about the individual market here because the employer market is guarantee issue so it's the individual market where 17 million and maybe going up to 25, 30, but they will make sure that they have peace of mind.

if you put that all together we think you can structure a system that's much better than the one we have today, that's more transparent, but allows the benefit of drawing from the different years of expertise on both sides. >> if i could just follow up on that. of course the medicare advantage as you know is 14 to 19% more expensive but, and i agree with much of what you said, is that you can outcompete the government. the government won't be able to adopt these techniques. so why is the argument should it be the competitive option? >> in terms of head to head? >> so i can choose etna or a public option? >> the last point that you made was very important. the last thing i didn't comment on. which is, from on a head to head basis, why is medicare cheap sner medicare is cheaper because paying 85 cents on the dollar. so if we're going to continue to kid ourselves that underpaying hospitals means

cost containment, that's going to put us on the path to ruin, which is why so many hospitals said if you pay us medicare rates or medicare plus five we're going to go bankrupt. we're going to dismantle the entire sls. so the question is how do we back up and do the right thing and put together the policy that works and frankly can get past. we think there are key elements here that can get passed. medicare advantage, i would love to talk about that issue because nobody is talking about this. you quote the med pack data but they never disaggregate where members of congress have decided to pay more where areas which have been underserved. you see a very, very different picture for medicare advantage. med pack has not disaggregated that. that's irresponsible. because millions of seniors are on the press piss of losing their coverage. and nobody is talking about it. but they will be very concerned about it. >> last question.

>> one more thing i wanted to ask you had complemented a lot of changes. the insurance industry profits have gone up dramatically. so why not just institute yourselves some of the regulations you're suggesting like no longer denying patients on preexisting conditions and community rating things that you guys proposed? why not do those by yourselves? >> i'm very glad you gave mea chance to talk about profits. the -- i will be happy to provide all the data. we've scapiled them over the last ten years. on average health plan profits now are about 3.5%. 3 bt 5 that number, the growth number of profits in our industry is 20 billion dollars and we are spending $2.4 trillion on health care. it's less than one cent of every dollar of health care expenditures. we are the smallest sector in terms of profits compared to fractions of drug companies,

any kinds of academic medical centers, imaging, that sort of thing. so we think it's very important to have disclosure and that disclosure requirements ought to apply across the board so the american people can actually get the data so they know exactly what's going into the system and what's not. in terms of mounting an effort to do what you've said, if you don't have everyone in, as massachusetts found the first time they tried this, there's rate shock for people who stay in the system. and that didn't prove to be a responsible course which is why on their second try they got everybody in. >> thank you so much for being with us. >> thank you. >> we are back with jennifer and ezra and both very deeply involved in covering health care debates. let me ask, after hearing from

the head of the trade association for the health insurance companies, karen ignani's criticism was that the media has boon too involved in process. >> i would absolutely concur with that. it has become a real problem and it's something you see in legislation over and over again. you have all these stories about whether the democrats or republicans, committees negotiating with each other and back biting and getting angry. and people forget. you hear the pitch of these town halls out in the country and you would think we were talking about something so massive. death panels and youth nashea when we're talking about a transfer of resources from the top of the system and some from medicare to give people insurance at the bottom. but the bill wouldn't have much of an impact for most. so i think she's right. >> how much responsibility to the politicians and the political activists hold? you've watched these town hall meetings. how often do they start with

here's where we agree? >> not very often. of course it goes to where we're divided on. most insurance companies being able to deny preexisting conditions, there's a lot of that they're on the same page. but at the end of the day it's easy to pass a bill that everybody can vote on but that may not have an impact that a more controversial measure that may have more of an impact. that's going to be more difficult to pass something that republicans and democrats can agree would have -- >> now that i've criticized the process, what do you both think after watching almost a full month of town hall meetings and the president on the road and advertisements, all of your coverage on the internet. what's it going to be like in sept? when members come back? >> one thing about the town halls is they're doing two things. one they're discreditting the town halls as