to win this election. you came here because you knew that america can be a little fair, a little bit more just, a little bit more efficient. we can provide better health care coverage, we can make sure that we use less foreign oil. . .

>> all their hopes wr dashed because this is a tough, cynical town. we're going to be able to show them that basically you can't get anything done in this town. you can't change things. and everything always immediately becomes partisan. and governments -- way too complicated and congress is way too paralyze add the special interests are way too powerful to bring about meaningful, big changes that help the american people. that's the storyline they're operating on. but that's the storyline wie been fighting against this entire time. from the day we announced this race, we were fighting against that. and they have been trying to write that story again and again and again. we are not going to give up now. [applause] >> we are not going to give up

now. we're going to get this done and show the american people that the government can work for them. thank you, everybody. god bless you. [cheering]

[cheering] [cheering] [applause] >> as the selt care conversation continues, c-span's health care shub a key resource. keep up to date with health care

events and town hall meetings and upload your opinion about health care with a citizen video. the c-span health care hub, at c-span.org,/health care. >> tomorrow morning, college and career readiness. a conference will examine upwards to prepare students for life after high school graduation. it is hosted by the education testing company, a.c.t., live coverage at 8:45 on c-span 2. now a discussion on the day bait over health care legislation. we'll hear brief remarks by two former surgeons general. and followed by the discussion of the role of government in medicare. then we'll hear about medicare costs and life care issues. this is about 3 1/2 hours. >> i want to thank the organizations that made this possible. starting with the robert wood

johnson foundation and also the association of academic medical centers, the american board of internal association and the american hospital association. without all of these organizations underwriting our efforts today, we would not be here. our premises as the leading hels journal of health policy and is nonpartisan, is that a health reform effort warrants a serious national discussion. health affairs was founded in 1981. my predecessor is in the room today. and john would be the first it tell you that health affairs has been in the business of covering health reform since 1981. as our system is an extremely dynamic one, periodically, more dynamic at some times than others, but health reform -- at health affairs and therefore we are very delighted to be sponsoring the session this morning. as many i don't have ow have been observing the current

debate know, we have become aware the discussings going on about health reform are this the always proceeding at the highest level, which is part of the reason why we decided we needed to have this today. some of you play have seen this cartoon in the globe earlier this week, summing up the tone at town hall meetings. as you can see, the questioner said, we'll separate this up between the oddly halluc knitting and badly misinformed. this fake protester is holding up a sign, saying, we have no idea what we're talking about. we recognize these issues are complicated and they demand a longer conversation than is frequently the case. as we started on this voyage of thinking we could do something useful, we selected several

topics that we thought we could bring something to in order -- both to harkin back to work that health affairs published in the past and also capture some of the ibs that we understood were of great concern to the public. we -- we do not pretend by any means this is a comprehensive systematic review of every issue that ko come up in health reform. and by the same token we don't have a representative sample of speakers today, representing every possible i do logical and ethnic and geographical or other perspective. we're not pretending we're doing that. what we are pretending we're doing i, i hope more than pretending, is bringing you solid substantive, nonpartisan discussion on these key issues. we're most honored to have a couple of special ges on the line with us today to kick things off. these are individuals who as they will tell us and remind us have been in the health care trenches for quite sometime and have seen a lot come and go and

have a very special perspective, personally as well as professionally on the importance of health care in the united states. first we're most honored to have on the telephone line this morning, with us, from his home in hanover new hampshire, former president c. everett coop. you have information in your pacts about our speakers. let me mention dr. koop is about to celebrate his 93rd birthday. he received his degree from cornell following his degree from dartmouth. and after senk in a pennsylvania hospital, he did postgrad training at the university pennsylvania school of medicine and the boston children's hospital and the boston school of med at university of pennsylvania and received a doctor of science in medicine in 1947. he was a pediatric surgeon for many years. he's presently the elizabeth

professor at dartmouth as well as the c. everett koop institute. he's a internationally respected surgeon. as you know, he was appointed both surgeon general and deputy assist secretary for public health in 1981. as surgeon general, he oversaw all of the activities of the public health commission corps. he took a great interest as many of you recall, of smoking and health and diet and nutrition and environmental health hazards and immunization prevention and became the government's chief spokesperson on hiv and aids. he continues to be a force for public health and education. we're most delighted to welcome this morning, dr. koop. are you on the line? >> i'm on the line. >> good morning. good morning to you. i'm please to do join you today by telephone. i wish it could be with you in person but my doctor has advised

me to minimize unnecessary travel. and -- and when you're 92, i -- i want you to remember that -- you always v-should listen to your doctor. i have spent my life in the trerges of health care, as a physician and surgeon. and also as a public health professional and as an educator. since my retirement from the post of surgeon general, i have devoted much of my life to the subject of health care reform. we're now at a police where -- little is more important to us than having afirst-class health care system that truly advances the health of the american public. since my -- we are now at the place where we are facing

critical questions about shaping a system that is equal to our great country, and in that context there, are many serious issues that demand serious discussion and debate. forums such as today's, are essential to that objective. and are essential to our democracy. i congratulate the participants, the sponsors and the audience and wish all of you well as you would -- advance the discussions today. signing out from hanover, new hampshire. this is chip koop. [applause] >> stow much, dr. koop and say hi to your doctor for us. we're also very grateful to have with us, also on the telephone line from arizona, former surgeon general, richard carmona.

dr. carmona was the 17th surgeon general of the u.s. he served as the nation's top doctor at the time as you will all know, issuing calls to action against major health concerns such as obesity heart disease, cancer and the dangers of second-hand smoke. during his tenure he focused on shifting the paradigm of health care from treatment to prevention, stressing life-long healthy living is key component of health care. he is passionate about health disparities. he has educated the public to make informed choices. he's become a specialist in the area of public preparedness and he has combated many health threats. he grew up in a impoverished hispanic family and dropped out of high school, and experienced the disparities first hand and then he went on to become a green ber way and a swat member

and graduated from college in medical school at the top of his class. he served as an e.m.t., a nurse, a trauma surgeon and a community physician before being unanimously voted into office, at the surgeon general. he now serves as the vice-chairman of cameron ranch which as many of you know is the 24-year-old hyphen hansment company. he's chief executive officer of the health division and is president of the canyon ranch institute. dr. carmona, are you on the line? >> i am. good morning. >> welcome. >> i'm delated -- delighted to follow surgeon koop in bringing you greetings. like him i spent most of my life in health care's trenches. before i became the 17th surgeon general of the united states, as you heard, i worked as a paramedic, a registered nurse a

physician and a surgeon, as well as a public health officer, a hospital c.e.o. and a professor of surgery, just to name a few. as noted, i have degrees in medicine a public health and as surgeon general, i became more acutely aware than ever of the health and public health needs facing our country. i believe that it behooves all in our great nation, regardless of party affiliation to take the current debate over health care reform seriously and participate. help drive the debate to a rational and logical conclusion. i too salute today's efforts and others like it that are taking place around the country to bring all serious and reasoned perspectives to bear on this discussion. susan. thanks for your and health affairs and our colleague's leadership in bringing together all of us for this important conference that hopefully brings

clarity and transparency to this complex and sometimes clouded issue. and my best wishes -- wishes to all of you and from tucson, arizona where it is probably hotter today than in washington, this is rich carmona, signing off. thank you. [applause] >> thank you so much. we had also invited david satcher to say a few words this morning. he was unable to join us by telephone and also sent his regards and support for this conference. i move now to introduce david colby from the robert wood johnson foundation. his buy yes is in your pact, he has a few words of greeting for us. david? thank you, susan. on behalf of the robert wood johnson foundation, i want to

thank you and everyone at health affairs for hosting us today and especially for putting together this event. it comes at a crucial time. because -- as we have all seen over the last couple of weeks or over the last month, the facts of health reform are too often getting lost in piles of myth and -- and giga bites of fear or maybe i should say, tera bites of fear or zeta bites of fear. as some of you know, i spent nine years at the physician payment review commission and then at met pack. during -- and i was there during the last health reform debate. and i'm proud of my years in washington. unfortunately, i had a front row seat to watch the last debate on health reform become derailed by panic and the practice of high politician. as a researcher and a fan of drag net, it pained me to see

cold hard facts afterpains taking research drowned out by the likes of harry and louise. so with joe friday ringing in my ears, just the facts, ma'am, i wanted to do my part not to let that happen again and sessions like this certainly help. in order to fix which is inarguably wrong and broken in the health care system, reform must be driven by data. and there's no shortage of objective information. they're guided by an arsenal of what is wrong with the health care system and how to fix it. we know much more than we knew last time. we know definitively that the americans receive the wrong care or at least not the right care about half of the time. and we know that even though we spend more on health care per capita than any other country on earth, our outcomes are not the

best. and we know that there are huge geographic variations within the united states on who is receiving what care at what price and whether it is working or not. as a prichte philanthropy our role is to provide our leaders and policy makers with -- with the resources and tools they need to support the health care system that will achieve coverage and improve quality, value and equality for all americans. and that's why we support health affairs and while we're working with susan and her team on a series of policy brief that is provide clear, accessible overviews of the most salient topics of the day. the briefs include competing arguments on all sides of a policy proposal, and relevant factual research. and the briefs and a lot of other research based information are available on our website by visiting health reform.org. and the foundation's dedication

to objective research and above all just the facts, is why we're proud to support today's symposium. in closing, i want to thank all of the participants for sharing their knowledge and their dedication to the issues that are important to all americans. and thank you. [applause] >> thank you so much, david. and david mentioned the health policy briefs. we're also bringing out a new health policy brief today that deals with many of the subjects we'll be covering this morning. that and our earlier briefs are available also on our website at www.health affairs.org. they're free and we encourage all to access them. we're going to move on to our first panel discussion. and again, we selected some specific topics we thought were going to be of most interest today.

based on what we thought -- was the greatest area of interest in the public at the moment. what we could gauge was of concern at the town halls and so forth. that -- we believed was this whole question of the fear of government takeover of the health care system. all of you have heard variations on the theme. i simply selected one here that was written up in roll call just a few days ago, about a woman that went to a forum with a senator chuck grassley out in iowa, this woman is peggy berke skin, a 61-year-old factory worker who was one of 2,000 people that showed up at one of grassley's town hall meetings. as you see here, erik stin had a message for the iowa republican. stop barack obama and democrats from enacting the plan. she goes on to say, quote, when

9/11 happened i was terrified. i'm more afraid now. i'm afraid of our government. the banks and the car companies are taken over and now health care. erik skin told grassley and this is in the methodist church where the town hall had to retete because it had overtaken the capacity of the earlier facility. this led us to believe that -- we needed to go back and look again at some of the basic facts. what exactly is the role of the u.s. government today in paying for and or bringing for health care? and how might this change under leading health reform bills now in congress. and we have asked two distinguished people to address these topics in sequence. first we're going to hear from lynn nichols, the director of the health policy television at the new america foundation. he's going to lay out for us

just so that we're all on the same page, what does the u.s. federal government do in health care today. then we'll hear from gail who is a veteran of many positions in public, and particularly the administrator of the health care financing association and now the c.m.s. from 1990 to 1992 and also served in the white house under president h.w. bush as health policy advise they are. gail is going to talk about how the government's role might change under leading health reform bills now in congress. and so first, let me turn to you lynn nichols.

>> sorry my kid is algebra camp, so i can't do this as fast as she could. this is an honor to be on a panel with susan and gail. i'm going to skip the jokes and cut to the chase, because my job is to talk about government. sometimes people say i'm from the government, i'm here to help. i'm here from a think tank, i'm here to explain. i want to talk about the government of -- role of government in a free society. i'm going to give you a lecture. research, regulation, and delivery direct as well as financing. and now, let's just -- this is the two-minute version or one-minute version of the role of government in free society. public goods, basically you want a government to do stuff that you want done that we can't do alone or we can't get done through the marketplace. public good, the simm pliths example is national defense.

basically it benefits from us all, but you can benefit from it even if you don't contribute. because of that free societies left alone won't have enough and you get conquered by the al qaeda or whatever is this year's enemy. national defense is essential. similarly, miss, fire, and things that benefit us all that you would, it is hard to exclude people from, that you would have free rights. and things that are sao good or so bad that they effect everybody. public education. we're better off because everyone can read and stand in line. and sometimes i debate which of those two -- two things you learn in school are most important. they're essential to civilization. similarly, polhution is a negative, something if we don't intervene on, we'll have too much of. government steps in when things spill over from one person to another. and little season function except to economists, promoting

competitive markets. if we didn't have markets that work, it is hard to depend on them. so paying attention to them is important. and this is by far the most controversial. redistribution of market rewards, if we did nothing, people would starve. we don't want-to-that to happen so we do redistribution. we argue about how much. that's what politician is about. and then finally, macro economic stabilization, we learn in the great depression, if you don't intervene, you could have an economy implode and that's why sometimes you have to intervene at the macro level. how does this translate into health care? public goods, a good public good example is knowledge. and knowledge comes from research, and dissemination. what we do in in country at the federal level is we pay for -- basic research through the national institutes of health. 30 billion dollars a year. i won't go through every program. but $30 billion of n.i.h. money

flows to create new knowledge which is in use in lots of way. air research and quality spends $50 million on comparative research. we spend $30 million on new knowledge and $50 billion on effectiveness. and 1.4 billion that protect us from diseases by foreign agents and there's health infrastructure, in a sense, an electronic information highway is a bubble good is a thing that will make us better off, we will have -- be better off with it. and then the drug 5d stration, making sure the drugs we get are effective and the labels are clear and professional licensure is important. you won't me -- won't want me to

practice medicine without a degree. and research, somebody else spoking can give you cancer. how can you stop that in a free society? there's a lot of stuff going on. state and local governments deal with restaurants, and federal law is the reason you don't have spoke in airplanes anymore. that's interstate commerce. promoting competition. insurance market regulation. and left alone, like all good folks trying to make money, they'll collude, this is normal. so in 1944, anti-trust case stopped it. we turn regulation of health insurance over to the states, so long as they did it pursuant to federal interest. and anti-truss is there to stop competition. and h.m.o. act was a crowbar used to force a competition in into the marketplace that was suppressed. med quare plans came out in their oldest firm, 1982, the idea was to have private insurance compete with fee for

service medicare in a way that seniors would have a choice among them and then of course the medicare modernization act did the same thing in competition and from vision of drug coverage not medicare population. here's the most controversial, retribting access to health through government. and there is direct provision, the v.a., we spend $39 billion on about $5 million patients. we spend $3 million on 2million patients and 15% of beds, most of them are small, county hospitals. and by the way, just for compare is not, nonprofit is 60% of hospitals. we make direct grants to community health centers. $2billion federal and $5 million state and hokal. they 17 million. and the biggest expense is redistribution through insurance, public assurance for

the poor and the disabled and the elderly. and that of course is medicare and medicaid and s chip. the most recent data i could get to compare everything was 2007. we spend 418 billion dollars in medicare. and we spent 340 billion in medicaid and s chip of that 340, 192, 57% is federal. medicaid is a federal state share. so the total federal public insurance payments per year right now, 610 billion dollars. and now, just to give you a little perspective over time. in 1960 bhf we had medicare and medicaid, we spent about 5% -- we spent about 5% of g.d.p. on health care and that is now 16%. out of pocket spending used to be 47 now it is 12. go to the bottom row, public spending used to be 25 and now it is 46.

fundamentally what has happened is we have substituted collective dollars for the out-of-pocket payment of most my, the elderly and the poor who had no coverage in 1960. and this is the biggest change in the way we have organized our health system. we pay if people who couldn't pay for it otherwise. and okay. in perspective, this is total health care end speaking on personal services and 22% comes from medicare. and 17 from medicaid. other includes v.a. and -- and d.o.d. and is some philanthropy and think about medicare and medicaid and private insurance. private insurance is bigger than either medicare or medicaid but not bigger than both. for hospital care, medicare is a bigger relative pair, baup you go to the hospital more than those not elderly. they pay 20% of hospital care, and note again, private insurance is more than that and medicaid is 17. for physician visits, what you see here is a reflection of both

the fact that the medicate population is relatively healthy and we pay relatively poor my for doctor visits and medicaid. med cared and private insurance is 50. when you think about who pays for doctors and who pays for hospitals, most of the money comes from a private source and medicare and medicaid make up these different percentages. one thing you should know about public payment rates is two-thirds of all hospitals have a negative medicare margin. medicaid pays differently and less. than medicare in general. and so our public payers are not what you call wildly generous. both pay less than private payers. this is one of the big controversies that is real. it is a very serious fact. private biers pay a heck of lot more per patient than medicare

and medicaid. what does it cost? what i'm showing you here, is basically 35% of our population in poverty is uninsured. medicaid takes care of some of the poor, not all. and some of the poor believe it or in the, actually have employer coverage. but 35% are uninsured. they represent 36.5% of the uninsured. okay. the big point here is that roughly 60% of the uninsured make less than two times poverty. also interestingly, 10% make more than four times poverty. most are low income but not all. there are funny choices. let me remind you what cost of health srns, which is why this cost so much. what you have here is a family policy in 2008 according to kaiser. a family of three at two times poverty makes 35 to -- if they

bought an insurance policy on their own, it would be 36% of income. and if they make three times poverty, it would only be 24% of income. and that my friend, is why reform costs money. thank you so much. [applause] >> i see we have a little problem here. if it is up, i can't see you. and therefore, probably you can't see me either. when -- when susan asked me to

-- to do this part, my first reaction was to laugh. i -- and say, how will the role of government change in health care reform and i said, ah-ha, that's a trick question because -- i don't know what the remember is going to look like but after i thought about it for a while, i thought well, okay, it is a hard question. we don't know exactly what is going to happen, and the bills which i am not going to -- now going to review for you in -- in any detail differ substantially, there are a variety of place that is you can go read these bills that have been summarized. they're very important. you ought to go do that. but they are, there are some areas in which they are quite similar and i am going to -- to talk a little bit about what is likely to happen, assuming we have any health care reform

legislation passed. and which i do believe, continues to be likely. although, we are -- we are in a point now in august where everything seems uncertain, but my presumption is that we will see some legislation passed by the congress, before the end of the year and signed into law. it does seem we have seen a change in focus, at least in terms of the way that the legislation is being discussed. and that is -- what had started out initially as being a discussion of health care reform, and a lot of discussion about what health care reform might entail, has now become a discussion of -- of health insurance reform. i'm sure all of you have noted this difference. it is -- it is important to try to distinguish whether this is a selling strategy to focus on the insurance part or in fact

whether or not this really reflects a difference in focus in terms of moving away from health care reform more generally, that is focusing equally on the -- the delivery system changes that we all have discussed in these types of groups. to a much more focus on making sure that health insurance is expanded to the population without it. the real problem in trying to have the discussion about how will the role of government change with health care reform is right now -- we don't know which of the bills that we have seen thus far will prevail. they differ in some important ways and of course, we have not seen what could be -- the moe important of the bills because it is the one that had the most effort at being bipartisan and -- e by partisan and that's the bill that the senate finance committee will release this fall. there are the three committee bills that have come out of the

house. they differ from the initial bill that was under consideration by the house. we have heard discussions and -- in a venl way by the administration of the -- of the points and the principles that they think are important. there's not a lot of specificity. i think this is clearly in response to what they believed was a strategic mistake in the attempt in 1993 and 1994 of the health security act to get health care reform passed. we seen the senate health bill but it did not have any financing associated with and so many of the most controversial issues that is -- how do you pay for health care reform or health insurance expansion has not been included. we will know much more presumably in september, or whenever it is that the senate finance committee releases its proo visions.

provisions. as you look in terms of the -- of the kinds of changes that people talk about, when they talk about the changing role of government, we need to understand it is not just -- more government, clearly people are concerned now about how much more government play be in their lives. susan mentioned in her introduction that -- that what we are seeing in her opinion and agree with this completely is in part a response to all of the change that people have witnessed in the last year or year and a half. just as -- the pressure on the administration to only be able to spend on health care what they can finance is a reflection of having already had unfunded bills like the tarp bill and the stimulus bill. what we are seeing in terms of people's concerns about the

expanded role of government is reflecting what they have been sexerpsing in the last year, where they have seen very substantial increases in the role of government and in areas in which, we, as americans are not used to seeing them. in the financial system. overseeing, c.e.o. pay. being a major shareholder, in g.m. and chrysler. and now, directly subsidizing people to buy new cars. it is in that context that i think the question about -- about what exactly is likely to happen to the role of government with regard to health care, takes on a new frenzied reflection of concern by the american people and just as -- the ability to finance unfunded expenditures for health care would have been very different without tarp in the stimulus package in my opinion, the concern we are seeing raised

right now about the expanded role of government would be very different had we not had all of these other events occurring in the last year. but we have -- and we need to take them into account. and in discussing the changing role -- it is important to understand that it is not always just about more government. a lot of what we will see in health care, all though we will see more government in any reforms that reform packages that have been introduced thus far, is the shift to a different level of government. in particular, and in health care, a significant shift from the state government to federal government. although in some cases, we're also seeing proposed changes that would indicate a shift from the legislative branch, to terriblely to the executive branch and i'll talk about that in a minute. and wile aye indicated we don't know exactly the dimensions of change that we're likely to see because we don't know which of these quite different bills will

prevail in the end. if any legislation is passed and as i've indicated, i think that is likely, there are changes that seem clear. the first is we will see substantially increased spending on health care by the federal government. the initial estimates of what it would cost to get everybody covered were about 1.5 trillion dollars. i don't think right now that is the number we're likely to see because of the problem that we can only do what we can pay for. but that is probably the number that we would see had we not had all of these other unfunded bills that we have had to deal with over the course of the last year. what we have seen in legislation are numbers like -- $1 trillion over 10 years or $900 billion over 12 years. it is hard to believe that a trillion in the context of a travel and a half is starting to sound more modest, whereas even

for somebody that bruise used to run the medicare program and thought that big numbers were a part of my lexicon, it is hard to be quite so quick about throwing around numbers that start with trls, rather than billions. it is also possible because of the issue i just raised which is we will only see passed what we are able and willing to pay for, that the final bill could be something smaller than the $900 billion i i was talking about. i just threw in $600 trillion, i don't know what the lower number would be. it is possible it would be a smaller piece initially of expansion, than what we've seen now being discussed which is $900 billion to a trillion dollars. it will fundamentally depend on the financing strategies that will be able to be passed by the congress. and so, for sure, the -- the

first change that you will see is substantial my greater spending by the federal government on health care, if there is any health care reform passed. and how much change will occur in medicare is also not clear. the administration has been proposing a reduction in spending on medicare over the next 10 years in the neighborhood of $500 billion to $600 billion. a lot of discussion about this. a lot of concern raised by people on medicare as to what whether or not this toip of change will impact them as seniors. my advice when people have asked me that is -- you should not assume it will not. it depends very much on how these changes are implemented. and we immediate to understand that in general, what we have seen when we have seen substantial reductions in spending is that -- some of the reductions are good, and come

out of very marginal or low value spending. and some of the reductions are more questionable. if you have any question in your mind about the truth of this, think back about what happened when b.r.g.'s were introduced, with a deliberate attempt to lower the length of stay, by moving from a per diem payment to a payment -- based on the diagnosis at the time of discharge. it took about two months after d.r.g.'s were introduced until you started hearing the phrase, quicker but sicker. what that was reflecting was concern that while the days were shorter and many of the people who were discharged earl here were okay, some of the people who were being discharged earlier were sicker than they would have been and sicker than they should have been, otherwise again, a reminder that when you put down downward pressure, it is very hard unless you have a lot of she can'tive changes

going on to be confident that there won't be any unintended consequences. and that occur. so the exact savings is something has we'll have to wait and see what is negotiated and what it is likely to mean. and reassuring seniors that their access will not be negatively affected will be a very important part of the selling job for whatever legislation is passed. and in terms of insurance, that's probably where we see potentially some of the biggest changes in terms of the role of government. for sure, what we will see, that is the nature of what is being proposed, is -- is a lot more federal government responsibility in what has been an area where there has been very little government responsibility in the past. insurance, health insurance, has like most areas of health care, been primarily under the jurisdiction of state

governments. what is being proposed in many of the insurance refrms is that we will see this taken over by the federal government. it is particular liane issue for individual and small group insurance. but it is also going to be true at a larger level where -- many of the businesses have not been affected by state regulation because they have been part of the arisa preem shun the law passed in the 1950e7's that allowed self-insured firms not to come undered purview of state government but basically in health care, at least, not to be under the per view of the federal government either. and if there is an insurance exchange, it play or play not be at the federal level. it depends on which bills you look at. some scanges are being proposed a the the national level that would of course mean more federal government involvement. some of them are being proposed to occur at either the regional

or state government lelfts. so it will clearly be more g. but it is not clear which level of government that will be. and finally, if there is a public man, that would indicate a very clear additional role at the federal level. you would probably need something like a c.m.s. style agency to operate and manage the public plan. you would have to make various decisions about how it would function. and it is -- it is, i think less likely to occur now than it seemed a month or two ago. but i would say it is by no means off the table. and it is something that -- is still being under consideration and clearly a very important issue to -- to the left wing of the democratic party. much more so than it appeared to be early on in the campaign, much more so than it appeared to be to the administration, early on, although they have indicated

all along the president has indicated all along he prefers the strategy but he doesn't regard it as absolutely central to reform. and the fear is -- is exactly what len indicated when he talked about the payments under medicare and medicaid. right now, most hospitals have negative margins under medicare. medicare pays about 80% of the -- of the private rate to physicians. the concern both by the provider community and also by the private insurance exhueity is that a public plan with have the full authority of government, it could also have those kind of pressures produced which would result in cost shifting to them. and lower payments to the providers and thus, be stabilized private insurance and a going forward basis. >> and that is probably one of the most controversial issues that we will have to see played out.

and in the just because of the increased role of government but because of the potential repercussions op private insurance and on the prior community on a going forward basis. and the house has teafmented to teal with this by including a provision, that says, that -- that the public plan would not use medicare rates. i have probably lived in washington far too long to take such an assurance even in statutory language very seriously. one short sentence and any subsubsequent piece of legislation removes that provision and then you have a public plan which has the full power of government behind it. there are other very important changes that are at least being considered. i want to mention them because they also -- they also have significant changes on the role of government. we have what has been referred to as med pack on steroids.

sometimes called imac. independent medicare advisory council. it is and an attempt to do something like the federal health board that senator daschle had mentioned and others have mentioned as a stredge to try to slow town health care spending. it would basically -- like some of the provisions of b remarks ac no the defense department, allow for decisions to be made by an advisory group appointed by the president and confirmed by the senate with regard to changes in medicare pricing and there would be -- an ability for the congress to disapprove it. but if it had been accepted by the president, unless disapproved immediately would become part of the baseline and therefore any disapproval would have to be paid for in some other strategy. it clearly represents a very

significant shift from the -- from the legislative branch where decisions are normally made, about reimbursement under medicare to the executive branch . there is recognition arising by memberses of the congress that, that that is in fact what would occur. so we will see -- how much credence -- there is to including this in a final piece of legislation. there has been discussions about individual mandates, either of a hard or soft nature, i would regard what massachusetts has as a soft mandate. and you have to have insurance -- unless you're in a category where it is deemed there's had the an affordable insurance available to you and then you're excused. if you do that, you have to decide who will enforce this. probably the federal government but hot clear and what kind of penalty will be imposed if you don't have it.

similarly, all of the bills thus far have a pay or play provision for business. that is either they have to provide insurance coverage presumably meeting what ever the benefit standards will be that will be available for mans that are part of the insurance exchange or else you will pay some kind of a tax, it looks like -- it looks like 8% of payroll is the number that is -- is coming up, most frequently, but that is again not yet been decided. it could be something less than that. and in any case, who enforces this? and how -- how the penalty is collected, will mean expanded roles of government. all of these that i described, all of the insurance changes, the insurance exchange, the potential role for this -- this med pack on steroids, the man tates on the individual and the play or pay provision all

represent quite significant increases in terms of the role of government. so for me, the bottom line is -- assuming legislation is passed is to say, there clearly will be a significant increase in good. spending, we're talking probably in the neighborhood of about $1 trillion over ten years, give or take a little bit. we are indeed talking about a increase in government power, particularly a shift from what has previously been state responsibilities to federal government responsibilities. we are likely to see a significant increase in the number of people without insurance coverage. and the numbers that len cited in terms of their distribution are numbers that are -- have been present for the last 30 years. study i was involved with 1977, expenditure survey had one-third

of the people -- who were uninsured below the poverty line, 10 or 11%, above the poverty line. this is clearly a problem we will only first by active legislative and policy chains. what to me is actually the more -- morell vant question since if you want to lower the people without insurance coverage, it is likely to take substantially increased spending by federal government and if you have are going to reform the concerns that have been raised by insurance as we now know it, you are going to increase government power in terms of how insurance is regulated. is whether we really are seeing health care reform or not. and in this case, the questions are -- are far greater in my mind, whether we will really see spending slowed or -- over the next decade or so or whether

we'll really see health outcomes improved and more emphasis on wellness and preventive care. all of those are far less clear to me in terms of -- of the health care bills that are being considered, in i had my choice, i would have people worry much more about whether or tpwht we are actually reforming the health care system in terms of the legislation, we're -- we're considering rather than just worrying about how much additional government that we are imposing but in fairness, that is a legitimate question to raise as well. thank you. [applause] >> thank you so much, gail and len. we're going to take questions now from the audience. we have some roving microphones. we ask you to wait until a microphone comes to you before you ask your question. and if you would identify yourself by name and affiliation as well, that would be helpful. while we wait to see if there is

a question from the audience, i'm just going to start with one -- from the moderator's prerogative here. len, what i understood you to be saying is that the biggest single change that we have undertaken in our society is that we now pool our dollars through the government to pay for care for people who used to not get it at all. chiefly the elderly and the poor. and so what we're talking about now is -- ised a -- adding more to the pool. more of the poor who we have not covered today, as gail said and this is a stubbornly resistant problem. if you had to characterize that, are we talking about a huge change? or are we talking about a change at the player gin? >> well, it depends on how you define margin, but i would say this, the reason i put the numbers up this, that we spend over $600 billion a year now per year, to take care of the poor and the elderly, what we're

talking about, i think len and i would agree, a fully phased in coverage of all of the insured would be about $150 billion a year. that's a big number. it is not as big as $600 but it is a big increase. i would say think about it, though, as a fraction of g.d.p. over 10 years, 1.5 maps into $1 motor 6 trillion. over the period of eight years, that's zero percent of g.d.p. it is more than gail and i make but it is affordable for a nation as rich as hours. but the question is, and i think this is the single biggest question, are we willing to do what it takes to pay for this and there are only three buckets, you can increase taxes, you change the way we currently subsidize health insurance and you can do something about the way we spend money in the medicare and medicaid programs in my view, all three buckets

are necessary, we're going to do this right and the third in particular in order to bend the cause curve in the long run. i think we got to be willing to do all of these things to be willing to pay the price. i don't think it is too big a price but it is a nontrivial. it certainly is a significant change. >> but it is not the -- the poor and the elderly and i think one of the reasons that we are seeing the kind of pushback is that -- what we are seeing is not let's cover the one-third of the uninsured who are below the poverty line or the -- the group that are below 200% of the poverty line as we did with the children's health insurance program. it is to say, and -- as well, we need to see coverage, everybody, but it is -- it is to take not just who we have already identified as appropriate targets of government action, which is -- poor or even poor and low income and elderly, but

to say those groups and everybody else, and i think that's part of also the pushback that you're seeing. >> those with ement employment based insurance and those working and not getting coverage through anem employer who we would say have to get coverage through anem employer. that's what you're talking about. >> this is not to say they shouldn't be covered. i believe the people need to be covered, it is to recognize that what we are actively doing now -- is expanding the role of government beyond the traditional focus of government. the poor and low income and old to directly receiving subsid jis, whereas -- otherwise they indirectly receive very large subsidies because of the tax laws. if they're receiving employer provided insurance. it is -- it is expanding, the role of government -- for the other groups in order to make sure everybody has insurance. >> gail makes a really important

point. we're not used to thinking about people above poverty needing a subsidy for anything else. and that's why i put the slide i did at the very end, at two times poverty, a mother of two would have to pay 35% of her income and at three times poverty, it is 24. the truth is, sports fans, we wait d too long to do health reform. it got too expensive. we think of a disconnect and we think of the poor as needy but for health insurance, more than rn ---month the poor are unable to pay for it. . . the pushback point and so let me ask you, what's your understanding of -- or what's your best guess in understanding this pushback, and

in providing that explanation, then what's the policy argument or solution to address that pushback, and let's just leave aside the glaring issue that the fpl needs to be completely recalculated. >> >> fpl being the federal poverty level population. >> well, i think gail hit it on the head, that we are in a situation that is so unprecedented in our history to have been faced with an economic calamity, like i think it's fair to say, a broad consensus of folks thought we were last fall, let's not forget, paul son and bernanke going to the hill saying you have to act now. gail will tell you now is not a popular word in congress. it's hard to do. and they ended up with a tarp package that was a big, big chunk of change. the stimulus package was $800 billion more, then we got tarp two and the autos, we owned a couple banks and insurance

companies now and this is really unsettling to a lot of people. i get that. it's about if my view, the ideology of the role of government. how can this be a good idea? unfortunately, i think we're in the context where all that's true, but we still have i would say, $50 million uninsured today, because of the economic decline, and we still have a situation where the richest country on earth has people who get cancer, can't work anymore, lose their coverage, can't maintain cobra and they die. we don't really want that to be what america is, and in my opinion, we can afford better. what we have to do, i think, is extremely calmly accept the angst, accept the questions, deal with it. to me, the frustrating part is not the question. the frustrating part is the relatively small percentage of population, doesn't want a discussion. that's what's hard. we've guilty to have a discussion. -- got to have a discussion. that's what august is supposed to be about. we're trying, but that's really

what it's about. >> do you want to add anything to that gail? >> i think what you are saying, lin and i have shared many panels and laugh that we can take each other's positions on some of these panels, we have had an ongoing, serious problem in health care. 15% of the population, without insurance coverage, and unsustainable spending, a couple of percentage points faster than the economy, and real problems with regard to clinical outcomes. everybody who knows anything about health care knows that that is something that you could have said this year, last year, five years ago, 10 years ago, 20 years ago, the number might have been 13% of the population without insurance coverage. there is a passion and a desire by the president and the congress to do something about that, and we need to do something about that. it is their great misfortune that they are trying desperately to do something about this, in

the context of having to have dealt with this economic blow to our country, which did require having it be addressed first and that that has put restraints and concerns in place that they would over wise have not felt, but we are not going to resolve these issues unless there's active policy. we saw in the late 1990's, a decade of robust economic growth and the only reason the number of uninsured didn't grow, because there was a decline in employer sponsored insurance, was because the children's health insurance program was passed in 1997 and that compensated for the people losing employer compensated insurance, so if we're going to fix the problem, 15% of the people without coverage, we're going to have to have explicit policy changes. to my mind as an economist, what is even more important for the economy as a whole, if we are

going to slow down government spending and improve health outcomes, we are going to to make a lot of changes in terms of how physicians and hospitals are reimbursed, how they're organized, our whole emphasis on preventive and wellness care, rather than only sickness care. we don't know how to make these changes happen. we have to be much more honest, that it will take time and trial and error to figure it out. and as soon as we can figure out the mode else that work, that produce the intermountain health care and the kaisers and the mayos, we have to try to help them spring up otherwise in the country, other parts of the country. but we need to not be so glib as to say, oh, with their $700 billion of waste out there, we can just go grab it somehow and then we'll have financed health care reform. we know where we want to go for the most part. we don't know how to make it happen. >> all right. we'll take one more question

here in the year. >> lou diamond, thompson and reuters. i go back to the 150 billion and the distribution and two questions. one is can you give us a sense of the distribution of that 150 across the income spectrum, and this is obviously not all low income and how that compares and how would he should think about the tax deductible handling of private sector insurance hand how that distributes across income and should we not be including in our discussions that comparison always? >> yes. and we'd like to hire to you do this talk from now on. that is the perfect question, because fundamentally what you've done is described one pyramid where we know in order to get the 50 million covered, we're going to have to subsidize people at the bottom virtual my completely and you can scale it back as you go up the income

scale. my view, you could probably pull this off, subsidizing people up to three times poverty, maybe some would want to go to four, but we could do it at three. but the current subsidy that we useúthrough our employer system is the actual reverse, that is to say, we subsidize bill gates rate and the people who pick up our garbage every night, now have been put into firms without anybody else in the firm, they get no coverage, they get no tax benefit, so we basically have an inserted situation here and we could absolutely minus 1 make mother both more efficient and more fair. >> if you want to know the numbers, it's about 60% of the people are below two times the poverty line. that's who would -- about 60% of that money would go to them. 40% would go to people above two times, but it's mainly the two

to three times the poverty line is the concentration as you've heard, it's at roughly 10% of the uninsured are four times or more of the poverty line. almost all economists, except during campaign periods apparently, would tell you that we should get rid of the tax exclusion from employer-sponsored insurance or limit it, because it encourages people to buy more insurance than they might if they had less buy assistance. and because it is terribly unfair, it is worth more the higher your income. the senate finance committee sounded like they might consider it, now they're sounding less like they might consider it. it's a huge amount of money. it is -- lin had a wonderful phrase. it is off the table but still in the room. and that's because the congress is so desperate to finance these expansions and because this makes so much sense, it will --

it has political challenges, the unions don't like it, although you could exempt existing contracts, and of course, the president trashed the idea during the campaign, so that makes it a little politically awkward, but way more awkward things have happened in hour history than that. >> well, just to wrap up this really excellent discussion, what we're taking away from this is from lin's presentation, the federal government is very, very substantially involved in all aspects of health and health care now. and what we take away from gail's presentation is that to the degree we're talking about adding to any of this involvement, yes, it's somewhat more, under all of these proposals, and a lot of it is not necessarily more, but different. different levels of government taking over responsibilities, moving them from the state to the federal level, for example.

so i have guess we're left here with asking the goldie locks question, is all of this too much, is it not enough, is it just right, is it probably necessary if we're going to accomplish the goal of covering the uninsured, is it probably not enough if we want to really bend the curve? how do we reach a judgment on this? and i know this is a qualitative question, not a quantitative question, which may make you as campuses very uncomfortable, but i'm -- economists very uncomfortable, but i'm asking it anyway. >> the increased spending in the increased amount of government is not as worrisome to me as of the lack of focus on reforming the delivery system, point one. and point two, some of the proposed changes are either

needless or potentially very disruptive and i would put the public plan, number one, in that category. there are other ways to resolve some of the problems. you need to be very careful that you understand which problems you're trying to solve and then think about whether it's the best or the only way to do it. in terms of what is being proposed. it's at that point where you could change or reduce some of the increased amount of government regulation, by using a different mix of regulations, and expansions. but if you're going to solve this problem, you will need increased spending and you will need more regulation, that is a fact. >> i would certainly agree with all of that. i think what i would say in terms of the goldie locks question is both god and the devil are in the details. i think that if you imagine that we do indeed want to solve these

problems, that is to say, so many of our people don't have access to care, 20,000 die every year, according to the iom, we want to solve this problem. we're going to have to spend some money, we're going to have to increase the role of government. however, some of that, in fact, all of it could be relatively smart. it's an option. it has happened. you can do this without the heavy hand. you can do this in such a way that actually makes markets work better. that's the pointsn that's what insurance market reform is about. it's making markets work better and more fair. but to do that, you do have to pay attention to incentives and choice and my view, if you pay attention to incentives and choice, you can also bend the curve, but i have to say, it's hard to talk precisely and seriously about bending the curve when you're being accused of rationing for raising the question.

that's why gail and i both spend a lot of our daytime trying to promote bipartisan conversation. we want to do this, you need both parties to join hands and make it happen. then you suspend or at least deflect the ideological attacks. if it becomes partisan, for whatever set of complicated reasons and we can all name 30, then it's p harder to be an adult about bending t curve at the same time. however, we have to some day. >> well, i want to say thanks to both of you for getting us off on a terrific level this morning. [applause] we're going to move on now to orifex topic, which we have selected this morning. and it is the concern that has been raised about what happens if you really try to reduce the rate of growth of one particular program.

medicare. sometimes this has been referred to as a medicare massacre. and once again, i want to reach out to the news media to select a representative story that seems to suggest the tone of this is a police that ran in politico last week. the reporter cites the fact that frustrated older americans are a packing town halls, very passionate about their medicare benefits and very disapproving of the health care reform ideas that they appear to have heard so far and the reporters go on to remind us that these people, this demographic votes in larger numbers than other demographics, which is part of the reason their voice is taken so seriously. at the tuesday of last week town hall event in new hampshire, president obama made a point to reach out to many of these seniors, he took note of the low

support if polls for his health proposals and said we're not benefits. however, the reporters go on to point out that obama i@@@@@@@ @ emphasize that phrase, because despite the use of the word slashing, what we're really

talking about here is medicare not growing at this rate, but growing at this rate. so if we slash it that much, what happens? and what, if anything, impact would there be on beneficiaries and we have three terrific perspectives to bring to you now. first, from the vice-president of the peter j. peterson foundation, then we'll hear from darryl kirch, the president and c.e.o. of the association of american medical colleges, who will be speaking about many of these changes from the perspective largely of physicians, and then from the president of the health research and educational trust, and senior vice-president of research at the american hospital association, who will be speaking about these changes from the hospital perspective, and again, since much of the savings comes out of the hospitals, it seemed particularly important to address what might the impact be

on beniciaries as felt through their hospital care. so let's turn now to hear first from jean sterly. >> thank you, sue son. the title of my talk kicks off from almost the last name of lin nichols about let's talk like adults and let's talk like adults about health care reform is related to medicare spending. in many ways, i feel a little bit like the basketball coach who had a player one time who was very nervous at practice, so the coach asked him why was he so nervous an he said his sister was about to have a baby and he didn't know whether he was going to be an uncle or an aunt. i think in many ways, that's the way the debate over health reform has proceeded, in particular, with respect to how

medicare spending is going to evolve over time. the first fiction that i'd like to put to rest is one that cannot only come up in this debate but was famous in the debate over the hillary clinton health care reform as well. where congress should keep its hands offer of medicare, and -- off of medicare and you hear this a number of times. in point of fact, congress does regulate medicare, it empours the executive branch to do things in medicare and med compare is a publicúprogram, so one way or the other, congress is going to regulate medicare. the debate is not whether congress should keep its hands off of medicare, but how far should it actually regulate medicare and how can it do it in the way to provide the maximum benefits to the public. now the simple fact is that medicare and health spending are on an unsustainable path and given that they are on an unsustainable path, congress is going to reform medicare. if you remember one thing from

this, that so far, real medicare reform is not on the table. gail emphasized that, lin emphasized that a little bit if his talk. for the most part, medicare reforms that are being discussed are fairly modest, most of them relate to providing information that might, might be used down the road to try to control costs, and this is in a system that's unsustainable. just to realize how health costs in general are at an unsustainable path. this is just a projection made by the congressional budget office of health spending which is the bottom line on this graph, vis-a-vis other non-health spending in the economy and what shows is that this health spending, it includes not just medicare spending of course, but other health spending as well, is growing by leaps and bounds, basically shoving aside almost everything else that is being done in the economy. and the same is true for the government. if you look at the government

projections over the george w. bush administration and over the president obama administration, at least as under current law, the greatest changes under both these administration is basically an increase in medicare spending and secondarily, an increase in spending on the elderly through other cash programs. that is, almost all of government growth, government growth that does come with economic growth, is basically projected to go towards programs for the elderly. i'll discuss if a minute this growth for the most part is not affect being the current elderly. the real question is what happens to middle aged people and whether this is where they view in many cases in the audience, whether this is what you want governments to be doing more of in the future, as it gathers more revenues due to economic growth. what's another fiction? as i said, 2009, is it going to see real medicare reform? i doubt it. at least right now, what we're seeing is only a minor prelude

to a real medicare debate that is going to come up. in fact, i predict it could come up as early as next year, when i think congress is going to have to start addressing these deficit issues. it's going to have to start addressing them because of the extent to which we're borrowing from china, it has to address them because people are concerned about tax operates rising enormously and it's going to have to address them because the growth in health care spending is involving aside almost everything else the government does. it will shove aside the brief interlewd, basically programs for children are scheduled not to grow at all. spending on health and retirement for typical elderly person is scheduled to grow from about $22,000 per person to over $40,000 in about 15 years or less. we're as spending on children is basically scheduled to stagnate. so all of these pressures on the budget are going to come into play and i think they're going to come into play in very big

ways next year, but so far, congress is afraid and the administration is afraid to really tackle them in any real way. just to see this in terms of some numbers. this shows you under president obama's own budget, where he projected revenues would go, now a lot of the revenue increase here by the way is due to the economy hopefully recovering and others are due to tax rate increases he proposed, but you see the bottom line is growth in medicare, medicaid, social security, interest, and defens e is in there too. actually defense comes down as a percentage of g.d.p., but it shows that nothing is left over for anything else, except by running deficits, so tre's nothing as far as children's program, there's nothing left over for energy programs, nothing left over for turning on the lights in the capitol under president obama's own budget and this is happening now, this squeeze is taking place now and what it means is that real medicare debate, a real medicare debate i think is inevitable in the near term. :

>> in many ways the debate over health reform is small as a change compared to the changes that are already built into the current system. and so the real question we have to address, conservative, liberal, like, democrat, republican alike, is how do we

take all of these changes, but them into a package that is affordable and decide what we want most of. if we are middle aged, do we really want most of government growth to go to ourselves? or would we like some of it to go to our children that we would like some of it to go to the uninsured, that is a question that faces us and it faces us in big ways. now, there is a fiction that comes about, i think again on both the liberal and conservative side about fixing medicare. i would say in many ways there has been unison on not fixing medicare. from the left, you get the argument that you can't fix medicare by itself. we can only fix medicare if we fixed medicare as part of some very grand scheme on fixing total health care and er economy. i am not opposed to trying to fix health care in the economy. and is health care reform bill attempts and some moderate ways to try to do some of that. the notion that you can just leave medicare alone, that medicare can operate without a real budget in the midst of all

of this is somewhat silly. medicare is in many ways like the line in football. it leads. and if you talk to the head of the insurance company's, i have done that, they indicate that many of the prices that they set for the goods and services they provide is directly related to what they see medicare set as a price. maybe we can set a price sometimes all we can allow allow a price according to what private payers are paying. medicare leads. is the line. it is the begin july. and it actually makes a big difference in how total health costs grow over time. there is another metaphor if i can use it. and that has to do with the notion that we don't know what to do about medicare. health reform is as big as the economy of france. there is no way today we are going to determine what the economy of france going to look like 10 years in a. there's no way did it we will determine what health care will look like 10 years now. that doesn't mean we can't make decisions and we can't start up processes. it sort of reminds me like

parents arguing over child. you may feel your child needs to spend a lot more time practicing the piano or a lot more time studying. your spouse may be a little more lenient. a little bit of sesame street won't hurt. but if the kid is playing in the street, you can sit there and debate whether you want to get to watch sesame street or play the piano. but you shouldn't leave the kids playing in the street. in the matter, leaving medicare alone in an unlimited budget, an open-ended budget with little constraint on what is provided in the way of services by doctors, on what the public can demand, it just doesn't work. it is not a sustainable system. we are going to fight over the. were going to fight over the issue. will fight over next two and will fight over it 20 years from now. it still doesn't mean we can leave the system with an unlimited budget. medicare leads. it has got to accept that role. just to show you the role of medicare. this is just medicare in terms of the total health spending. medicare is the bottom portion on there in terms of just huge

growth, a percentage of gdp that it occupies. from the right you get the notion, well, medicare can't regulate prices. we know we don't like wage and price controls. they failed under president nixon. they will fail again. i hate is nothing but every insurance company in america, including medicare, sets prices. it might not set them very well, but there is something that stopped the drug company from charging an infinite amount for the drug. medicare doesn't regulate prices very well but it does set a price on everything it does. and it does decide what its medical care and what is not medical care. it does regulate. to the question of whether medicare should relate or not is a little bit silly. the question is how can we regulate it well. , and the issues we have to address, is how medicare favors specialization over primary-care, like other health insurance by the. how medicare favors chronic care overtures. i talked to had the drug companies to admit they will spend money for chronic care

research. they want to spend a lot less on chairs because chronic care raises a lot of profits and cures don't. that is a system we have in place. that system we want now, is that the change we believe in? of course, it favors a two-tier over prevention. another fiction. reform should avoid creating any looseness. this is a great political fiction that comes about when you talk about medicare reform or tax reform or anything else. there is this notion that the government is only beginning of the winners. it only provides more benefits to people, tax cuts to people. that's what government does. government operates on a balance sheet that there is nothing it does on one side of the balance sheet that doesn't have an effect on the other side. is $500 billion increase in the next 10 or 12 years in medicare and a long term care spending, or more, is going to be paid for somebody else is going to come up with a $500 billion. it will come out of children's programs, it will come from somewhere. everything government does is creating losers.

the only policy that doesn't create lose is the status will. again, the debate is not whether we have changed, it is how do we regulate, organize a channel that energy doing toward good things. let me end with just a couple of other facts. the average health care costs per household in the united states now is about $21000. i am adding and not just the cost of your insurance. i am adding the cost of medicare, i'm adding it all in. average cost today is now $21000. this is the type of numbers that len nichols was struggling with when he said that we actually waited too long to deal with health reform. how do we pay for that? right now we already pay for that through taxes of about $12000. by the way, i had in the cost of tax subsidies to the numbers you were before. and we pay about $9000 other means, largely by the way on the tax side by the way is through deficits. what is the tax rate that is

required to support medicare alone? in 1990 it was about 4%. in 1990 it was about 4%. in 2010 it is a@ @ @ @ @ @ @ @ the physicians in america, and

it would be an egregious error to imagine that physicians all have the same position on health care for. they are just like the rest of americans that they have all sorts of partisan inclinations one way or another. the point though i would like to make that i think has been lost in some of the dinner recently, is that there is something very common among all positions that seems to be in the background of this. and quite silly, that is the hippocratic condition. physicians are professionals bound together by an oath and in cornerstones of that oath are to do good, and to always avoid harm for their patients. that is there from day one. i am privileged to travel around the country and talk with everyone from medical students, or a spider and medical students to the world's best specialist. that binds them all together and they all agree on that.

that is why you do not hear physicians arguing against covering the uninsured. and for them it is not a policy issue. for them, they see the net impact on patients. they see what happens when an uninsured individual is allowed to have a chronic illness, blossom, develop, go untreated and then they show up in the emergency room at two in the morning. based in does that might've been avoided with better prenatal care. and they are the people who are at the bedside, as you will hear from my colleagues at the end of life. so they know it is critically important, not just an economic question. it is a human question, an ethical question, to cover the uninsured. and they are behind that. they also are painfully aware of what earlier speakers have lead to two, the lapses in quality, the lack of efficiency, the increasing affordability in the system. and they want to see that

rectified. so as i move to talk more specifically about the question at hand, the role physicians play in medicare and a larger health care reform, please keep in mind that ethical underpin. that being said, physicians are concerned about medicare. they have done their best to treat medicare patients over time, in a system that has some fundamental flaws, as i will mention. the thing that is a very immediate issue for them is we are not engaged now in the first attempt to contain medicare cost. there have been earlier attempts, some of them are playing out. one of the most blunt instruments that's been applied to medicare is something called for the policy in the room, the sdr, sustainable growth rate around physician payments. it is an approach not focused on patient needs.

it simply was an across the board attempt to tap down medicare physician cost. if that were allowed to go forward in its current configuration without some change in the legislation in front of us, it would actually cut physician payments this coming january 1 by 21%. the net result of that does not require a mathematic equation. if physicians can't afford, they can't maintain their practice financially, when they see medicare patient, access for medicare beneficiaries would fall. that is a simple fact and that is why in both the house bill that is before us and in the senate, you see a tense two in one way or another address this, to prevent falling off that acts as clip for beneficiaries. the issue about the medicare reimbursement goes beyond simply

the physician payment rates. there are lots of other support that flow through medicare, especially to what often are called the safety net hospitals. and many of those hospitals are familiar to me in academic medicine because they are teaching hospitals. they are often the places with the trauma unit or the burn unit. they are also the places where doctors learn their craft. there are a whole series of special medicare payment that go to those hospitals that have been at various times discussed as potential ws to sweep up savings, to pay for the cost of insuring those. in my view again, this would be another clip we could fall off, to destabilize the safety net hospitals at a time when we need them as much or more than ever. would be another one of those very unwise steps we might take in hopes of saving money. so the physicians i speak with are encouraged. these issues are being recognized. no one is sure what the solution

is, but they know that they troponin step, the use of blunt instruments like this will not get us where we want to get in terms of quality. this feeds into another aspect that really was alluded to here. our entire health insurance system, and that system is strongly shaped by medicare is driven by fee for service payments, essentially volume-based payments. to put it in the extreme, the more severe illnesses people have, the more treating them is incentivized. that is where the rewards in the current systemwide. we have undervalued primary care. this is the reason you hear so many people correctly say this looks more like a sick care system than a health system. i see more and more physicians ready to step out of that world. the colleagues that i speak with

know that being paid to intervene when things, illnesses have gone too far is not what they went to medical school to do. and they are ready to consider alternative payment methods that start to focus on value and outcomes as opposed to volume. that unfortunately is being talked about only peripherally in this debate, a point i will return to right at the very end. i want to also address a second point that i think is being lost in the current. the question of doctor joyce is a very legitimate one, and i got you the opportunity to pick the physicians that care for me. but the bigger question i think americans are relatively unaware of is will there be a doctor to choose from. we went for a period of almost 40 years in this country where we did not expand our medical school capacity at all. even as our population was

growing. most of you know what we did, we started importing internationally trained physicians to fill our gas, especially in rural and underserved areas. that is now coming home to roost for us and it is a problem. i am not sure what the right number is, but we've had a very hard time in our own workforce studies finding a projection that doesn't show's facing doctors shortages in the hundred $250,000 range, doctor range by 2025. that is a lot of doctors and we don't have doctors freeze-dried on a shelf. it takes a minimum of seven years to fully train a physician. this is a problem that we have been very concerned about for several years. it is an even bigger problem in nursing. we're in the same time period the shortage is projected to be as high as a quarter of a million nurses, and then you

certainly detected that the most acute point in all this is primary care. fewer and fewer physicians want to go into a specialty that is undervalued and underreported. so as we say we want to shift from sick care to primary care and preventive medicine, we are not producing the people to do it. the most encouraging thing in the legislation so far it, as was in the presidents budget proposals is an attempt to reverse these trends. without going into detail, there are large set of programs, including the national health service corps, something with his urge to serve that i see in so many young doctors were that can be strengthened so we can put those doctors where many of those poor uninsured or underinsured patients are. that so-called title vii and title viii programs that not only help us expand numbers, but will help build primary care and will help increase diversity in medicine. so these are embedded. they are not at the forefront of

the debate, but in the end we can talk about policy all we want but if there is no doctor in the house, we have a problem. the last point i want to make is just circling back to something several have talked about. we have wrapped ourselves up in health insurance reform, where is the health care delivery reform? i am fundamentally very worried about the lack of discussion about how we transform the care model. in academic medical centers, teaching hospitals and medical school, you have typically physicians and doctors working together under a single umbrella, under the old fee for service problem doing lots of procedures. but as i talked with them, many of them lament the fact that we don't do a very good job of keeping populations well. a following patient, longitudinally over time. they are really eager to move them to better care models. what they lack in many cases are

the tools. medicare, for many years, has had a lot of demonstration authority, but they have been fairly limited projects, a certain kind of disorder here or certain payment model there. there is another piece of legislation beyond the major senate health and health bills that i encourage all to pay some attention to. it is a house bill h.r. 3134. and it is a very small bill that is an evolution as every bill is and it is to create health care innovation zones. h. i c. i think at his time in the course of the rest of this debate to do what we do in other areas of american enterprise to say we are going to identify zones where willing providers, doctors and hospitals, together with willing insurers, especially medicare and medicaid, can come together with other partners and really start to shift towards that care that is based on outcomes and quality as opposed to simply generating

volumes. of activity. it has a long way to go i think before it is embedded in the major legislation, but in conversations, the senate, cms, i think people know that we need care innovation as much or more than we need payment reform. and i sincerely hope that this is the place in which doctors, hospitals and patients can come together in a different way. thank you. [applause] >> good morning, and thank you, susan, and to health affairs reporting on this very important event. what i thought i might do is give it a little bit and talk some of the issues that were brought up early in the morning but really start with the facts. the facts on the american hospital association. so as we think about bending the cost curve, let me start with two commitments that we have made on behalf of the nation's hospitals. the first is, as you have probably seen, in conversation

with the white house and with the senate finance committee, we have committed to contributing to again, bending the cost curve and contributing $155 billion over 10 years. $155 billion over 10 years. that would come through three major areas. fact one is lower payments. so as the rates increase over time we have committed to accepting a lower payment increase rate over the next 10 years. secondly, and there'll brought this up well, less money to care for the uninsured payments, disproportionate share hospital payments, payments that go to our nation's safety net hospitals, generally, to care for those who don't have the ability to pay. and as coverage increases, this is a link directory to coverage, payments for those be reduced and that would be another part

of the savings. the third part, a small piece, is readmissions. we do know that there are instances where there are avoidable hospital readmissions that cost medicare dollars and we are committed to improving upon that. so that's commitment one. interned $155 billion over 10 years. but i really would like to build on what gail did so eloquently this morning talk about another piece, which is outcomes. we have also made a commitment to ourselves and to the community, a pledge to implement a strategy, a campaign that we called hospitals in pursuit of excellence to improve quality and efficiency. so we are really committed to taking known best practices, the science that is out there, and accelerating and spreading those practices so we can eliminate these major areas. st to start on those, we have identified eight topics for

which we know, again, best practices exist, hospitals are working on and where mick and significant improvement that as significant improvement that as the session talks@@@@@@@@b, @ @a commitments, we have also committed that again, as a group

working within the health care system, there are longer-term initiatives that we need to address. improving care coordination, again, positively impacting citizens in our country in terms of facilitating not just the discharge process but care across the continuum. implement health information technology that we all know well is so important, and so critical in terms of modern anything in the health system, preventing patient falls and improving perinatal care. these are the issues where scientists are still evolving, measures are still developing but we feel a commitment that these will not only improve quality but obviously improve efficiency as well. also as just was talked about, we are strongly encouraged by the need to efficiently design, test, and learn new ways of delivery and payments. we cannot underscore that. and so we strongly support voluntary demonstration projects that are encompassed in today's

very is bills, to think about how we may really test and learn new models. so bundled payments. bundling payments together fm different providers into one lump sum payment that could go to a provider core set of providers, and then it was up to them to decide how to deliver the most effective care for a population based on one payment. that is a model that is worth testing. we are not there yet. we need to learn about it, but we strongly encourage that. accountable care organizations, which have seen some bills which again is organizations that will be accountable for a set of patients who are geisha or a population that will deliver a range of services to provide the best effective care for them. we need to test how accountable care organizations may work in tomorrow's delivery system. so again, committed both financially, committed in terms of quality and improvement in

efficiency and committed to learning and testing new models of delivery and payment that will further our country. i think the impact cannot be underscored. as we view these impacts, beneficiaries will stand to benefit. improved quality today means fewer infections, means avoiding unnecessary readmissions. we certainly know there are plans readmissions. we know there are readmissions that are not related to the initial reason you may have first gone into the hospital, but he said bobby's a there are other areas we need to work on. impact on health care cannot be underscored that we are talking about making the health care system more efficient, the entire health care system, which benefits beneficiaries as well as providers as well as purchasers and payers of health care. and it as susan has said quite well this is about reducing the rate of the cost growth. so this is very critical in terms of where our nation goes in terms of the financial

organization of our health care system, reducing the rate. these issues, again, the american hospital association is committed to working on comprehensive meaningful reform. we recognize the need for slowing the cost growth and we recognize that it is going to take all of us working together to make that happen and it is a quality and an efficiency issue. thank you. [applause] >> thank you, again to all three of you. we will open up the session as well to questions from the audience. and as we are waiting, let me just ask one quick one because i want to make sure we all are on the same page as we emerge from what we have just heard. in essence, what we heard from you, gene, is not withstanding any discussion about class untrimmed cuss or slashing medicare, what is being talked about in terms of medicare savings quote unquote out of health care reform bills, something in the neighborhood of

400 billion, $500 billion over a 10 year period. really is kind of chump change, you are saying. you ain't seen nothing yet, given the rate of growth in medicare and what the nation will have to eventually do. and in terms of thinking about winners or losers, you said obviously there will be some losers. but we really have an area of ambiguity around the whole notion of what will happen to beneficiaries out of all of this. you said hospitals are committed to providing better care for beneficiaries at the end of the road that will actually cost less, subjected to fewer infections, falls and hospitals, everything else. so theoretically, somethings could actually get better for beneficiaries out of all of this. on the other hand, i have concerns about how much doctors are going to be paid, who knows whether beneficiaries are going to have access to doctors, transeventy music. and there also seems to be some discussion so much on this panel but there has been a lot of

discussion about medicare advantage plans in particular. and that people enrolled in those and that they may lose benefits. so is there a clear bottom line from all of this of what the impact will be on beneficiaries out of the medicare changes related to health care reform, or not? gene. >> again, remember we're talking about being a cost growth curve. we're talking about was the rate of increase and the benefits of people are going to get. so next year people are going to medicare than they had last year and the following year they will have better care than they have next year. so the question is if you however put less money into a system, then you would have a system that is basically open which the amount can be almost unlimited, does that mean that there is an impact? simple accounting says there is less money means that the price of something has to go down, or the quantity of what is provided is going to go down. i think fortunately, maybe i should say unfortunately there is enough waste in the system

and in that practice there are probably a lot of things that will not impact on people. but if there is a consequent of reform, maybe that is making $300,000 a year doesn't get much of an increase, salary increase in the next few years, or maybe when he or she becomes more efficient in providing me surgeries, we ratchet down the price of knee surgeries at a much asked to rate his income doesn't go up. maybe fewer people do need the surgery and maybe the best and brightest by not going to need surgery, they might go on to education. and so there will be shifts so you can't guarantee when there is less money in a system that somebody somewhere is not going to benefit concert there will not be less money available in a system that provides more. but as i say, it is a little bit silly in the context of health care reform because we know medicare is unsustainable and all of us on this panel are talking about ways we're trying to get at this, by billing payments, for instance, accountable care organizations

does they will provide a little less growth in these systems can we do in the most efficient way. so that is the question. there will be somebody who gets less care somewhere and there will be some people in the system, some drug manufacturer, some doctors, some nurses, maybe people who are very worthy who might get less payments in this system because there would be less money than otherwise. >> darrell? >> we have to spend less. if we don't, we are translating this problem to our children and grandchildren. given that we have to spend less, if that's all we do, if we simply put the brakes on, reimbursement, there will be holes that began to appear in the care for beneficiaries. but we are not in the dark here. gail made a very important reference earlier. she talked about -- she mentioned three systems that are frequently cited because they are low-cost, high quality, high

patient satisfaction. she mentioned the mayo clinic. and having visited those and talk with their leaders they have very clear ideas about how to bring cost out of the system while preserving quality. the problem is they are in relatively simple environments. poverty rates are low, incomes are high. we need to take what they know and empower more people in america to scale it up and apply it to tougher environments. if we do that, we really can. i mean, bidding the curb is an empty policy phrase and let you talk about what a care delivery system looks like. we actually can see those kinds of systems out there. we now need to translate them to the rest of the country. it will not happen by flipping a switch. is going to take really, gail used the phrase was, supercharge demonstrations involving lots of

willing parties to do this. >> we all have a shared responsibility in bending the cost curve. so that is clear and we have to address it. if it is just payment cuts, then there is a risk. absolutely a risk in service of. shortly hospitals will not cover my squally by any sense but there is a risk. it must be met with copies of reform, and the innovations supercharge demonstration projects have to be part of it in terms of the overall picture of reform. so yes, if they are part of it, we can do better in terms of cost and quality. >> let's take some questions now from the audience. do we have one right here? we have one right down here in the front. >> good morning. i am judy paris. i am a clinical social worker and a consultant in long term care. since this is the medicare section, i had a question. i was part of a negotiated rulemaking committee in the late '90s on provider sponsors

organizations. and a number of the panel members, dr. kirch and others talk about the need of system reform, giving doctors and providers together. and i left that issue long ago. i am just wondering, i think it is still in statute and i am wondering how that would fit into your thoughts, if you know of it, and if there is anybody who haven't tried them in terms of system reform and pulling the comprehensive pieces together. >> we have a toolbox in the united states that is brimming over with a very solid concepts, things like accountable care organizations, provider responder organizations, medical homes is another one we are all hearing a lot about. but my observation is that we are suffering from concepts in search of people to implement them. and right now what i think we need to do is use the considerable power of the federal government in the case of medicaid state governments to

empower the increasing number of people who are willing to implement them. the number of places where they know it's about interdisciplinary team-based care. it's knowing about having every provider, regardless of discipline, practicing at the top of their license as opposed to some optimizing each of the. there are so many people i've encountered around the country who would like to pull the pieces together, use the tools. the tools are there appeared the authority is there. i think we need to use the opportunity of the legislation to really inject it with some energy. >> did you want to add something? let's take another question. we got a couple here and then we'll go over on this side. >> i am from the american college of teratology right next-door. i've been practicing in the academic center for the last 25 you're so i'm really glad to hear a little bit about the academics and what is going on with the work force. question, and also just excited to hear about mentioning

quality. and like we have a lot of quality tools that we would like to see implement it. i was wondering though about the use of registries to track quality. one of the things we mentioned is change, and changing delivery. but if we don't make sure we are getting the quality we want from those changes, how are we knowing we are getting the quality? is that one of the tools we should be considering? >> i think registries are just one aspect of applying this incredible power of information technology to health care in a way we have failed. everybody in this room must marvel at how many of us go see a new physician and what you get is a clipboard with a piece of paper on it. and you have to reinvent yourself with each visit and each new doctor because there isn't the it platform we need. >> let me just jump in your. for people who might think that registries are things you sign up for when you're getting

married. why do you clarify what registries are? >> there are various forms of registries, but often there are ways of garnishing information from populations of patients, perhaps population of patients with the same disease or sing the same kind of treatment to learn from them, to learn what works and what doesn't work and what is most cost-effective. >> so it is a way of tracking. what is done to patients, what happens to them over time and then try to figure out how to learn from that to improve care going forward. >> more than tracking. it is the learning, but you need information to learn from. >> gene. >> if i can add maybe just a disheartened know, i worked for four years with the national committee on vital health statistics which in recent years has devoted a amount of time to trying to implement electronic health records taken with regard to this question, the previous one, it is quite clear that improved information systems themselves do not necessarily been to the cost per. they offered the opportunity for more efficient systems, but in

truth if you have no budge constraint the incentive to take advantage of these information systems is pretty small. systems is pretty small. in@@@@@@@@ú@ @ @ @ @ @ @ @ @ @ it is going to have an effect. so you have got to somehow or another, you've got to match all

these efforts, electronic health records, provider groups, registries, you have got to have them within some sort of a budget constraint where there are incentives for people to do the more efficient higher quality thing at a lower cost. and it may include in the case of radiologists whether there are some alternative providers with a slightly less gail might be able to do the same amount of work for slightly less these. those types of issues -- there has to be an incident to make those types of changes. >> i think we had another question here and then let's go over to the side. >> former dod in congress. there is a question that i would ask you gail as well, but let me make two assumptions. one, that we ought really are trying to build a healthier country. and a second, it is 2019. a question for you all is

comparing the current track run versus some sense of where health care reform may take us, how are we doing in 2191 versus the other on status, quality, affordability, and access? >> in 10 or 15 seconds, if you would. maulik. >> we don't have a choice that we will be better. we just don't have the choice we have to commit to it and we have to move forward on it. it might not happen in three years. it is going to take some time but it will happen. >> darrell? >> i think those things will change at different rates. the one thing that won't change sadly overnight is the problems with health status in the united states. the obesity, diabetes spectrum problem of problems didn't appear overnight and we're not going to reverse them overnight. so i think you're going to have to be patient that while we can redesign systems, reimburse rationally, it is going to be a slow turn for us in improving the overall health of the american people.

>> i don't know the final answer to your question but i would say we are on our current after our book basically, our economy is in the threat of blowing up and health care could end up taking hits that will not be intimated very efficient or very done very well at all. and i think come i don't think it is just a matter of waiting a few years. i think actually in the next few years we will seek enormous pressures on health care, if not to wait for some of these improvements that we want to take place, but to make other changes that are a bit more drastic. and that will mean i think quickly changing the payment system to reward quality, to reward of volume last, to allow for alternative providers, to do all of those things that i think they do enhance our probability, enhance our chances of leading quality increase at the right rate. out the mystic side says we have always grown as an economy and we've always gone as a people because we're always able to stand on the shoulders of the giant who were there before us. as long as we can take past

knowledge and build upon it i am fairly optimistic about the future. >> all right. we had a question over at the rear. >> judy, new york city health and hospital corporation, safety net hospital, largest the book hospital system in the country. no one is more committed to health care reform than the safety net hospital. we served last year for hundred 50000 people with no insurance. by the disproportionate share hospital payments, or dish payments, are about a lot more than just the uninsured here they are also because medicaid under pays. and so in new york, for example, they have been paying about $0.35 on the dollar for outpatient dedicate this at. they are improving that, but they are cutting inpatient so one of the questions i have, and safety net hospitals should not be destabilized. they are needed now more than ever. and so what are my questions to the aha representative here is how will you accommodate that

medicaid underpay when that will continue since the states have such drastic deficit while you are cutting dish payment? thanks. >> dish payments go away. i think that is a prick of these because exactly what you mentioned on the safety net hospital stabilizing still continue to be uninsured and other issues so it does not go away. it does get reduced as coverage gets increased. so there is a direct linkage, and as coverage is increased for a while but it cannot go away by any means and we have to seek again to protect safety net hospitals. >> any of the rest of you want to comment on that? okay. let's see, did we have one more question. let's take one back there.

>> again, david. the atlantic monthly published an essay by david this month i don't know if you're familiar with it, drawing a lot of discussion about health care, how american health care killed my father. has any of you, of the panelists read it? he makes two interesting point. one of course is hospital required infections which was the cause of his father's death. if you combine that with medical errors, that is now the third leading cause of death in america queered a really bad job on transparency reporting errors. i would be interested knowing what their position is any other point for gene is the article, the authors cite that the problem is through medicare being as you suggest, the market maker i think is another phrase for your comment, medicare has done a bad job of basically subsidizing to many hospitals keeping the acute care system in place and not evolving the system as we know to more sort of aging in place, more decentralized care delivery.

>> the first question on hospitals and hospital acquired infections and so on. >> i think in terms of the 10 year anniversary, we clearly have a ways to go, but there has been significant substantial progress in the last 10 years. incredible progress by hospitals and every health care provider in terms of patient safety. in terms of the infections, that is why we specifically focused on these issues. we know it doesn't happen overnight but we are committed to making that work. and the only way to make it work is to really promote best practices, learn from each other, and transparency is a part of it. aha has always promoted transparency on meaningful relevant indoors measures. and more and more organizations and national and state bodies are following that. >> in terms of medicare, i don't think any panel would disagree with the comment you made or reflecting in what was in the article. i should say that a lot of the bad incentives and medicare does reflect a bad incentives that are reflected throughout the insurance system in which we

have a volume. and there was some incident where you and i go to the doctor to that is just a system that is not sustainable. i should say that one of the more interesting aspects of the health reform debate, given that this is an evolving system and given that we never know all the answers, is this an attempt to empower medicare, or hhs or some alternative body, to have much greater power to epaulet suggestions that they make overtime, suggestions they make not only for larger experiments, suggestions they make for perhaps not just lowering our changing the rate of growth in payments but actually ratcheting down payments in certain areas, where technological improvement allows services to be done at a much faster rate. suggestions where they really think we can improve the quality of care. i am not saying those will answer all the questions were certainly that they would end the fact that half of all

doctors will provide below median surgery i don't think that will stop. but we can provide better information systems. we can provide better incentives to actually try to improve upon the record that you signed. >> darrell? >> i have not seen the article but i always become concerned about the focus on medical errors, poor quality in the abstract. i was responsible for hospitals and medical nursing staffs and nobody felt the failure more acutely in the face of medical errors than those professionals. it isn't that we have uncaring people in the system. is the design of the system itself, and it actually goes back to the reimbursement methodology. if everything is paid in pieces, then each activity becomes a standalone piece and there is a scene between the activity. one consultant doesn't speak to another. the primary care doctor doesn't get the information they need.

it is those scenes that have to be close and to close them we have to change the way we pay and we have to change the way we actually designed them and deliver care. >> we are going to bring this tale to a close here shortly. i do want to mention that if there are those who are interested in receiving more information, particularly from gene's perspective, you can e-mail him at stirling. take a look at the health care website. as well as the websites of the american hospital association and those are respectably aha.org and a amc.org, for additional information about what we have spoken about this morning. i just want to wrap a. i don't know if all of you are lucky enough to have your parent still surviving, but let's say for a moment that you are. but they are busy, retired

people. they have a few minutes to listen to you while they dash off to play golf or whatever it is that they do. so you have got about a 30 seconds with image are going to sit down and explain to them. mom and dad, here's what i want you to know about medicare and health care reform. you have 30 seconds each. gene. >> first, i would come into them that my daughter is a pediatrician who works actually at one of these systems and tries to be accountable care, comes close which is kaiser in northern california. she gets paid a lot less than a lot of other people in the system. she loves her work. i would say we need to actually fund many more people like her and provide more payments to those people who are providing preventive care, who are focusing on cures rather than just chronic care. and i would say to them that as a current member of the elderly, you're probably not going to be affected very much by this health reform.

and that, even the medicare reforms are going to come along will probably not affect you and your as much as they are your children and grandchildren. so help us think together about how we want the health care system to evolve over time. how we want government over time. what we want to live in the way of health care for the elderly versus the uninsured versus the young. and i think they would very much engaged that conversation. >> darrell, your folks are even busier than gene's. they have 25 seconds to listen to you. [laughter] >> using the two medical school because you believe it was a noble profession. doctors and the nurses and the other professionals are not going to abandon that if they are not going to abandon you but we need to fix this system, or the two granddaughters you love are going to be in real trouble. >> maulik? >> will have a stake in this. it is important to all of us, and to all our kids. and to get there we need to address efficiency and we need to address quality, and it will

take time. it will not be pretty but it will happen in the next decade. >> arai. on that note we are going to take a 15 minute coffee break. let me urge you, please, to come back for our final set of discussions today, which are on very critical end-of-life issues, and why it might or might not be important to address them in health reform. to a proposal that has surfaced in the house bill, h.r. 3200, to pay practitioners under medicare to conduct advanced planning consultations with patients. we have three terrific mandalas to discuss that issue. will also have an extended q&a session at the end of

>> welcome back to our final session of fact versus fiction, making sense of healthcare reform issues. and we have left for our last session today one of the topics that has obviously become very, very emotionally fraught on the town hall and other electoral -- i guess it's not literally electoral but i guess everything in the end is the electoral trail, which is the issue of end of life. for all of us, we know we all have a 100% probability of death. it's something we prefer not to think about. however, most of us have had to

think about it just in the last year alone. personally, i've lost several elderly relatives. i know that we all think about our parents. we think about ourselves. we think about our children.@@@@ understand what is meant by it.

and this particular provision in h.r. 3200 section 1233 advanced care planning consultation, obviously, has caused a lot of difficulty for people. it is a very tediously long section, as you see here. and this is just a tiny fraction of it. i didn't load the whole thing up onto slides today; otherwise, it would be a 20-minute presentation in its own right but as you see, it kind of goes on and on and on. and it's understandable that not everybody could read it or has read it or understands what it is. but that's the point of our panel discussion here today. it's to put all of this in context. and particularly, to put it in context of the end-of-life issues that we see every day in the u.s. healthcare system and that many of us will experience in our personal lives. as we know on the campaign trail, this provision for advanced planning consultations that would be paid for under

medicare has caused a lot of difficulty. again, i'm just going to mention one news story which is an abc news piece that kate snowe did on this back a week or so ago and pointed at a healthcare town hall with obama, president obama, hosted by the arp a man said, this is being read -- this being section 1233 is being read as saying every five years you'll be told how you can must die. i don't have to mention all the other people you know who have evoked this language and worse in describing what is in this provision. and because there is so much emotion, we thought it was especially useful to have these is next three particular individuals speak about this from their perspectives. so i'd like to introduce now, first of all, christine castle who's an m.d. who's president of

the american board of internal medicine with a lot of end of life care experience and knowledge under her belt as you will hear momentarily. she will be followed by dan meier, m.d. who's the head of center of care at the mt. sinai school of medicine, a very noted expert from way, way back. they have written about almost every aspect of end of life care from physician-assisted suicide to euthanasia to pallatative care and they know there are people doing literature searches on them right now to see what they have put their names on in the past as has been the case with so many people over this period who have written and thought deeply about these issues and are now being accused of holding all kinds of beliefs. you know, that's not what it is all about. what it is all about is really trying to put into perspective

how one goes through in america the last stages of serious illness and how one does or does not prepare for them. how one's family does or does not prepare for them and what happens to you if you don't prepare for them and you end up perhaps in a situation that you possibly would have wanted to avoid. that's what they're going to talk about, notwithstanding, everything else that they've written or talked about in the past. and then we're also going to have -- and this gentleman holds a very special place in our hearts at health affairs, jerald winakur from san antonio. the reason why he's so dear to the hearts of healthy affairs he was the author of an extremely important narrative matters piece. it's the section of our journal where we ask people to give first-person accounts of encounters with healthcare and with the healthcare system that have a policy point to them. we call them policy narratives

but that's a dull phrase compared to what they are. they really are first-person accounts of the joys, the pain, the suffering, the complexity of being a patient or being somebody working with a patient in america. and jerry's piece of 2005 on the aging of his father and the dissent into dementia of his father and his own work as a doctor watching his father what do we do with dad is the piece was named is one of the memorable pieces we've ever published. so with this -- with these three individuals, spectacularly situated to discuss thesew! issues, let's turn first to the first of them chris cassel. >> thank you, susan, and thank you -- let me add my thanks to you and to health affairs for pulling together this important

conference and helping to restore, i think, both civility and important substantive content to this important national discussion about healthcare reform. and my -- so my topic is to talk about the data that -- and very quickly i'm going to do this 'cause there's a huge amount of research that is now available to us about what patients want, what families experience as people have advanced in progressive illness. but before i do that, i want to point out that you're going to be hearing not only from me but from two other physicians who actually have the knowledge and skills to care for people with advanced andu complex illness. that is to say geriatricians and given that all three of us are board certified geriatricians

that it's probably about -- you know, a tenth of the nation's supply of geriatricians -- [laughter] >> are here today and so maybe we should actually be going out and taking care of patients. it would be better. that is an even more of an endangered species than primary care in the united states for all the same reasons. it's very difficult to do. very challenging and undervalued and underrewarded and needs better systems of car. -- care. it's also important to recognize that taking care of patients who as susan mentioned are going to die, as all of us are going to die, usually means you don't know which patients are going to die and you take care of people because you want their care to be personalized to what they want, to what their values are and to improving their quality of life for every day that they have left, every week, every month, however long that might be. so it's kind of a fiction to think we can set up policies

that look just at end of life care as if it's a definable and predictable slice of when a patient gets to that point. and so what we really need is a healthcare system and providers who have the skills to be able to work with patients over the course of that process. so we're talking about patient-centered care here, really. and so we really have a good deal of knowledge about what patients with serious illness want. now, mind you, it is a diverse country and people want different things and one of the most important skills that the providers, particularly, the physicians need is to be able to have those conversations with patients about their values, with their families or without, at their choice or if they are unable to speak for themselves, having known them over the course of their life so that they can have told you before they became incapacitated what

it is that they would want for themselves. so it's -- a lot of is about communication and about relationship-building. but if you look at surveys like this one, people want pain and symptom control. they want to avoid a painful prolongation of the dying process and actually the vast majority of people will tell you this is what they want. they want a sense of control and dignity. so that word "control" is very important. the control has to be with the patient. they are concerned about burdens on the family, both emotional burdens and financial burdens. and they want help with that. they want help with understanding how to reduce those burdens. and they want to strengthen relationships with loved ones. you know, we often talk about the beginning of life, birth at a time when there's great meaning to the significance of giving birth to a child and a

new life. well, the end of life is just as profound and potentially just as meaningful. and, unfortunately, in our healthcare system, we haven't given it the kind of prominence and the kind of spiritual and otherwise emotional significance that the patients are telling us they want. and indeed there's a lot of data that they're not getting what they want. suffering in united states hospitals has been well documented. and this is in more than one national data set. this is one of the first ones that was also supported by the robert wood johnson foundation that really put this information really in front of the nation's medical community in a very important way. this was a huge study across many different hospitals with people with many different conditions. 50% of whom only lived for six months after they entered into the study. so this is a very sick

population as i said earlier that they -- you can't always predict, but it's a way of defining people who have very advanced illness. half of these patients had moderate to severe pain more than half of the time during their last three days of life. so that is clearly unacceptable. that is not what patients want. 38%, almost 40% of those who died spent more than ten days at the end of life in an intensive care unit unconscious and on a ventilator. again, if you talk to most people, they will tell you that is not what they would have wanted. and while it's not on this slide, the same study pointed out that one-third of the families of these patients lost most or all of their savings in that last)illness. this is not medicare dollars. this is not health plan dollars. this is their personal family savings.

so when you talk to family members -- now, you know, when patients die, of course, we try to ask people as they're going through these illnesses what they want and what the experience is like for them and how can we improve it. but part of what matters in the way we care for patients at the end of life is the memories that are left behind. and the way to find that out is to ask the families. so family members tell us this is what they want. they want their loved one's wishes to be honored. they want to be included in the decision process. they want -- and those are the two things, by the way, that the legislation that susan put up there addresses. a way of getting -- the patient to tell the doctor that information. the rest of this is what good pallative care and good hospice programs can do. personal care needs, practical

help, honest information -- i can't tell you how many times in many studies and actually in patient interactions that i've had where people just said would somebody tell us how to prepare for it, how to cope for it. 24/7 access because when things change or a question comes up, it's not always 9:00 to 5:00 monday through friday. they want to be listened to. they want their privacy respected. and the patients' families would i like to be remembered and contacted on the patient's death. and again, what the families get is not enough of any of this. not enough contact with the physicians. 78% said they did not get enough contact with the doctor. not enough emotional support. not enough information about what to expect in the dying process. so we think we're uncomfortable -- that patients don't want to hear this.

the patients are telling us and the families are telling us they want their questions answered. and by and large in our medical institutions and our training we don't teach how to convey this kind of information in a caring and supportive way. and then not enough help with pain, 20%, 1 out of 5 families said this. and, in fact, while i emphasize that this isn't only about money, it is important and actually interesting to look at how the costs break down, the spending of how we spend on end of life care. and so if you look at this pie chart, this is the last two years of life. and mind you what i said before. that this is only in retrospect these people died. these are people with very advanced illness. how did they -- their cost guessguescosts of

care lined up at the end. and i think you'll hear from dr. meier is a very important place. as much as we try to get people at home. people want to be in hospice or at home, it's not@@@ @ @ @ @ @ ) right things. so we have two kinds of issues here is how much money we spend and what is it that we're getting? what kind of value for that money? well, one thing we know, though, from many, many studies is that more is not necessarily better. so you can draw some inferences

from this. and this is another study showing association between cost and quality of death. so the quality of life for the people who were dying during this final week of their life and graphed along the horizontal axis here per capita cost. how much was spent on them during that final week of life, and you can see that the people who actually had less money spent on them actually had a higher quality of life during that last week. so there's a lot hidden in that data that we need to understand better. and we need to work with. but at least i think it's pretty fair to say that spending more money is not the same as getting better care or getting better quality of care. so the last point i want to make is about advanced directives because that's what was in the legislation and that's what gave

rise to this really unfortunate mischaracterization that somebody else is going to make decisions for you. in fact, advanced directives are about exactly the opposite of that. advanced directives are about you making your own decisions and the people who take care of you being able to know about what those are because think about what happens if you're ill at home, the ambulance comes, you may go to a hospital emergency room. your doctor might not be available. you're in a nursing home. you might go to a hospital where the doctor doesn't have privileges there. so there has to be a stable document, a stable way of having this information come across wherever the patient is. so that information can be transmitted. so i went to the definitive medical information source, wikipedia, for this definition. [laughter] >> actually, you know, as we looked around for definitions,

this was the best one that came up so i guess wisdom of crowds really does work sometimes. so i won't read through this entirely but i do want to make a couple of points on it. first of all, that these are decisions that are put in writing for the event that you might be incapacitated so you couldn't speak for yourself. if you have an advanced directive and you're not incapacitated. at any moment you can change your mind and speak for yourself. people will not need the advanced directive if you're mentally conscious and competent. it's for those situations where you're not that the advanced directives are so important. the other thing is that advanced directives can be something like a living will where you say under what circumstances you might want more aggressive or less aggressive life-sustaining treatment. but it also can be used for what's called a power of attorney or healthcare proxy where you assign decision-making

to someone you trust. and often people are more comfortable doing that because it's hard to think about what might lie ahead. and so as you think about advanced directives, it's not that you have to imagine every possible circumstance that might occur. but you can make a decision about who you would like to be making these decisions on your behalf in the event that you're not able to make them for yourself. advanced directives are a way to empower patients, not to turn these decisions over to doctors, to hospitals, to insurance companies, or to the government. now, the last couple of slides here are just to point out is that when people have those discussions with doctors and get their questions answered, that, in fact, they are more likely to choose less aggressive care. and that's actually bourne out in the work on shared

decision-making, not in the pallative-care arena but in the elective care. but in the decision, not always they will choose the less costly and less aggressive and frankly less risky course of action. not everyone and that's why these are individualized decisions. but i think there's pretty good evidence that patients know how to use information and they want more information. so in conclusion, a summary of what at least the tricommittee bill has which is the one that i think has gotten the most attention. it provides medicare coverage for voluntary advanced care planning consultations, at least every five years. and the every five-year provision is just so that the doctor can get paid for having this conversation with you, which right now is not the case. we've heard about this unfortunate fee for service

volume-driven healthcare system we have. well, the volume of conversations with the patients does not get the doctor more money. that's the one thing that doesn't. so all this provision does is say that medicare every five years would pay for you to have that conversation with the patient if the patient wants it. it also requires quality measures which are getting more sophisticated all the time to be taken advantage wherever possible an end of life care and particularly advanced care planning. and that some of the medicare pay for reporting plans be linked up with that kind of performance data. now, the other -- the last point i want to make is that there were a number of us who were in conversations with the hill's staff during these -- the drafting of some of this and urging that they include actually what might even be more important than advanced directive provisions, and that

is to say, education, work force issues. we do not have a medical or a nursing work force who is very skilled in this arena. so we really need to find ways to create both training programs and incentives for more young physicians and people that darrell is talking about to go into this work and then, of course, increased emphasis on evaluating different approaches to quality of care and research. thank you very much. [applause] [inaudible conversations] >> thank you, chris. thank you, susan. thank you, health affairs, for organizing this event. and i'm very appreciative and

grateful to be here. and i have the opportunity to put some flesh and bones on pretty much everything you have heard so far today. and i decided to speak to you about two of my patients so this is a tale of two patients. one of whom i think suffered because of the way the current system incentives are set up and the other of whom i hope you will agree got what i would consider to be optimal care during her chronic and then ultimately terminal illness. and i hope as i tell you about these patients, you will think about what are the lessons to be drawn from their experiences and how they relate to the discussions about the health reform that's on the table now. so the first patient is mrs. g. who was an 82-year-old nursing home resident with moderate dementia and recurrent pneumonias. she had what i would consider to

be business as usual in the american healthcare system. multiple hospital admissions. she had four hospital admissions to my hospital. her nursing home is down the street from mt. sinai and we see multiple revolving-door options from that nursing home. in her case she kept aspirating and kept developing pneumonia. she had dementia for 10 years prior to her hospital stays. whoever her primary care doc if she had one 10 years before never discussed her wishes for care in case of future loss of capacity so there was no healthcare proxy. there was no living will. there was no evidence of any type, verbal or written, of her wishes. on this day i'm going to tell you. she had six weeks of intensive care unit she had predictable diseases.

a tremendous amount of pain associated with development of a pressure, severe pressure ulcer during that six-week icu stay. and a devastated adult son who was both very angry about what was happening to his mother and very guilty that he was unable to stop it. or prevent it. and this is not mrs. g. this is another patient who did give me permission to document her care, but this is the situation mrs. g. was in. and she also was restrained. you notice the hand restraints on this patient in the icu and the reason the restraints were here because people were afraid to use too much sedation because of the underlying dementia so rather than sedate her to keep her from pulling out her tubes, they tied her hands. so just imagine what that is like. she as i said had a six-week stay in the icu. she had a different attending physician every two weeks. we rotate on and off so almost

no continuity of care. she left the icu during week 7 of her hospital stay to go to a regular floor. the hospitalist documented in his note that he asked the son if he wanted us to do everything for his mother. and that was the question, do you want us to do everything you want for his mother and, of course, the son said, yes, what family would ever answer that question no. so it's the wrong question, obviously. but as a result, this patient continued to receive all aggressive, life-prolonging treatments that we know how to give and that included very difficult twice-daily dressing changes for her ulcers which were very deep down to bone and muscle and painful and her reaction to these dressing changes was to lash out and try to strike away the people who were trying to care of her because it was very painful and to scream essentially.

and then in between dressing changes she was curled up in a ball facing the wall and did not respond -- seem to recognize or smile when her son visited, which was causing him tremendous distress. after the nurses had had enough of what they described to me over the phone as torturing this patient they called for a pallative medical consultant. day 63. we sat down with the son that afternoon and this was a 90-minute meeting with the son and his two sons. the son was in his 60s and his two sons were in their 30s, so three generations. and we asked the son a different question. we asked him what he was hoping we could accomplish for his mother. and note the tone difference between do you want us to do everything for your mother versus what are you hoping we can accomplish for your mother? and he just erupted with anger and upset. isn't there something you can do about this pain? you know, every time i come in she's moaning, she's screaming.

she won't let the nurses anywhere near here. she's afraid of every human being who comes near the bed. so you might ask well, why wasn't anybody treating the pain before that? well, there isn't much medical education about this, i have to tell you, and there's very little work force incentive for people to enter pallative care or geriacs and you don't give people pain control with people with dementia pain is one of the strongest predictors of confusion. that people who have uncontrolled pain are delirious and agitated. and that people whose pain is controlled have a much lower risk of confusion and agitation, but a lot of doctors don't know about that literature 'cause they're not trained in it. so we did a very simple thing. we gave her a tiny dose of morphine, 5 milligrams below her

tongue in between her dressings. she was relaxed. she startedecognizing her son. she would smile and squeeze his hand when he came in. and four days later went back to her nursing home. this time with hospice at the nursing home to make sure that she got good pain management during dressing changes to make sure the nursing home staff, which as you know were grossly understaffed for people this complicated were getting support from hospice expertise. she lived another four months probably because her symptoms and her wounds were being properly cared for and because there was more support for the staff. the son actually wrote a letter to our ceo thanking him for the quality of care our hospital provided, you know, go figure. and which he forwarded to me. the cost of her care just in that last hospital stay was well over a quarter million dollars. that does not include what

occurred in the prior three hospitalizations that year. so the cost over a quarter million -- the suffering million -- the suffering incalculable@@@@@@@@@ @ @ @ @ @ patient number two, judy f. 65-year-old with metastatic lung cancer seeking guidance on what to do. she was diagnosed at age 59 with nonsmall cell lung cancer, no prior history of smoking. given her prognosis, when she

was diagnosed of 6 to 12 months. well, you know, so maybe on average people with this disease live 6 to 12 months, so much for averages. if you followed what people are talking about that we're wasting money at the end of life this might have been a patient who wouldn't have gotten any treatment because on average she's at the end of life. so why are we wasting people on the end of life. she got appropriate treatment and show lived six years after diagnosis. with the care of a superb oncologist at nyu. she sought me out at about 14 months before death because she was starting to have progression of illness, pain, fatigue, difficulty concentrating, insomnia and it was very clear to her that her oncologist was not capable of discussing what the future was going to hold. he's a great oncologist, really good at cancer care, not good at these bigger questions of

meaning and purpose and what is it going to be like when this treatment no longer works? for about 14 months she received simultaneous care from me and pallative medicine from her oncologist and lived a reasonably high quality of life and it wasn't until the last three weeks of her life that the tumor was progressing and she decided to stop the chemo. she was no longer able to go out. that's when we called hospice only in the last three weeks of her life. she remained at home in the care of her husband and her daughter, sarah, and died peacefully at home surrounded by family. so that's judy. at the time of diagnosis. a remarkable human being. i wish i could tell you more about her, psychotherapist. she was in three different reading groups. she was about the best read person i ever had the pleasure to take care of. we talked a lot about books. that's her daughter sarah.

that's her husband, george. this is one of the trips they took to italy while she was undergoing treatment for lung cancer. quality of life was the most important thing to her, and you can see she achieved it. now, this is a cartoon from the new yorker of a doctor saying to a patient, there's no easy way i can tell you this so i'm sending you to someone i can. [laughter] >> so her oncologist, as i said -- i have enormous respect for him. he's a great doctor. and he did give her six good quality years with what ordinarily would have killed her much earlier. but he is really, a, not trained and, b, not comfortable, and, c, does not have time to have long conversations about what the future holds, what the pros and cons of different treatment options are and how to help judy come up with a plan based on the facts, plus, her preferences. those of in pallative thinks

he's a really great doctor. why? he does not ignore the issue. he sends her to someone who can help her with it. me in this case or another pallative medicine doctor or a geriatrician. and, in fact, what judy got is what i call the conceptual shift for pallative care where patients receive both life-prolonging treatment and pallative care. throughout the course of a serious advanced illness until the point that life prolonging care is no longer beneficial at which point they are referred to hospice. and that's another reason why i have so many concerns about throwing this term end of life around. we didn't know when judy was at the end of life till the last three weeks of her life. and even then didn't know how long she would have. if we had made her wait to receive pallative careill it was obvious she was at the end of life, her last 14 months would have been a misery. so this is judy during that three-week period at home.

where she -- they moved the bed into the living room because it was the brightest, sunniest room and sarah and george taking care of her at home. so what are the implications from these two stories. first of all, we need to match the care to the patient's needs. we do not know as chris said who is at the end of life until weeks to days before death. we cannot save money by, you know, cutting off care for a population of patients identified as the end of life because we only know that in retrospect. so policymakers who are saying, oh, we're wasting all this money at the end of life, i want to say back to them, well, if you, policymaker, were diagnosed with metastatic small cell lung cancer should we label you at the end of life and say, sorry, no chemo for you, buddy. you're at the end of life. we'll save money on it. of course you wouldn't want. you would want every effort to prolong life with as good a

adequately of life as possible. that is not the solution. needs-based treatment is the solution. advanced care planning for both mrs. g., who didn't have it, 12 years before that terrible hospital stay. and for judy who did have it from the beginning of her diagnosis is necessary from the point of diagnosis of an advanced progressive illness. not before the end of life long before the he said of life. non-hospice pallative care is whenever symptoms, functional impairment and family burden mandate it. regardless of prognosis. and at the same time as all other appropriate life-sustaining treatment. hospice only when life-prolonging treatment is no longer effective or the burden outweighs its benefit. and the result in multiple studies, which i will not bore you with is genuinely patient-centered care and markedly lower costs. this is the one place in the healthcare system that's a

win-win-win. it's better for patients and families. it costs less. it's very clear from the data. art buckwald talked about this very humorously as only he could do. this is from his obit in the "new york times" a couple of years ago. he wrote so far things are going my way. i am known in the hospice as the man who wouldn't die. so here we have someone who failed to die on time and hospice -- he had renal failure. he had to be discharged from hospice. how long they allowed me to stay here is another problem. i don't know where i'd go or if people would still want to see me if i weren't in hospice but in case you're wondering i'm having a swell time, the best time of my life. isaac wrote life is pleasant, death is peaceful. it's the transition that's troublesome. [laughter] >> and helen keller writing in a book called "optimism" a wonderful essay if you haven't read it. although the world is full of

suffering it is also full of the overcoming of it. i want to thank judy and her family for sharing their story and personal photos with me and with all of us today. thank you. [applause] [inaudible conversations] >> i also want to thank susan and healthy affairs for inviting me to be a part of this panel. and it's a real honor to be here with dr. cassel and dr. myers. i'm a geriatrician, a primary care doctor on the front lines who helps care the oldest among us. my livelihood derives from a very flawed but necessary single payor system, medicare.

i deal in nuance not numbers. you've heard a lot of numbers from policymakers today. and my work is really dealing in nuance. in any health reform that may occur in our country, i want what's best for my patients. and i'm here to speak on their behalf, on my patients and their families that are struggling through difficult times. i'm now in my 34th year of practice. in my doctoring life i've had well over a quarter million face-to-face encounters with patients in the exam rooms, in my office, in emergency rooms, in icu cubicles, hospital bed sides and nursing homes. i spent most of my life ministering to the medical problems of the elderly and counseling them in and their families during illness and end-stage disease. many have been my friends now for decades. they trust me and i honor that trust. i advise, i advocate, i explain, i educate.

at the worst of times and when the end is near, i do my best to remain by their sides. 3 1/2 years ago my father died from alzheimer's disease after a long struggle. in the beginning of this ordeal, i thought that i of all people knew what to do when a serious illness befalls a loved one, gains a stranglehold on a family. i was wrong. we muddled through day-to-day as so many families have done and are doing across america. this is my father leonard winakur. he was an army air corps photographer during world war ii. he couldn't wait to get back home and marry his sweetheart, my mother, francis. i came along in 1948. in his late '60s my father had a major heart attack, in his 70s prostate cancer. one night past his 80th birthday my mother called me in a panic.

i don't know what's wrong he said he's pacing through the house needing air. he's all agitated. i ran over there. he was in congestive heart failure. i called his doctor, one of my younger associates. i'll meet you in the e.r., he said. it's such a reassurance to hear these words from a physician one knows and trusts. this was the beginning of a seven-year siege for my family, the beginning of the end of my father's story. it started in the hospital where i made rounds almost every day for three decades. no one made any mistakes. my father received excellent medical care, the best available in america today. his heart failure improved. but within two days he became confused and paranoid and delusional. his dementia had been unmasked. the medical condition is called delirium and it is an increasing problem in our frail and aging population. i stayed with my family every night fending off bed rails and

iv poles, check every bag plugged in his arm running interference when he went down to x-ray and the bathroom, when he became too agitated to rest i reassured him my hand on his arm or shoulder and one night to quell the demons of his delirium, i even crawled into bed with him and held him as he had done for me a lifetime ago. after four days in the hospital and with the assent of his physician, i took my father home because i knew as a geriatrician that if i did not, it would be unlikely he would ever come home again. to continue this hospital stay in this unfamiliar and frightening environment would only add to my father's confusion and agitation, require more medications, and engender even more potential side effects. a further stay would have just been a way station to placement in a custodial nursing home. what my father needed, what many of our patients with end-stage

illnesses need was less medical care, not more. they need guidance, not cat scans. familiar faces and places, not 24/7 institutional care. they need, he families need to understand the limitations of family medicine and with on the spot help education and regular communication with trusted caregivers many folks can remain in narrtheir homes and be kept there. i promised myself that i would never put my father back in the hospital again. that i would do whatever it took to keep him in his home. and my mother, my brother and i would be by his side. what did my father want? i had spoken to my parents about advanced directives and about the durable power of attorney for healthcare years before. as in most american families, these are difficult conversations. americans do not like to talk about death. 75% of us have not had a

conversation with those we love the most about how we would like our deaths to be. what we would want done and not want done. i'm not the first one to make the observation that humans have a powerful desire for immorality. no one wants to admit he or she is going to die one day and perhaps it is this. our fear of death that fuels this rancorous debate we are having but this is a question for the psychologists and philosophers. years before i had spoken to my parents about these things because as a geriatrician a primary care doctor i know how important the to get people thinking about these issues. it's a process complex and time-consuming. what exactly is cardio pulmonary resuscitation? what does it mean to be fed through a tube? how does one live on a ventilator. if i sign this forms are the decisions irreversible? can i change my mind? they made me their healthcare

proxy. you're a doctor in the family after all they said. i took a deep breath and filed the forms away, tried to forget that one day i might need them. i@@@@@@@ j@ ,@ @ @ @ @ @ in the narrative matter, ended up getting excerpted and i woke that sunday morning in august 2005 to find 500 emails in my box. thousands more followed. i was not prepared for this. i spent my life trying to solve my patients' problems, patients like doctor thi here and we went through so much together but i tried to solve these problems one-on-one together with families. touchstones, autonomy and justice. justice we teach our doctors in training today. but what i learned from these thousands of emails from folks all around the country is that many felt at sea.

in the worst of times they all too often had no one to turn, no voice of reason, no trusted resource. i wrote about my experience caring for my father about my life as a geriatrician, about all the lessons i gleaned hearing from so many people in this book which i call a memoir manifesto and in it i outline the failures of our healthcare system to adequately address the needs of our aging population and their families. i tried to reach out to all the people struggling as my family has struggled. imagine you are alone in a house with your debilitated loved one and you're flown cross the continent and at the bedside of your father or mother in a hospital icu wondering what to do next as the respirator hiss and clicks in the corner. you pace the halls of the nursing home as the aids come to remove the excement of your mother's bottom and/or you sit on the bedside watching a bag of

opaque fluid is pumped drop by drop through the plastic tubing which snakes under the sheets and under the stomach of someone you once knew and still love. you feel guilty and powerless and abandoned and angry and bereft. you have decisions to make and no one to guide you. your father's doctor or some anonymous care team on daily rounds floats in and out of the room very early or very late. you think they are going to try to avoid you on purpose your difficult questions and maybe they are. your own children live far away. your siblings are obstinate or in denial or still angry over some long ago slight, some falling out which seems silly now. you're afraid that you will make a mistake, decide the wrong thing, choose the wrong path, honor thy father and thy mother. oh, god how can i not feed her through this tube. if i just discontinue this infern respirator i know he will

die. the doctor says she must go back to the hospital to treat this pneumonia again. how many times can she survive this? hurting him. if i say enough, am i committing a sin? murder? will mom forgive me? my sister? will i ever be able to forgive myself? i consider it my responsibility to help patients and families make these difficult decisions and for decades i've done so. i have spent hours and hours with patients and spouses, hours more with children and siblings. the conversations are often complex and emotionally wrenching but as far as medicare is concerned, there is no monetary value assigned to the time and effort it takes to have these difficult conversations. not only in a time of crisis but at any time. there are now proposals, as you've heard, to compensate a patient's personal physician for doing this hard but essential work, proposals that had been misconstrued and misrepresented.

on february 24th, 2006, my family celebrated my parents' 60th wedding anniversary, the last one as it turned out. we managed to keep my father at home for over six years. it took a toll on all of us emotionally and physically and financially and yet none of us would have done it any other way. the cost, though significant, and this is an important point, were much less than if my father had been placed in custodial care in a dementia unit and i believe he was happier at home than he would have been anywhere else. still these were difficult times. we had weathered his incontinence, his belingrance and agitation. i thought thought he would break a hip and i would have to make the decision to have it fixed or not. i knew he could never survive the surgery and rehabilitation. in my dreams, i fantasized about euthanizing my poor, agitated

and confused father when the time came and he was in pain and there was nothing more to be done. .. i could never by law or sanction or edict or order cause purposeful harm to anyone in my charge. in adherence to my professional code i join the rank of my colleagues who practice with me in our time, those that came before me and those that will follow. soon, 20% of america's pop liss will be over 65. by 2050 there will be 18 million people over 85. one-half of them will likely have some form of dent inia.

only 20% will be fully -- -- of di meantia. >> the number the american college of physicians calls our current circumstance a collapse in primary care. only 300 or so are trained each year. fewer than those entering retirement. currently there is only one for every 8,000 people over aged 65 in america. why did this happen? how has this happened? doctors didn't create this problem. bad public policy created this problem. m. perverse payment incentives have undermined primary-care medicine, have promoted specialization and technology over face-to-face interactions between doctors and patients and families. all insurance systems for medicaid to manage your have undervalued doctors like me for

decades now, devalued our time, our cognitive conferencing and consensus building skills, rewarded us only for the wrong things. another trip to the er. another round of antibiotics. another course of chemotherapy. we need to take the time to restore a system where the primary care doctor patient relationship has meaning and value again. peoples family want and need someone to trust, someone to advocate for them, who will go to bat for them, who will tell them the truth. who will talk to them in the most difficult times, educate them and offer options. and study after study has shown that the health care provided by primary care doctors, restoring them to the center of the paradigm, will be less expensive care and more satisfactory care. and it also involves educating the public about the importance of advance directives. this is a wonderful website would together by the center for medical humanities and ethics. where i teach by our

bioethicists in texas living wills.org. we need to educate. we need to educate the public. what procedures, under what circumstances are helpful and which are not, we'll let our health care proxies, what are the role, what can they do and not do? what is the role of the family, for doctor? let me make this clear, nothing in anything i have seen is proposing that doctors substitute advanced care planning for medical care. no one is proposing death penalty were outside experts to decide who lives and dies. i would not be a part of such a system nor would any physician i know. but any system that refuses to reward the work of health care professionals for doing advanced care planning and conferencing with families during difficult times is preordained to be cold and bureaucratic, sterile and uninhabitable. and will subject our failed elderly who finds him or herself

with an end-stage disease at the end of their lives to inappropriate, unnecessarily expensive and possibly futile care. end-of-life discussions are complicated. decisions are often arrived at incrementally your family members often at odds over many things must all be on the same page. and electronic medical record is not much help here here most of the time there is no need to rush the process. it's a lot like health reform ought to be. well thought out and implemented with caution and concern. at the end of his life, my father no longer knew that i was his son. but after each visit with my father, if he was still awake, i said to him, i love you, dad. and it was always a surprise when he answered, i love you to. because this was something my father could never bring himself to say to me when i was his 12 year-old son, or his 50 year old son. from the depths of his dementia

my father gave me a great gift or he would be honored by my your presence here today. thank you. [applause] >> thank you so much, all three of you, for giving us a sense of what it really is all about in the areas you operate in everyday. i want to start, we're going to open this up once again to questions from the audience, but i wanted to ask you. we have heard now in the weeks since congress adjourned that many lawmakers want to back away from section 1233, that is basically been thrown overboard as far as some of the members of the senate finance committee are concerned. it is too hard to explain. people are too confused.

it is just not worth it. how does all of this make you feel, given what you talked about? >> i have very mixed feelings about it. i think in the end, this national dialogue about and of care like there will turn out just as the kerry shopper debacle turned out to be positive. although there was a lot of heat and smoke in the end, there was actually a lie because people basically said throw them out. throw government out. these decisions belong within families. this is not, you know, this belongs to us. and i'm hoping that in the end, that will be the same conclusion as a recognition that advance care planning is about restoring power and control to the objects of all of this discussion and expense, the patient and the family. and that we have begun, as i and

all my colleagues have increasingly been doing, talking to the press about what advanced care planning really is. that we have begun to turn the tide on these lies about death penalty and that's all they are, in his life. and we just need to keep saying that. i also think that the most salient health reform changes to improve access to primary care, geriatricians, like me and jerry, to improve access to palliative medicine are things having to do with workforce. those are much more important than, you know, a $75 payment for a discussion about advanced care planning which is not going to be sufficient to turn the tide on the physician incentives to keep doing things. all the incentives need to change, so this is just kind of a strongman for assault, but not that critically important in and of itself. if we could do something about loan forgiveness, to get people

to go into geriatric nursing or geriatric medicine, or if we could do something to get medicare dollars to support palliative medicine fellowship training which not all the attendant medicine fellowships are is an entirely supported by philanthropy, which is a pretty failed me for public policy. i might add. those policy changes which are unlikely to be controversial would actually have a huge impact on access to quality care. so i am hoping that some of those measures and there in some of the bills that senate finance is considering, survive. and they don't survive this time, we will keep on getting them in next time. >> chris? >> it's a very interesting question, susan, and i think my concern is that so much of the heat, not only about the death penalty issue, but the others, has not been in any way related to what's in actual legislation,

as you know, and as we've talked about all morning. so the lasting in the world that i would want strategically for the nation is to hold onto something that gets misinterpreted and gets used for political or other kinds of reasons, and not get to what we have been talking about all morning today, which is expanded coverage for americans, reduced cost burden for the families, and improving quality of care. that's what we really need to accomplish. and within that, what we are talking about, the end of this morning about palliative care, is part of the picture but it isn't the whole picture. so i would not want -- i would want that to undermine the chances of a reform package getting through. i do think that diane's point is very well taken, that there are a lot of things we need to do in changing the payment incentives. the previous panel talked about

bundled payments, accountable care organizations, medical homes. you could build in expectations about palliative care and about palliative care expertise into that would have much more impact overall than as diane said paying a primary care physician $75 once every five years, that is not going to transform our health care system. >> jerry? >> you know, i think a lot of people when they hear about some of the proposed legislation, get frightened. first of all, they are frightened about the subject of death anyway. they don't like to talk about it and they certainly don't want any kind of top-down system imposed on them. so obviously, you know, as a practicing doctor, i am in favor of education. you are right. every five years of communal, in a conference in the exam room is

probably not going to do it. but we have taken great education campaigns in this country to do with other health issues. think about smoking. now we are engaged in one with obesity. i mean, this is, to change attitudes, to get people thinking about these issues and comfortable talking about these issues needs to be an educational campaign. and i don't really know how to do that, but i do know there are people that do know how to do that. and i think that's what we ought to really be focusing a lot of effort. >> i think you all do a pretty darn good job of it and have done so here this morning. let's open this up to questions and discussion from the audience. once again, i would ask you to identify yourself by name and affiliation. if you would like to address it, to a particular analyst, please do that. if it is one for everybody, please indicate that as well. while we are waiting again for any more to come forward, if we build this kind of system,

chris, that you just mentioned, and that the other panelists also discussed, accountable care organizations, where payment goes to an organization and it is not on a fee-for-service basis. it is not stimulating this ct scan that particular intervention, but really did, in fact, engage people as diane said, and when finally there is a recognition that maybe things are not going according to hope and that the time is near. what would these look like? these are also kind of scary concepts for americans because there are not a lot of these entities out there to go to and say see, this is something you might actually like. >> there are, i mean, there are a lot of them but there are some of them. and they are not small. i mean, we heard this morning about geisinger and mayor and kaiser which is eight and a half million people. and intermountain. and a number of other integrated

groups. what could happen with something like an accountable care organization is that you could force the hospitals and all the different physicians specialists to come together and say what do we need to take good care of this population of patients. and then they would figure out they needed a palliative care expert and they would figure out a way to pay for it. and it wouldn't require any specific sort of overengineering if we're going to pay this much for this and that much for that, because these systems would figure out. that is what you have seen happen at tranninety at most of these physicians are on salary. if they have in the incident, it has to do with patient satisfaction, which is a pretty good thing it seems to me to care about. and then ultimately, it does end up costing less. and there is very good about

that. without anybody having to ration anything or limit any care that actually makes a difference, but by really coordinating care and getting rid of the things like that frightening story that diane told about the first patient, where you know, huge amounts of that expense, not only were unnecessary, but were terribly painful for that patient and for the family. >> diane, would you agree with a comment darrell made any earlier panel that there are lots and lots of physicians out there who want to participate in this change? >> absolutely. one thing i didn't mention was a conversation i had with judy's oncologist when he offered her chemotherapy directly into the brain. towards the last four weeks of her life, and she called me and said my doctor offered me chemotherapy into the brain. what do you think?

you know, should i say yes to the. he had been hitting them out of the park all for the prior six years, so we wanted very much to take his recommendations. so i called them. eni had been in regular contact for about 14 months about judy. and i said, you know, what are you hoping that this treatment might accomplish for her? and there was a pause and he said, i actually don't think it will help her. so then there was another pause while i took a deep breath, and i said well, do you think we should be recommending that she do this, given that it is pretty high risk? because if you put a foreign object in the brain, the risk of infection. and toxicity is quite high. in his response was very instructive. his response was i don't want you to think i have abandoned her. so this wasn't about money. this wasn't about that's what he gets paid for. this was about he did not know any other way to signal his commitment to her.

to signal how much he cared about her. my job with him was to help them show how much he cared about her by going to visit her at home, which is what i did. i said she really wants to see you. she wants to say goodbye to you. can't you make a home visit? he had never made a home visit in his entire career. he was in his middle '50s. takes care of cancer patients. it was incredible meaning for to her and him. and he spoke at her funeral. hopefully it will make it easier for him next time. but he had never knew how to have that conversation. he never knew how to understand that his presence, his commitment to her is what she needed. not another procedure. but the motivation was to show her how much he cared about her. so doctors do desperately want to do the right thing for their patients. there are no evildoers here. the system is structured to get the results that we see. >> jerry, i have seen you

notting. >> i want to pick up on a point. teaching young doctors, medical school and residency, teaching them the kinds of behaviors that you mentioned, getting them to understand the importance of doing things to patients at architect and logical, but our humanistic is very important. and i have to say that in very -- and not very many places as it ought to occur, is this occurring in america today. i have really had the privilege. it has been a privilege, my wife and i., my wife is an attorney, and we both volunteer our time to teach a basic ethics module at the university of texas health science center in san antonio, both in the first year and the fourth year. and, you know, what do we do? we have conversations like we're having today.

we read essays. we read short stories. we read poems. we talk about these very difficult conversations that we must have with patients, and how important it is for us to be attentive to these needs. i mentioned in the beginning of my talk that i deal a lot in nuance. you know, patients very often are afraid to ask these questions of us. how long do i have? what is therapy going to be like? what can i expect? but if you are taught to read the nuance in your patient, in a face-to-face conversation, it can make a tremendous difference. you can really have a breakthrough with someone. and this needs to be a standard part of medical education. and just like everything else, very often the dollars aren't there for those in medical schools. i mean, we don't treat patients at the center. we don't get research grants.

we read poems with medical students. you know, why should that be paid for? in our system. well, let me tell you, i believe that this can make a big difference. it has made a big difference, and so aside from educating patients at end-of-life issues and advance directives we need to educate health professionals in being able to engage their patients during difficult times. >> can i just add to that? i mean, think about mrs. g.'s pain, untreated pain. really come her doctor did not know how to manage pain. i hate to break it to. most of her doctors had ever been taught to manage pain. you should be scared. they don't know what they are doing. it wasn't in the curriculum. most medical schools have no mandatory training on this, what they are very good at integrating somewhat and putting them in the icu.

or you know, ordering a cat scan, we are really good at the doing that. but the most fundamental human needs have been lost from the curriculum, and most medical american schools and we have no national control over the curriculum. medical school by medical school determines this. it is a huge problem and there is no health reform without medical education reform. >> let's take a question here in the front from gail. >> i agree with the concept that has been raised several times about the need to change the reimbursement system, reward the kind of behavior we would like to see. i am very supportive of selective loan forgiveness. i think it'd be much more effective in an era when medical schools missions are very high and physician income growth has been very low, or negative and were not giving it enough attention. but aside from changing the

monetary incentives, important as that is, i am going to implore you to use your influence, to indicate that this is more than just about getting the money redistributed. it is going to be, how do we try to make sure we have the full spectrum of people who could be working on these issues, how can we make more and better use of advanced nurse practitioners to help us with our shortage of primary care physicians. you talked about training new positions in these issues, which i applaud. i am going to plea with you, we need to figure out how we're going to reach this stack of physicians, 600,000 strong or whatever we are, that are out there. we can't rely only on helping to retrain the new ones coming through. i have to say, when i have spoken to physicians that are in

residency, or while they are still in medical school, i am not overwhelmed that they are treating, seems that much different from the training that other positions, including my husband, who was trained in the 1960s, somebody not fundamentally different. so i'm going to urge you, because you spend your life on these issues of trying to think about in addition to arguing for more money and for better recognition for primary care and geriatrics, and in particular, to think about strategies that we can use to reach out to existing physicians. i was, diane, when you talk about the lack of knowledge about pain management, but i don't know is, do you think that most physicians know they don't know about pain management? i mean, is that sort of the first thing that we need to do? you don't know what you're doing, but actually there are ways to fix that, just like you

can call on other people to help you and hear our modules that you can take in your next cme about pain management and other issues ask i think that it's just not enough to talk only about more money and not enough to talk about only reaching out to the medical students. i mean, that is just not going to get it done. >> gail, you couldn't be more right, and i would point out we do talk a lot about the pipeline, but every physician is expected to learn new stuff throughout the course of our careers. we all do that. and actually now all 24 specialties within the abm as boards require periodic recertification to show that you have been keeping up with your knowledge. so ashley have a tool now where we could begin to both offer that kind of education and also measure it and told physicians accountable. and actually recognize them when they achieve it.

so i think that your point is very well taken. you should be aware that some good news on the horizon, we've been talking about all the problems out there, is that 10 different specialties got together to create a subspecialty certificate. diane was very involved in this, in hospice and palliative medicine. medicine. so there now are board-certified specialist in this area, and notches in the primary care arena but in several different surgical specialties, in psychiatry, in neurology, in pediatrics as well. so the fact that there is no kind of a recognized way of saying this person actually has these skills should allow us going forward to be able, and maybe even have, you know, educate consumers, especially family members, ask these kind of questions. you know, do you have a specialist in this area, or do you have expertise in palliative

medicine. learn that term, and ask people about it. that will begin to make a difference to. >> well, you know, i appreciate your comment, gale, but i have to say this. someone who has worked in the fee for service medical sector for over 30 years, who has been basically at the mercy of whatever medicare, c.m.s. decides every year what my services are worth, i have to tell you this, when we talk about -- let's not talk about more money in the system. i'm not talking about that either. i would like to see some shifts. when an ear, nose and throat doctor gets more money for cleaning out avenue a patient's ear than i get and a 90-year-old comes in to see me because she had a spell, i need to try and figure out is this serious? do i need to go to the hospital? do i need to do some tests in the hospital? woman and it

might take me an hour. and somebo cleans wives out of an ear and gets more money. i would say there is a problem with the system. and in my estimation, and i talked about medicare being flawed system. it is very flawed, but it is fixable. it is fixable. if someone will sit down with doctors who have been doing this for a while and say, you know, how would you fix this? is it right that an mri scan is reimbursed at $1200, but you get, but dr. winakur, you get a $60 when a patient comes in with a little spell? well, i say yes, we don't need more money in the system, but we need to reallocate what is in the system. >> all right. as we wind our way to a close, i want to do a slightly different version of what i did with the earlier panel where i asked the earlier panel to speak to their elderly parents. i'm going to turn things around and ask you to speak to your children or grandchildren.

and i know chris in particular has a very smart 13 are sold year-old grandchildren i want you you to imagine infinite you a couple really sharp 12 and 13-year-olds who are your grandchildren or your children, and i want you to tell them what your hopes are for the health care reform debate that we are having in this country. and in particular, with respect to these issues. now these of course are going to be 12 and 13 euros. they are not prepared to think about death or dying, but they perhaps are smart enough to know that they too will get there someday, or they certainly sensed that their parents or their grandparents will. so you have 30 seconds of their attention because they are about to go play on the wii or something else like that. >> what a great question, susan. well, what i would say is if you are right, not to talk about death, but most importantly,

this gets to the topic of the whole session today, is that my hope for her would be to live in a country where she didn't have to worry about going broke because of health care expenses herself personally. that she could live her life and be confident that there would be some reasonable approach to providing medical care for her parents, for me, and for her, should she need it that would be affordable. and that she could actually be reasonably confident that it would be good quality care. and so that, that would be the main thing. what i would also say, getting to jerry's important point, is that i have been trying to entice her into going into medicine, of course. and what i would say to her is, and it would be a system that would provide you a very

personally rewarding career as a physician, knowing that you could help people in the ways that made sense. >> diane? >> well, i have a 23 year old and a 20 year old. and what i would say, what i do say to them is that i am working for a time so that when they are my age there will be no debates about health reform. everybody who is born an american citizen will know that they have access to high quality medical care, just as they know if they put a letter in a mailbox it will arrive. that is not true in many countries of the world. that the postal system works. we take it totally for granted. i want a health care system like the postal system, that people can take for granted, that it works quite well. is consistent. it is standardized across the country. that people will get the care they can benefit from and the care they need, no matter where they are, no matter who they

are, no matter what color they are, what no matter what their income is. that that is what i am working for so that my kids and their kids will inherit that kind of system. >> jerry, the last word to you. >> i have two daughters who we call doctors. one has a degree in redish romantic poetry. [laughter] >> and the other is about to earn her doctorate in counseling psychology. why they did not choose to go into medicine, i think, well, we touched on some of those issues today. but what i want to tell betsy and emily is that your father has written down and you know where it is what he wants when it is his time. and i encourage you to, at some point in your lives, have this

conversation among your own family and write it down. >> and on that note, we will bring this to a close. i want to once again say that health affairs really is so grateful to the organizations that made his forum possible today. the robert johnson foundation, the association of american medical colleges, the american board of internal medicine, and the american hospitals association. we pledged to bring you a serious discussion that was at the level that the topic demands, a serious health reform as we said demands a serious discussion. i hope in the process we have also brought you one that you have found provocative, stimulating, informative, and as we heard from the last panel, even emotional. thank you very much for coming today. please take a look at our website,

>> current and former administration officials said the c.i.a. hired the firm black water to locate and cincinnati top operatives -- and assassinate top operatives. and topics on this morning's "washington journal" including health care and attitudes about the u.s. government. >> this fall, enter the home to america's highest court, from the grand public places to those only accessible by the nine

justices. the supreme court coming the first sunday in october on c-span. >> now a discussion on the outsources of intelligence gathering to the private sector. speakers include former c.i.a. director michael hayden and former homeland security administer michael chertoff. this is about 10 minutes. and the answer is, no, we thank you all for being here with us today for this joint newsmaker and book and author committee event. i am chair of the newsmaker committee and also washington correspondent for workforce management, a business magazine published by crane publications.

and the book and author committee chair is andrew schneider and andrew is over here to my right, he's an associate editor at kipling washington editors. this morning we're going to explore the privatization of intelligence, a topic whose news peg was sharpened to my delight by today's front page stories on the c.i.a. outsourcing 2004 operations designed to kill al qaeda leaders. we have an outstanding panel to delve into this topic. general hayden to my left, he's a retired four-star air force general who served as the director for the national security agency from 1999 to 2005, and director of the c.i.a. from 2006 to 2009. to my right, my immediate right,

is another former bush administration official michael chertoff who was secretary of the department of homeland security in president bush's second term from 2005 to 2009. he was the second head of the agency in its history. we also have on the panel with us to my far left jack devine, he is a 32-year-old -- a 32-year veteran of c.i.a. -- i'm not 32 either -- a 32-year veteran of the c.i.a. who is now president of arcan group, a crisis management firm in new york city. and to the far right is our moderator for today, joe findler, a "the new york times" bestselling author who for many years has written about the inner section of espionage and business and his latest book

"vanished" was released by st. maarten press on tuesday and joe is the reason that this is a joint newsmaker and book and author committee event and he'll sign copies of his newest book afterwards right outside. joe will, as i said, moderate and each panelist will give an opening statement and then we'll move to q. and a. during q. and a. i ask that each of you please identify yourself and your organization. we like to know who has joined us for these events and i invite you to go to the microphones that are stationed in each aisle. so i will now turn the proceedings over to joe fender. >> so i hope that you realize that this lead story in "the new york times" today and the whole series of c.i.a. leaks has been artfully orchestrated by my publisher for this panel to make

it work. what actually began as a crass attempt to introduce my novel "vanished" and its hero, a guy named nick heller who is a private spy, has evolved into something a lot more interesting which is a way for me to display my ignorance of intelligence issues in front of people who know a lot more about it and some very, very accomplished people who i want to thank for showing up here. what i want to do is i want to -- i want to sort of moderate the first half and then open it up to questions. i would like to basically serves as not quite a moderator but as an enhanced interrogator you might say. so there's really two parts to this whole private spies issue. one is the outsourcing of intelligence operations and functions by our government to outside contractors and another one which is a lot less talked

about is the evolution of this really interesting profession of private intelligence operatives, most of whom come out of our intelligence community. so what i want to do is start, address my first question to general hayden so as most of you know that there was this terrific front page piece in "the new york times" today reporting that in 2004 c.i.a., before your time, hired outside contractors from blackwater as part of this program to locate and assassinate al qaeda operatives they, quote, helped the spy agency with planning, training and surveillance. now, maybe i'm not a narcissist like all writers but i can't help but speculate that this emanated as a leak by the c.i.a. and a response to a piece i did on tuesday in "the daily beast"

saying that leon panetta's urgent hearing on june 24 to congress disclosing that the c.i.a. had misled congress for eight years was actually based on a mistake, that this was not a violation, that the program was really little more than training and intelligence collection, but i'm wan not goio talk about that piece because i know that i've tried to ask general hayden about it and he won't talk to me but i do want to talk about the use of private contractors by the c.i.a. so the article indicates that the reason panetta briefed congress in the first place is that he became alarmed and here i'm quoting from mark's piece that the c.i.a. had used an outside company in a program with lethal authority which raised deep concerns about accountability in covert operations, so this tells me that the use of private

contractors in this kind of a risky lethal action changes the whole game. panetta thought that the use ofr met the threshold for briefing congress. i'm going to ask you without going into some of the stuff you won't talk about, do you believe outside contractors should be used in risky, covert operations? >> i guess the first thing i would have to say, joe, as you carefully pointed out, i'm not commenting specifically about any concrete action or commenting piston specific article that mark wrote in the times or in the "washington post." we used contractors at the agency for a variety of things. we go to contractors because they possess certain experience or certain knowledge that we

don't have inherently inside oir workforce or at least we don't have it inherently at that time. on the wall during my time as director that were contractors. so i make no pretense that contractors, those here running our fire department and government employees are all over here, it's simply not true. contractors don't run our fire department, those are government employees, and it was one of the questions i asked is why do we have government employees for a service we can obviously -- we can obviously buy? i would brief the hill on a variety of activities, be they foreign intelligence or covert action, and i would occasionally be asked, more than occasionally, particularly as time went on, was that done by a contractor or was that done by a government employee? and generally my answer was, i don't know, i'll have to get back to you, because in most

instances we were trying to use -- to use a football metaphor which my wife warned me not to use so much anymore -- we generally use the best athlete available in the draft. who is the best individual for this task at this moment? ok? we have come into a bit of a spin inside of our broader political culture, contractor bad, government employee good. if you take anything away from my contribution to this morning's discussion, reserve judgment on that. certainly don't make that a generalization, all right? we viewed contractors as an integral part of our workforce and i am going along and i'll say just one more sentence and perhaps someone will follow-on with questions. and all that said, with how important contractors are, i reduced the number of

contractors by 15% and we did that over a period of time, not more than 12 months, but that was far more about the agency than it was about contractors, it was far more about what the agency did in regard to management and far less about what contractor his to offer in terms of accomplishing our mission. why don't i stop there. >> but, general, you haven't asked my question, with all due respect which is, the c.i.a. apparently uses outside contractors in some really high-risk covert operations. isn't that a problem? should that be? >> if you look at current o.m.b. guidance, and this is about as far as i can go in our conversation, joe, the definition of inherently government activity -- and you need to go look at this -- is surprisingly narrow. in actual intelligence, actual intelligence analysis, actual intelligence collection, our

permissible activities for contractors undercurrent -- >> ok. >> no, without commenting on mark's story, what he talked about was planning, training and surveillance which i think i can scoop up into intelligence and analysis and collection. >> ok. but if i can persist for one second. you said that you basically don't -- you're not aware when you were c.i.a. director of the difference between the blue badgers, the outside contractors and the green badgers, right? >> no, what i said on a particular activity, with the team we put together, generally speaking, i may be careful that i don't overgeneralize, for a lot of the agency's activities what we put together is a blended team of government employees and contractors, very frequently the contractors are what we call i.c.s, independent contractors, so please don't take anything that i said to suggest what the agency routinely does when we

gotta a really hard problem is to go to the yellow pages and look under solutions and make a phone call and say, could you guys take care of this for us? ok? what we're talking about are discreet skillsets, usually housed inside an individual, an individual that we want to hire as part of the team and therefore we hire that individual. >> but there's still a big legal problem, i mean, eric holder is considering appointing a special nswer in two parts, ok? about the endemmity, joe, i'd

have to consult a lawyer. what people accuse us of doing, however, and i saw it reflected in "the times" story yesterday is that we go to contractors when we do not want to take responsibility for some activities. let me just yell out loud and kick the podium and say that it's absolutely not true. agency officers, myself as director, for example, have the same moral and legal responsibilities for the actions of government employees or contractors operating under our guidance, operating under our authorities, operating under our direction. we do not use contractors to carve out something we do -- we want to deflect responsibility for. that is simply wrong. and you should not believe that. you can criticize us for not having some inherent skills you may think we should have inside the agency and we may be vulnerable to criticism because we have to go outside that you

might legitimately judge that we should have inside, i got all that, but we do not go outside in order to deflect responsibility from ourselves, period. >> well, secretary chertoff, to directly link to this, it is apparently there's a lot of fear among private contractors in washington because the rules seem to -- there is no law apparently, protecting them from doing things that they did for government, for example, interesting case, boeing is facing a major lawsuit by the aclu, alive today because they leased a plane to the c.i.a. for the rendition flights. there are a lot of contractors who i talk to who say, look, we do anything risky for the u.s. government in intelligence function, we're not protected. what do you think about that?

>> well, you have to separate two issues. one is is an individual contractor protected or endemmified and it's a complicated issue and i don't want to give a blanket statement and that's different from the issue that you raised with boeing which is, is there simply a risk for getting sued and forget in the end of the day if you win the lawsuit, but you have to get a lawyer and you have to deal with a certain amount of legal hassle, is there such a high transaction cost surrounding that that you'll get contractors who simply don't want to do anything because they just don't want to get pulled into having to be in court and getting emmeshed in these proceedings and, by the way, what is interesting about the boeing thing, it shows how far this argument can extend because it's a question of not actually doing the rendition itself, but simply providing the airplane. i guess that the guy who makes the pencils and the pens that

are used to sign a piece of paper that orders something, he could be sued because he's creating pens and pencils. this is actually less to do with the role of contractors in government than it has to do with problems in the legal system which have now become a tool of combat. if you don't like a policy you sue or you try to create legal problems in an effort to raise the temperature and hopefully cause people to shrug their shoulders and say i don't want to help the government because if i engender controversy i'll pay a cost. the guy of whole foods is experiencing a little bit of this, not maybe in tms of being sued, but with the temperature being raised in the public media. so to me this is not really an issue about contractors as much as it is an issue about the legal system. i do think that it is worth saying that contractors may be in a different legal position than government employees and that's something which i think is a contractor's issue and

that's why they need to think through very carefully what they do, what they don't do, and how to protect themselves with respect to things which do create a certain amount of legal risk. >> but it's not just a contractor problem, it becomes a government problem, i mean, when you ran homeland security you were part of the intelligence community. >> correct, yeah. >> you hired outside contractors to do some threat -- terrorist threat assessments, to do some sensitive intelligence, right? >> the government, and, by the way, not restricted to just intelligence, in the law enforcement community it's not uncommon to have contractors perform functions, whether it's a security function, you know, guarding courthouses or analystic function, the idea that there's this clear line between government and non-government is simply not borne out by the reality of a government activity across the board, not just intelligence. >> but if you want to hire

outside contractors on an ongoing basis which seems to be what's going on in the intelligence community, we're kind of -- you know, rent-a-spy, in a sense. you therein have a problem if contractors are going to realize that they're going to face liability, right? >> i don't think that there's any question that it's in the government's interest to make sure that there are the kind of protections for contractors who are operating in good faith that we want to see with respect to government officials, that's why we have the laws always created various kinds of immunities to give people some space in which they can operate without being in legal jeopardy, as long as they're operating in good faith. you know, part of the undercurrent of this discussion is, well,hy do we need contractors? and the truth is that we need contractors because as general hayden said, there are skills that we don't have in the immediate government that we may have a requirement for. and there may be skills that we don't have a continuing requirement for. for example, there was probably

not a lot of emphasis in the community 10 years ago for pashtoon speakers and now there's probably a high demand for that. it may be in 10 years that the demand for pashtoon speakers won't be there anymore and we may be interested in people who speak dialects in africa or dialects in southeast asia, so it doesn't make sense to bring people in for permanent positions for a skill that may be needed for a specific period of time at a surge level. so it's very much in the interest of government's efficiency to make sure that you have the flexibility to surge and deal with specialized requirements in a very specific way. >> therefore, the law should deal with this issue if government is going to continue to hire? >> yeah, if you're going to expect the contractors to do the work, you will have to give them the legal protection that is necessary to allow them to do it. >> i want to bounce one more thing back to general hayden and then talk to jack.

so when you took over as the head of the c.i.a., there was a time shortly before you took over that the c.i.a. workforce was close to half, private contractors. you brought it down by 15% to a figure that i have now heard is pretty authoritatively 20%. and the press release said 60%, an error, i'm sorry, don't blame me, but it is 30%, which is incidentally still pretty high, but why did you do that? what was the concern? was it that the c.i.a. was hemorrhaging qualified people? i mean, i think 5,000 c.i.a. officers left the agency, you know, by around, you know 9/11 and shortly after to go private, to be hired back the next day by c.i.a. for a whole lot more money. >> what we did, joe, number one, keep in mind what i've said about contractors and the important contribution and what

the secretary just said that the legal structure has to protect them and i should add too, not just contractors, the american intelligence community gets a great deal of benefit from what we call cooperating domestic entities and they're not contractors, they're just patriotic americans who are willing to help and if the legal system is such or has been misused in such a way that these people feel they are no longer able to assist, that's a blow against american security and against american freedom. ok, so we had contractors and it was clear to me that we had expanded rapidly, the said -- and let me be kind but the set of individual decisions made throughout the agency, i need a contractor here and i need a contractor there, and a contractor there, created a macrocircumstance in which we had too many contractors and we were probably competing against each other to h >> so it is