dealing with it. i think there has to be some sort of package deal, and i know these things on the agenda are being discussed, but turkey does not want to be seen to be negotiating anything having to do with the pkk, but effectively, they are, of course. . >> that is a model of what they might like to achieve, moving in a western direction, and israel possible good relations with the u.s. and turkey.

-- israel's good relations with the u.s. i would like to hear more about that. it is interesting that they still feel that they have to play inside iraq, and that is the most important thing. they're very close to iran. they have to consider iran. they have always been more secular, even if not leftist on occasion. here they have a government in baghdad that is not. it is religious and its ties to iran are also controversial. i wonder if you could give us some thoughts on how relations with these neighbors and anybody else like syria plays into this. >> the kurds have the tragic predicament of being split up as

a nation among several powerful states in the region that have emerged after the ottoman empire. so that is their conflict and their predicament they have to deal with. the other conflict coming out of the ottoman empire is the israel-palestinian conflict. the israelis were always looking for partners among non-arabs in the region. iranian is often were that. now we have a very nasty israeli-iranian dynamic, but israel always says there is no problem between iran and israel, it is always between israel and the arabs. you find a lot of support in israel for the kurdish predicament, though it is somewhat mediated by the strong alliance between israel and turkey.

in iraqi kurdistan you find phyllis of sympathy towards israel. -- you find feelings of sympathy towards israel. it is rather disturbing to me. i think they want to have it both ways actually, but they would like to have it so the suffering as that is under control. that is a little bit unfair to the kurds, but i don't think they should use that line because you should not equate god with oil. i remember seeing the district director's office, an israeli flag. i asked him about it. it goes back to 1970's when the kurdish revolts was supported in part by israel, so there is a

sense of solidarity. , but i don't think there is a strong israeli role in kurdistan. the kurds cannot afford to do that. there has been talk that kurdistan will be staging ground for israeli jets on the way to bombed iranian nuclear facilities. i am not sure kurdistan wants to become a warship. -- on the way to bomb iranian nuclear facilities. it is totally vulnerable to attacks by the neighboring states, which are more powerful. kurdistan has to play a very careful game. i don't see any strong alliance there. on the iranian side, that is a different story. the alliance there is even stronger, because the kurdish parties joined iran in the effort against saddam hussein's. the famous attack was a prime

example when the kurdish parties exported iranian troops into iraqi territory and pummelled them with the largest chemical attack on an urban center in history, which is the subject of my book which is available in bookstores. this alliance continues to play itself out, but iran has no interest in the emergence of a kurdish state. because turkey has been preventing that , iran says thank you very much. we don't need to do anything but send messages every so often. earlier this year the iranian foreign minister said he was against the referendum.

this was the first time this message was relayed, but iran does not want them to fall to the kurdistan region because the kurdish bid for independence would be much stronger. i think iran knows how to meddle in the kurdistan. it has supported islamist groups that are radical in the sunni cents -- and sunni sense. it may do that again if it finds it necessary, but it says turkey is doing the heavy lifting. >> any questions from the press? >> once and ambassador to iraq. this is a question i tried out once before.

in terms of a confrontation without predicting anything, if you look at it from the krg point of view, would they rather have a confrontation earlier? they look at the buildup of the security forces, they will get f-16's from the united states. isn't there -- could not at least be a strong incentive for the kurds to try to settle this even in a confrontation earlier rather than later when the iraqi military would be stronger? >> they definitely do want to settle this earlier but then later. they want to settle this early on, then they became very frustrated. they want to solve it as because they realize their window of opportunity is closing. the problem is they don't come down from the main demand, which

is they want cuckoo -- they want [unintelligible] if you talk to someone, that you can find room for compromise. i think that is also a role these two leaders have played, but keep in mind that he is originally from that area. originally his family is from there. secondly, it falls within the man was the area led by d. pkk -- led by the pkk. it also leads me -- leads them to shop more loudly about it because it is a way of drawing support away from it.

that internal conflict which plays itself out every day, that conflict is not helping in finding a compromise. one side is saying and the other side -- one side is ready to compromise and the other side is going the other way. my sense is that the kurdish leadership has made the calculation that the americans are not kidding when they say they will leave. secondly, we predict that iraq will not survive beyond an american troop withdrawal because baghdad is totally dysfunctional. and there is no will to resolve the conflicts between the insurgents and the maliki for

the supreme council. -- or the supreme council. based on that assumption, that they make the calculation that is too late. we cannot reach a compromise even if we wanted. so we need to look elsewhere. the second-best is turkey. nobody likes turkey in kurdistan, but it is better than baghdad and syria. we will have to live with it. i think it is a dangerous assumption because iraq is not lost. it would not want to say that. secondly, if you are going to take the position, that that means he will definitely not compromise. any effort by the un is totally lost. the challenge for the united states and turkey is to send a clear message to kurdish leadership that they need to

work out an accommodation with baghdad. fully protected of kurdish rights but maybe making a compromise on territory. >> there are many question from folks in the overflow rooms. i will combine two of them. what should the prior days before the new kurdish government -- what should the priorities be and how has the government changed? >> what was the future of the kurdistan? who is the new kurdish government? we have to first see a government immerge. we don't know who will form the government. very likely it will be the kdp and pkk, but this pivots on the issue of how many positions lee pok will get in this coalition, -- how many positions the pok

will get in this coalition. why would we give you the prime ministership? when you did not pull your weight and you lost all day's votes and now we have a proposition coming in. we will not give you the 50%. if they -- if that happens, this is the kind of debate that is happening. if that happens, you could see an opposition coalition being the largest. i think it will be the kdp and pok, but there may have to be some compromise their. andy kendeigh kdp may take over -- and then the kdp will take

over. they will still face a strong position in parliament, about one-third of the parliament. if they're going to have priorities, it will have to be to fight corruption. this is the item that he has made this very clear, but we have seen very little actual change. maybe this could start up. the second issue is service delivery. the krg has made some headway in bringing electricity to people's homes. these things took time to get started and maybe not it will accelerate, but these are the top priorities. this is what accounted for the defeats that they suffered, and

pok lost in the home town. the second part of the question was -- >> democracy and kurdistan. >> we have elections that were open and free and fair. there was the usual problems but i think the opposition parties have accepted the results, which was a wise thing to do. this was a useful exercise. it is one that could build democracy, but what we need now is democratic institutions. it is going to take time. we are working on a report right now on governance in kurdistan that will come out in a couple months that will be updated. i am awaiting the results of our research on that. i am heartened by the slow progress that is being made, but

there are so many factors that could throw something in the wheel, at the disputed territory issues, at u.s. troop withdrawal, but we can hope the kurds will have the space to continue to move forward. i think the kurds could not do what the of iranian regime did, it could not cheat. the reason is because the kurds are dependent on the west. the west should continue to play the role of monitor, protector to the extent that it can. this is good for kurdish democracy. >> i wanted to ask you a question about the kurdish parties looking towards the 2010 national elections. if you look at the 2005 elections, the kurdistan front

effectively had an alliance with the united iraqiya alliance. they had particularly good ties with the supreme council. -- united iraqi alliance. they also supported maliki in his selection as prime minister. to the extent that there are some potentially serious cleavages between maliki and the supreme council, how will this affect the calculations of the major kurdish parties looking and how they align themselves in terms of national politics? will they still be inclined to go to the supreme council, or if maliki is willing to give them something of significance on an oil law, would they be more inclined to support maliki?

>> the kurds will go with anyone who gives them their city. since no one is going to do that, i think there will be some tough negotiations ahead for everyone. i think the kurds always ruled that time when it less maliki as prime minister. -- when they blessed maliki as prime minister. the problems is with everybody else except the supreme council. the supreme council fought together in the mountains in the iran/iraq war. there is a lot of solid area -- a lot of solidary -- solidarity between them. the bond is very strong.

the kurds want maximum autonomy in iraq, and the supreme council has had this project of a southern federalism or tri-par -- this suited the kurds very well. now the supreme council did very poorly because of the agenda of there's -- because of their agenda. now we're going to see new alliances emerging. who can we deal with in baghdad? that is going to be hard because nobody is going to give them much of anything. on the other hand, all of these parties need some kurds in order to make these new coalitions against each other. they need to get something. they will give promises.

when we become the government, then we will do -- and of course nothing will happen after that. that is what happened twice in the past. i see lots of continuing unhappiness ahead on that front. >> i am from the defense intelligence agency. thank you for your presentation. looking at province -- looking at the province, since they took power earlier in the year, there has been some near misses with the krg, and particularly involving some forces. my question is, do you see a need for a mediator between the krg and the hg? if so

who? -- if som, who? >> there is definitely a need for mediation. it has occurred at different levels. you have had at the u.s. brigade headquarters, it is all along the line. it has become particularly acute come up but it is no less serious among the other parts. -- it has become particularly acute, but it is no less serious among the other parts. there have been attempts to set up a joint coordination centers in various parts that have liaisons' from both the iraqi army and the kurdish people on the military level indeed the

iraqi police and kurdish krg police in the urban areas. you could have the same and the other province. they're not calling for additional deployment of u.s. troops, said that would be in that province because there are the least american troops there. the need seems to be the greatest. there is also mediation done by the u.s. embassy, which is shuttling back and forth all the time, and by the united nations, with their people going up and down to try to calm things down whenever there is a spat. we already have had an experiment with a joint patrols with iraqi army operating together at checkpoints and going on patrols, so a is

possible. it is very important to remember that in 1991 after the uprising was crushed, they went into kurdistan and then there was an accommodation. there were joint patrols in certain towns, but less than a few months. then the iraqis said let the kurds stew in their own juice. they're not long-lasting and not a substitute for political agreement, but they could lead to it by building confidence on the parties on the ground. we want to promote that kind of mediation. there are enough people there already dealing with it in a coordinated fashion. >> iam afraid our time is up. thank you so much for coming out. >> thank you. [applause]

[captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2009] >> we are taking live to the

white house just of to the south lawn. we're expecting to hear from president obama. >> earlier today he met with tom-all, and -- he met with tom daschle. the president is expecting to make comments on the afghanistan election. the militant attacks claimed 26 lives, and the violence was expected to result in a voter turnout below 70%. we will hear the president's comments and then he is off to camp david for the weekend. they are off to martha's vineyard for their vacation beginning on sunday. we will have the president's comments live once they get under way.

>> the president should be out shortly for the flight of two can date -- flight to camp david. ben bernanke said the economy is on the verge of a long-awaited recovery, say the prospects for a return to growth appeared good. we will hear from the president in just a moment about afghanistan and the presidential elections held there yesterday.

>> we are waiting. the president to make a few brief comments expected about afghanistan and the presidential elections held yesterday. and the obama family is off to camp david. their vacation will begin on sunday as they head to martha's vineyard and returning on sunday, august 30. we will have the president's comments live when he comes out.

>> we were expecting present obama out now, but you should be out shortly and we will have his comments live about afghanistan. in the meantime, some items from c-span viewers this morning. host: let's look at some of the big stories in the news. this from the "washington post." man convicted in bombing is freed. this is seen as another tragedy. a former secret service agent

convicted in the bombing returned home greeted by cheering crowds after being sprayed -- after being freed from a prison. -- scottish authorities released the man, who is dying from prostate cancer for human tarrian reasons after serving eight years of a life sentence. he is the only person convicted of the crime in connection with the 1998 bombing of pan am flight 103, which exploded over the town of lockerbie. that is creating distress for families, especially american families. there is another piece also on the same page in the "washington post" looking at some of the victim's families and their reactions. we see a picture of stephanie burnstein, whose husband died in that flight. others are speaking out and saying they did not want to see

the man freed and sent home to libya. another photograph in the washington times of his homecoming and how cheering crowds are greeting him as he returns home. in the washington times piece it says the american families hate this. susan cohen lost her daughter in the 1998 bombing. some in england have fallen for the leader's massive campaign. so families reacting with concern over that. and in other news, violence takes toll on afghan election. the story in the financial times. the u.s.a. edition, voters define taliban by 26 killed in attacks and karzai vows to do better if elected. there were signs violent intimidation in the runup to the

poll had taken its toll. are these issues you are thinking about? first caller this morning for this segment, phil calling from kansas. hi, phil. >> good morning. wanted to talk a little bit about what professor light spoke about in the last part of his segment about getting behind closed doors. that is one thing that worries folks like me and people who really want to question these healthcare bills being pushed through congress. i think the root of the issue has become trust. you know, trust should be the mother's milk of our relationship with our government, but i think a lot of people are just, their trust meters are really on red right now. the reason is is that when they get behind closed doors, when we read the bill and i've read the bill, i have questions. i don't understand it because it is written in legal. >> host: are you speaking of the -- what story are you

talking about? >> 1018 page with the porgtion that the senate stripped out, concerning end of life planning and so forth. so there are concerns. all we hear is the noise from the congress. so for example like when the president talked about his grandmother, i understand that is a painful situation. my wife and i had a similar situation with her mother. she was 88 and had a hip replaced. and there were people who questionedhether we should or shouldn't with her and here she is two years later working in the garden. it's only two years, but in the background we have folks like peter singer, who has written on euthanasia and he's written about rationed healthcare and he talks about leveraging the cost of providing an additional two years, i think they call qaly,

quality adjusted life years. in a case where like my wife's mom, they would leverage her against say a 30-year-old astro physicist. who is worth more to society? who would you provide healthcare to? naturally folks like me are going to get upset. all the talk from legislators saying, stop being emotional. what other outlet do we have? is i can't go to the white house and sit in a policy meeting with with peter singer and other episis. the only outlet we have are town hall meetings and we're getting -- expressing frustration, fear, anger and growing sense that we just don't trust our government. >> host: tom on the democrat's line from evansville, indiana. hi, tom. >> good morning. okay. first i want to talk about -- did you hear the news about tom ridge coming out with a

brand-new book? >> host: yes, i have heard about that. why don't you tell our listeners about that. i'll see if i can find the article. >> it showed the bush administration are coming out in droves and people talk about not being able to trust your government, this and that. i think that most of the people, especially republicans, are just on auto pilot. and you got tom ridge and now you got tom delay going on "dancing with the stars," and he is fixing to be indicted on campaign fund fraud. i don't get it. i want to say something. i am a democrat and i am a liberal and i believe there needs to be some kind of tort reform as far as dropping the amount of money that they have to pay as far as malpractice insurance. this is the thing, anybody that has been a victim of

malpractice, either they have died or either they were seriously injured from the hands of a doctor, they would change their opinion immediately. as far as i'm concerned, i'm so tired. it's been months now, i'm so tired of hearing these myths about the death panels and about manual's brother and the other guy he mentioned. it's ridiculous. the democrats need to do reconciliation. the republicans, i heard on rachl show, a very credible source, very credible, not like the groups and insurance-based entitys that give information to fox and the right wingers that chuck grasley, and other republicans said, we need 75 votes to get this passed. come on, be ridiculous.

want to talk about breaking the rules and being corrupt? come on, people, stop watching fox news. it it will rot your brain. >> host: take a look at the story tom was talking about. this is in the "new york times" today. bush official tells of pressure in 2004 vote. the story by peter baker. he writes, tom ridge, asserts in a new book he was pressured by top advisors to president george w. bush to raise the national threat level before the 2004 election in an effort to influence the vote. after osama bin laden released a tape before the election, ashcroft and rumsfeld pushed mr. ridge to elevate the public threat, but he refused. according to the book, mr. ridge call its dramatic and inconceivable event that proved troublesome and reinforced his decision to resign. and let's look at the response.

keith urban, a spokesman for mr. rumsfeld says the defense secretary supported letting the public know if there was a greater threat and pointed to a variety of threats and warnings, including one tape vowing the streets of america will run red with blood. mr. urban said it it would seem reasonable to discuss threat levels and valid been irresponsible had the discussion not taken place. let's go to jake on the independent line calling from are silverspring, maryland. >> good morning. happy friday. i need to stay on the healthcare issue. it's been the only issue on c-span for many weeks, i think. but the last caller pointed out republican party on auto pilot. to some extent, i would agree with that. i think what you are referring to is the neoconservatives and they have been using scare tactics for so long, i want to say that the future of the

republican party will be more lib tarrian and fiscally conservative. what we've seen in the last eight years was not the republican party. along the lines of healthcare, we know it has to do with special interests and it is a lot, healthcare is an economic issue. >> we will take you live to the white house and comments from president obama on afghanistan. >> good afternoon everybody. i want to say a few words about this week's election in afghanistan. this was an important step forward in the afghan people's efforts to take control of their future even as violent extremists tried to stand in their way.

the selection was run by the afghan people. it was the first democratic election run by afghans in over three decades. more than 30 presidential candidates and more than 3000 provincial council candidates ran for office, including a record number of women. some 6000 polling stations were open around the country, and afghan national security forces provided security. over the last few days, we have seen acts of violence and intimidation by the taliban, and there may be more in the days to come. we knew the taliban would try to derail this election, yet even in the face of this brutality, millions of afghans exercised the right to choose their leaders and determine their own destiny. as i watched the election, i was struck by their courage and dignity in the face of disorder. there is a clear contrast between those who seek to

control the future of the ballot box and those who killed to prevent that from happening. extremists have shown themselves willing to murder innocent muslims, men, women and children, to advance their agenda. i believe the future is boulogne to those who want to build, not those who want to destroy. -- i believe the future is built. the u.s. did not support any candidate in this election. our only interest was the result fairly accurately reflecting the will of the afghan people. that is what we will continue to support as the votes are counted and we wait for the results from the electoral commission. meanwhile, we will continue to work with our afghan partners to strengthen security and governance. our goal is clear, to disrupt,

dismantle and defeat al qaeda and their allies. that goal will be achieved and troops will be able to come home as afghans continue to strengthen their own capacity and take responsibility for their own future. our men and women in uniform are doing an extraordinary job in afghanistan. so are the civilians who served by their side. all of them are in our thoughts and prayers, as are their families back home. this is not a challenge we asked for, it came to us when al qaeda launched the 9/11 attacks. america, our allies and partners, and the afghan people share a common interest in pursuing security, opportunity and justice. we look forward to renewing our partnership with the afghan people as they move ahead under a new government. i want to congratulate the afghanistan people on carrying out this historic election and west -- wish them a blesseed

month. >> president obama off to camp david and martha's vineyard. "book tv" primetime on c-span2 and an author talks about her work. that is tonight on c-span2. >> he was the campaign manager for george mcgovern and the time when walter cronkite was considered for the role of vice president. >> as the health-care conversation continues, c-span's healthcare hub is a key resource. follow the latest video ads and links. keep up-to-date with health care events like town hall meetings, house and senate debates and upload your opinion with a video. this c-span health care hub at

c-span.org. >> how is c-span funded? >> private donations. >> grants and stuff like that. >> donations. >> i don't know where the money comes from. >> contributions from donors. >> america's cable companies created c-span as a public service, a private business initiatives. no government mandate, no government money. >> a house oversight hearing with members of the commission on wartime contract in. we will hear about the potential that remains for waste and fraud in afghanistan. john tierney of massachusetts chairs this hearing. it is about one hour and 40 minutes.

it will come to order. i ask unanimous consent that only the chairman and ranking member be able to make opening statements. i ask unanimous consent that the record be kept open for five business days so that all members will be abel -- will be able to submit a statement. i want to thank all of you for being with us today. you are there and i am here, but i did have to restrain him from trying to get into the big chair. the subcommittee is going to committee -- continued its oversight of defense spending issues with a hearing to discuss ways, from and lack of accountability in afghanistan and iraq. hundreds of billions of dollars of taxpayer money invested since

2001 and more to come, it is critical we continue to strengthen our oversight in these areas. before i began, i wanted to address a procedural issue for the benefit of the public. we had an arrangement with the commission earlier on that we would have a report released to us until the evening of this hearing. that did not occur. we are about to find out why that did not occur. we wanted to give members an opportunity to be prepared and ask questions and do work on that. we will find out what happened there. i still suspect members have had an opportunity to prepare themselves. the u.s. reliance on contractors has reached unprecedented levels. reaching upwards of a quarter of 1 million contractors in afghanistan and iraq for the department of defense alone.

that does not include those working for the department of state for other agencies. it is a big number by all accounts with the civilian contractors in a combat environment. the opposite trend occurred with respect to oversight. the national security departments all-out program oversight staff to dwindle to the point that contractors have been hired to oversee other we need to fix a broken contract in and oversight function and that oversight from independent sources. it was the product of efforts by several of us getting back to 2005. it became clear we needed an

entity that could provide oversight similar to the efforts of the truman committee. waste, fraud and abuse transcends politics. oversight should not be the luxury of a divided government and -- we saw the disaster as me initiated action in iraq. i have high expectations for what the contract in can accomplish. we are here to assess progress today. the report highlights a number of issues related to logistics' and reconstruction efforts. one interesting case described shows the construction of a dining facility at $30 million. it is important commission break new ground. there is no sense in creating an oversight entity that duplicates the work already going on by

offices. we do expect you will review those reports and use them to inform. i'd forward to hearing about what we don't already know about. we in congress need to hear about any challenges or hindrance is the commission faces. i am concerned the commission will not be able to fulfil its mandate without a presence. i would note that according to the report, the commission has only taken two trips to afghanistan and iraq. the commissioners charge is too important to suffer defeat at the hands of obstruction. i don't want to see a lack of subpoena power to deter the commission from going after parties. we stand ready to assist the commission in regard to whatever is appropriate.

the dynamic in iraq and afghanistan is changing, specifically as we are moving to draw down troops in the area. we must look at the mistakes of a hurried decision making and avoid a repeat of this mistakes in afghanistan. lessons learned must be lessons followed. we will need every bit of experience and resolved at our disposal. it is imperative the commission has every opportunity to perform its work without hindrance. i want to thank the commissioners that are here and the rest of the members, and the staff for undertaking this assignment. over a month ago when i appeared, we noted we would be looking forward to this date when we could have the opportunity to hear about progress. your help will safeguard the lives of military personnel.

your work will help rebuild the trust of the taxpayer is too wisely spent dollars under difficult circumstances. those goals benefiting our people in harm's way represent the bedrock intention behind the creation of the commission. thank you for being here at this point. i refer to mr. flake for his opening remarks. >> i am pleased to be here and hear from the testimony, particularly the former congressman shay, as i know he has traveled to iraq and afghanistan a couple of times. i am pleased we are doing more oversight hearing. there is never too much oversight that can be done, in particular in this area. the base budget is more than $500 billion. congress appropriated $830 billion for the wars in afghanistan and iraq.

i can commiserate on how tough it is to get access to information that you need to do your work. i had been waiting for two months for bidding information on a small subset of defense contracts. details appear to be shrouded in mystery. i look forward to the possibility of having someone who is knowledgeable about the pentagon's process appear under oath so we can get answers to some of these questions we have wanted answers to for a long time. to that end, i look forward to the witness's testimony. >> thank you. this subcommittee will receive testimony from witnesses. i would first like to introduce you to mr. shays. let me introduce the panel. i understand he will deliver the remarks. >> [inaudible] >> i definitely will.

it never goes away. when chris was in there, he would always be buzzing over sharing. he serves as the co-chair and was appointed by nancy pelosi and harry reid. from 2007-2008, he worked as director of consulting and was the chief compliance officer of one company. he previously served as the deputy director of the defense department. he holds a ba from southern organic university. thank you. -- southern oregan university. he was appointed by john boehner. he served in the united states house of representatives where he represented the fourth district in connecticut. he served as ranking member of

the subcommittee on national security as well as chairman of the company. he holds a bachelor of arts and a mba from new york university. he serves as a member of -- he was appointed by harry reid. he specializes in government contracts and contract legislation. he served as acting general counsel in the house of representatives. from 1984 to 1995, he was the -- he went to harvard law school. he is a member of the commission on wartime contract in and was appointed by george bush. he has held a number of senior positions in the government including undersecretary of

state and the executive secretary for the national security council. he is retired from the united states army and previously served as an acting coach fare. he holds a bachelor of arts and ms. thank you all for testifying today and the work you are doing. now it is a policy to swear in witnesses, so if you would kindly stand and raise your right hands. do you solemnly swear to tell the whole truth and nothing but the truth? the record will reflect that all of the witnesses answered in the affirmative. as you know. your written testimony will be placed on the record and accepted. we would like to give you the opportunity to make opening remarks. it will be followed by questions and answers.

>> thank you mr. chairman and members of the subcommittee. thank you for inviting us to speak about our interim report. we will keep our opening statements brief to allow maximum time for questions. the commission has four other members. the precipitating event for being invited here is the release of the interim report released. our report identifies many longstanding issues for awarding and auditing the contracts that support logistics' and reconstruction missions. these include shortages, poorly defined and executed contracts, inadequate planning, weak provisions, unnecessary work and costly rework.

we will describe some of our preliminary observations. the interim report is preliminary and tentative. it provides a statement on key focus areas which are listed in the report. since 2001, congress appropriated over $830 billion to fund u.s. operations in iraq and afghanistan. america's reliance on contractors has grown to unprecedented proportions to support logistics' and reconstruction efforts. more than 240,000 employees, about 80% of which are foreign nationals, now work in afghanistan and iraq. additional contractor employees support department of state for international development.

these contractor employees actually outnumber u.s. military personnel. they provide support and many have paid a personal price. as of may 2009, 4973 men and women of the military and at least 13 civilian employees of the dod have died in iraq and afghanistan. it is less well known that more than 1300 employees have also died. criticisms of the contracting system and suggestions for reform in no way diminish the sacrifice of those they gave their lives. in discussing the major areas, it will address several issues of immediate concern. they are so important that they

are urging action. management and accountability. the first chapter addresses a number of crosscutting themes. the linchpin of contingency contract is human capital. acquisition depends on its government work force. the contracting officer as representatives serve a critical role. they are the individuals on the front line of contractor performance. they are in charge of making sure that the contract does what is supposed to do. they monitor whether a construction contractor works soundly or defectively. it identifies the process for designating and training cores as an issue of immediate concern. they are inadequately trained. they often learn of their added duty of contractor supervision only after arriving in the air. one of our trips, we were

briefed by the mountain division technical oversight. they arrived in january to fight a war, and they were named to this duty and it simply were not trained. as to the subject of financial accountability, the commission found a large number of ineffective contractor and business systems, including management of subcontractors with a large number of unresolved findings. they analyzed $43 billion in awards to 15 of the largest contractors. 50% of the contractor billing systems and 42% of estimating systems contained significant deficiencies. since the interim report was prepared, dcaa had defense

contracting further identified three more businesses as inadequate, to include the labor and billing systems that are in essential to document and review costs. the commission's hearing in 2009 hurt that through fiscal year 2008, teh dcaa has taken exception to $13 billion in costs. . .

we have looked at a total of 537 and cross referenced those reports. we derived 1287 different recommendations over that period. many of these recommendations have not been fully implemented. a major focus will be to try to understand why they have not been implemented. those organizations that said it would take action and why they have not. the u.s. government uses its key logistic program and what is referred to as log cap. this is a multibillion-dollar contract that covers a myriad of services from vehicle maintenance to the dining hall operation. the third iteration of this contract was awarded to kbr as the sole vendor. they kept a contract awarded in 2008.

it requires competition within three vendors. log cap 3 still dwarfs in terms of value. the dcaa director stated in may of 2009, "i do not think we are aware of another contractor that has had a significant number of suspensions or referrals." in response to that testimony, kbr implied that most referrals for possible fraud by dcaa have been resolved by officers. however, dcaa is advised us as of may 4th, none of its referrals for possible fraud had been resolved. a total of 3232 still open. this inspection -- the

suspicion has been looked into by the department of justice. this is not been looked into by contracting officers. these raises serious questions about logistics' contracting issues. for example, the commission has learned that american bases during this whole more than 600,000 line items. because of the poor documentation in the early days of iraq and the shortage of officers from a base commanders often do not know what property is on the base. as a point of reference, those light items haven't 3 certified and trained property managers that have that responsibility. there are another 12 that are a part of the property management process that have not been fully trained and vetted to fully trained600,000 line items.

these must be handed over to the government, sold, or scrapped. the lack of resources and planning have set the stage for mass of confusion and loss. as an issue of immediate concern, the drawback of u.s. forces in iraq risk incurring enormous waste. we identified more than $2 billion in new projects in iraq that are now being analyzed by us. a number of the projects in the pipeline may be unnecessary. for example, during april 2009 visit to keep delta, the commission identified a $30 million construction contract to build a new dining facility. it was being built near a recently expended facility. the new facility is due to be completed december 2009.

prague review of such projects in the pipeline could save taxpayers many billions of dollars and the unnecessary spending. chapter 3 addresses private security contractors. one of these steps for -- set forth in the mandates these shape the subject from the beginning of outsourcing, security from the 1980's in a 1990's. after those incidents, the secretaries of defense and state as well as congress, through their continuous oversight, implemented significant reforms. i think it is important to note that the reforms appears to have worked in this case. the state department reported 11 dead the force discharges a weapon incidents in the month of july 2007 alone. there were another nine deadly

force incidents in is a timber 2007. -- in december 2007. for the full year ending in may 2009, there have been only two for that year for incidence of use of force. with proper attention, improvements can be made there is a lot that is not getting proper attention. the commission identified a number of specific concerns related to private security contractors as a result of our visit to afghanistan. in afghanistan, the arm contractor oversight division or a-cod handles overseas contractors to make sure they aren't complying with terms and conditions. it is a very large role. at the present, there is such a large role for contractors that

raises the issue of the conflict of interest. the person they're briefed us while we're there -- while we were there is occupied by a private security contract official. he is equivalent to a colonel. it has not been filled, identified, or authorized. in contract terms, if there is a use of force incidents and there is mandatory coordination with the coverage of afghanistan, the contractor will do their representation for the united states government. that is the current process. the trip to afghanistan in 2009 underlined already acute contacting problems in reconstruction. that is another area where we're going to be focusing on intensely during the next year. there are serious shortages of

the government civilians. >> hanky pre >> i cannot imagine. -- thank you. i cannot imagine. >> it is really just the two of us, sir. >> we have joint statement. there are experts to answer your questions. >> they are here for the tough questions. >> it just continuing, chapter 5 provides a summary of the activities that the commission has in process or slated for steady in the near future. there are over 30 bullet items including a number of complex and far-reaching studies. the commission encourages examination on pages 92-94. we like to highlight a few.

it went to remedy the understaffing of contract oversight and audit functions and assess the effectiveness of current efforts to estimate the optimum numbers and types of acquisition personnel. we want to assess the shortcomings in government knowledge and information systems and undermine the accomplishment of the iraq draw back. we want to consider what processes and controls should be in place to manage decisions and assess risk of outsourcing the justice and security support services that may be considered inherently governmental functions. we want to consider how best to improve the accountability and consider it -- contingency contract performance. this includes affirmative consideration source selection. that was under management. under logistics', we want to assess contractor support

including possible establishment of an installation's management command to manage facilities once the contingency operation stabilizes. we want to identify reasons for the slow transition from log cap 3 to four. we want to examine recruitment process is, background checks, and training to ensure the employment of possible personnel. we want to examine the potential use of civilian employees in the apartments of defense and state in lieu of contract personnel including temporary employment. under reconstruction, we want to evaluate three construction projects and determine the extent to which stickle the collaboration is an integral part of planning, contract performance, and sustainability.

we want to assess the feasibility of establishing an interdepartmental entities for planning and coordination of reconstruction projects. let me just and by talking about a few activities -- let me just end by talking about a few activities and breach the commission members read the commission selected and if that -- administration staff. during september and october of two dozen day, the received briefings from more than 25 key organizations and programs. they let -- they met with scholars over carjacking issues and with contractors. our very second, 2009, during its first public hearing, included testimony from the general in iraq.

on may 4th, 2009, they had their second hearing which focused on the multibillion-dollar log cap contract for services. commissioners and staff have made two trips to iraq and afghanistan to inspect, conduct interviews, and received briefings from individuals on the ground. the first trip took place in december 2008 with an itinerary that included agency briefings in kabul. these included task orders for reconstruction and repair in afghanistan. in april 2009, that comprised of a 50 person group of commissioners and staff that broke into three teams. the conducted more than 125 meetings with employees of departments of defense and state, usaid, contractors

working on a range of projects. the commission continues to develop tasks for research and investigation to deepen its knowledge and to cope with changes. our plans include many more trips to theaters of operation, additional hearings involving a government agencies, non- governmental organizations, and members of the contract in community. we will continue our liaison with congress. before we conclude, we would like to say the words about the commission's staff. firstly, all of the commissioners are federal employees read some of them are details from agencies and services including the army, air force department, state and defense, the u.s. agency for international development, the defense contract development agency, and the u.s. army corps of engineers. some have served one or more chores in duty including working for the inspector general for iraq.

others have served in congressional staff and have held important decisions in the commercial industries which are the focus of our studies. there were hundreds of years of combined experience in education of many fields that to bear on our mission and perform valuable work for their country. in conclusion, the commission and staff of the commission on wartime carjacking in a minute -- in afghanistan and iraq take very seriously the task that congress has decided to as. we appreciate this. we sincerely thank you for the opportunity to describe our work to you today. we pledge our best efforts to provide information to make -- to help you make good decisions. mr. chairman, we think you for the support of this commission and for your critical review. we know that this committee, as well as the senate, looks at

everything we do to help us to a better job to make sure we do a good job. >> thank you. i think both of you and the other witnesses as well. this is all about working together and criticism. you have developed your staff, have your office space, and are getting things together. i think you have done a great job all things considered. i have a number of questions. we will have another round -- will have a number of rounds year. one comment made was that there are a significant number of reports and recommendations coming from those reports, many of which have not been implemented. that should disturb us all. you also said later on that there are a lot of issues outstanding that were not getting enough attention off. in the context of your plan, are

you planning on reporting to congress at some point how we might best utilize those investigative sources that are out there, the inspector general, so that every issue is covered. you do intend to investigate why some of these suggestions are not being implemented. that would be important for us to know whether it is executive action, legislation inaction, or the process. >> yes, sir. we intend to take the 1200's plus recommendations out of those 537 reports. we intend to trees each warrant to find out the status. we are aware that there are significant issues on key recommendations. there is a direct tie into correcting problems.

it is interesting to note. this is one thing i might share. we need to talk about this and try to evaluate it. when we were out in the field on the bases, can factory, afghanistan, the joint task force 101, universally they were supportive. universally, they said if there was anything the commission to do relative to the fact we have so many undecided organizations so that we could be coordinated better. it seems like we're collecting information and turning it around it to collect the same information two months later. each of these oversight organizations has a job to do. contingency and garments are unique from oversight because it is so distance oriented -- contingency oversite is unique. >> i will ask questions later on

about how to go about doing that. some of the capacity issues are serious. is the commission feels it has enough presence over in the theaters that you are investigating? >> the commission is debating right now whether we should have permanent representation in afghanistan and iraq. obviously, our commissioners and staff will be going over repeatedly. that is something we will be able to get back to you very quickly aren't. we know that we need to be there in both countries. >> @ thank you. -- tahnk you. >> i have some of the same concerns. i am sorry agreed my voice is hoarse. you had told hundred recommendations that have been put forward. is that from your group? >> no, sir. we went through all 537 reports, sorted them, cross

reference to them. we were tasked to build upon their work, not to recreate that work. >> says some of those 1200 come from the other investigative bodies that have put forward 3 >> all of the 1200 that i have referenced come from those organizations. >> what remedy is there if these are not implemented? what are we to do or what our other bodies to do to implement them? >> i think that point is spot on in terms of the of this is. it fits the subject of accountability. if someone says there are to correct a major problem and they're going to correct it within a certain time. and they do not, one of the things we want to do, for example, because the turnover of staff -- so really did not understand that. i just picked up the responsibility. there is an absence of a recording what is doing done -- what is being done. some of the organizations do a

good follow-up. the actions are just not getting accomplished to the extent that government organizations have agreed to do. >> in talking with a lot of the agencies on some other issues, we are often told that we have a process by which we cannot offer sole source contracts. we have to bid every contract out. yet, you mentioned kbr which had a sole source contracts for certain activities. could that contracts have been bid out? is there a process that the department of defense has to go through the do not bid at the contract out? is the paper work that has to be issued? -- is there paperwork? why are they able to have these contracts sole sourced?

what's that is an excellent question freed in has been some years that the department of defense has tried to have a later contract in which there would be -- a later version of log cap in which there were the three competitors. the talk about that those of back -- goes back at least two years. there are now slowly phasing in that successor that would have competition within the three companies. that is an activity we're going to be following in the theater. it has not been activated in iraq. each task order when these contracts still only has one vendor, kbr. there has been a concern of voice that the phasing in is going too slowly. >> of the jurisdiction covers just wartime. in theater, it seems like the problem goes beyond. i have been trying for months to get access to some of thesej &

a's. i have not been able to find out why some of these contracts have not been handed out free some of the problems you see in the theater -- contras have not been bid out. some of the problems you see in theater, are these due dec. problem inherent in theater? >> there are problems in a domestic context. there is this special exception for wartime sole sourcings. the same exception used to date in iraq had been used in the domestic united states. >> are you, as part of your activities, access -- asking for the paperwork to see what justification was given for sole sourcing?

>> we look at the justification and 40, j & a -- we look at the justification, j &a. the keyboard is often superficial. it is the exception for them being the only available contractor. we have followed it goes up to see whether it really has to be without competition. >> i might, sir, at a point that each is a very unique contract in the sense that you could maybe think about whether was dysfunctional and in terms of the way was established. there was competition, but it is a 10 year contract, dollar for dollar. when sear it can be rolled over. you're talking about a contract in action with a sole supplier

the dates back to 2003. it is still in place because tenures have not passed. there is no competition any more. that is why we are encouraged of log cap 4 4 there is a lease three vendors to bid on every order that were discouraged by the pace. we saw an example ofor the same type of work in kuwait had priced out at $120 million. it was $55 million less after competition came in. competition is a good thing in this is a fireman. there's nothing unique about it more time zone where you cannot usually credit -- competition is a good thing in this environment. >> if i might add to what the

commissioner said it and some of your concerns about the 1200 recommendations that have come from other oversight organizations, two of which we will certainly add a number of our own recommendations to. we have a challenge, i believe, and that is when we go way, have we come up with procedures to permit, which will encourage follow up? all you have seen dozens and dozens and dozens of studies, as i have, with some very valid recommendations that collect dust. one of the challenges we have, and a challenge that you may have, is how do we force some of

theseactionable recommendations forward as we turn out the lights? that is a problem that we face, or a challenge that we face, which is not much difference in every other commission and oversight organization bases. >> i think you hit right on that. three of us now, if i look at the panel collectively, have honed in on this. we're going to rely on the commission to give us some direction on what you think ought to be done, whose results ability to follow up, congress, whoever. we will work with you to get that done a. we will set up a series of hearings or legislation to keep moving on that to get it done. it is a ridiculous. >> precisely. >> thank you.

your knowledge for five minutes. -- you are acknowledged for five minutes. >> you think there'll be some intelligent -- analysis over the decision to sole source for most lessors multi-source? >> i will look to make a comment that when we talk about log cap 3, that was a contract that was given to kbr before we went into iraq. anticipated that we would be spending over $30 billion to one contractor. when we went to log cap 4, they will bid internally within the

three with none of them getting more than $5 billion per year. we're talking over 10 years. the government has introduced a form of composition there. -- a form of competition there. in terms of the number of recommendations that have been made, the 500 reports, our task is to categorize every one of them to be able to come back and tell you which ones have been implemented, which ones have not, why we think they have been implemented, why they have not. our recommendations also on what could and should be done. when you see is looking at those test reports, it is not to rework them it is just to know what is done and to make sure you know. >> sir, to your point about

whether we're going to look at the contract, there is an absolute obligation to look at it. the type of contracts, whether competition has been used 3 i will make a couple of observations. in fairness to the record, there are significant efforts to use competition in certain parts of contract and by the military and by state. one of the areas we highlighted that we're going to focus on in terms of contracts is subcontracting. for example, that is cost type contract in, dollar for dollar. the prime gives dollar for dollar on a fixed price. it kind of begs the question, how good of a job is it being done with that? there are foreign firms that are involved with that. what kind of data and analysis are going to be available? that is the frustration you see

in the report agreed that is the obligation of the prime contractor. >> will that sort of analysis also look at in house verses contractor? the question is whether that will ultimately have better been a better deal for the taxpayer, to go the traditional route. similarly, are there rules of some of balding in terms of the amounts of contacting oversight per dollar -- are there some rules of thumb in terms of contracting? >> what i saw in afghanistan, personally, is the agency went through and identified several thousands of tasks that needed to be done.

the cut it down to 537 theater wide that needed to be done. i think the number was 160- something. only 36% of these positions were filled. there was no one looking at the contractor. there was no one doing the work. defense acquisition university has developed a couple of courses. my example of a 10th mountain division we brought these individuals anin. there is a course for training. they said we have an on-line 16 hour course. i spent 30 days trying to take this course. i kept getting cut off line.

i finally said, to heck with it. they're out there trying to the best job they can, but they're not equipped with training. there it -- there is training that has been developed, but if they do not get it before they go free >> and other points, as the chairman mentioned, in addition to the shortage of oversight personnel, whether it is 16180, many of them are miss -- whether it is 160 or 180. you might have a combat medic overseeing operations at a base. we have other instances where one contract of asserts rep is overseeing 15 different

contracts in addition to performing their principal duty, which is unrelated to any of the contracts that person is overseeing. there is a shortage. there is a training problem. there is a casting problem applying the right kind of skills to the contract oversight. in many cases, we do not have those skills within the army. >> if i could just add one other quick point. a number of these say the contracting officer representatives, that they may come in and lead in the contract is still there. they do not have the institutional knowledge or stay long enough. that is another part of the problem. >> thank you. you're recognized for five minutes. >> thank you very much, mr. chairman. let me say that the work you are doing is very important.

i hope it does not gather dust. i am very pleased that a foreman -- a former colleague is on the panel. i always thought that the chairman was one of the finest committees we ever had. >> could you pull the microphone closer? thank you. >> i have been tremendously concerned about the horrendous waste that has been going on in the defense department, especially so after a year-and- a-half ago after the gao came out with the report that said we had to earn $5 billion -- $295 billion did on weapons programs. every should be horrified by that.

yet, it did not seem that many people were. it looks as though both parties are trying to prove how patriotic they are more concerned that someone might think they're not patriotic. we are ramping up in afghanistan and spending unbelievable amounts of money there. when i read your testimony that you're talking about massive confusion and loss, enormous waste, billions of dollars in waste has -- has occurred and is still occurring. it looks to me like it would really be unpatriotic if we did not question these things and do everything possible to stop all

of this waste. very few people are willing to vote against anything the defense department wants. apparently, nothing has been done. i sometimes wonder if there are any fiscal conservatives at the pentagon, according to the congressional research service. we're now spending, adding in the regular budget, supplemental bills, and voting on another supplemental bill either this week or a few days from now, the emergency appropriations, all of the money being thrown into the omnibus, we're spending more on defense then all the other nations in the world combined. a lot of that is generated because the defense contractors hire everyone and they have the revolving door the pentagon. i do not think that we can just keep on wasting and blowing money away like we're doing.

the only question i have -- you say at one point in your testimony, you say that there are a number of new projects in the pipeline. you mentioned the $30 million bank facility. a rough guess, how many other new projects are going on? -- the $30 million dinig facility. >> we know it is at $2 billion trade want to touch the programs to see if they make sense. that is where you meet people in theater. it just happened that this was shared with us when we happened to meet that base. out of a couple hundred bases in iraq, we visited three or four. there's obviously a need to do the analysis and look at the high dollar items. we'd ask the questions. does this make sense with the

direction of iraq? -- we need to ask the questions. >> by saying you only visited three or four and there are hundreds, is the $2 billion in just the tip of the iceberg? >> no, that is what is in the pipeline has approved construction projects. it is kind of interesting. this is an example, the dining facility, right next to it. they needed to feed 4000 individuals. the upgraded because they have a lot of problems with the existing one. he spent $3.6 million. that had just occurred. what happened is the paperwork that showed all the problems that led to this upgraded cafeteria never made it into the planning documents for the new construction. they still thought they had this dilapidated dining facility. the only thing i can think of is

that you have to go out and look at a pretty have to spend time in country. if we had not, none of that would come forward. you cannot just look at the keyboard. but the board would say it made sense. in had just been renovated so we're going to have two great dining facilities. >> this was also done at a time before the agreement between iraq and the u.s. when we would depart. as it turns out, we have this new, wonderful dining facility for two years. >> is the same contractor doing both the repair work and the new facility? >> yes, sir. >> they never spoke up of course. >> mr. lynch? >> thank you, mr. chairman. i want to welcome me back. it is good to see you. i think you all for your great work. i have not been over to iraq as many times as you have, but i am

up to about a dozen now. one of my jobs before i came to congress, i spent a lot of time on construction sites. i have a construction engineering degree. i am surprised that we get as much work done in iraq and afghanistan given the contractor arrangements that we have. i have seen horror shows. i have visited a lot of construction sites in iraq and afghanistan. i frankly think that the former specialist inspector general did a fabulous job. from my visits to afghanistan, i think that the situation there and the inspector general and the afghanistan is far less. he is newer. -- he is far less able.

i am very apprehensive about our ability to lose money in afghanistan and to waste it. that is your incompetence and through fraud. -- that is through incompetence and fraud. back in 2004, i asked the director of the dcaa, how many contractors -- excuse me, how many auditors you have in iraq? he said that we do not have any grade at this point, we had -- we were spending billions of dollars there. billions. i said, how does that work and then? he said, we are auditing our work in their contracts in iraq from alexandria, virginia. that explained why it is reflected in your own report.

it explains why we're having such a problem. now i read, again, from the committee memo that we have four individuals in afghanistan in the whole country. they're spending billions of dollars there. we have two at the air force base and two in the south. that is it. if we do not get a handle on that, boots on the ground, people renewing -- reviewing the contracts, this is criminal. there is no one who will operate like this in -- on a private basis. if we were spending private corporate dollars, this would not be happening. it is happening only because we are spending taxpayer dollars. people feel that it does not have to be audited to that great of a degree. we're terribly sloppy in iraq and afghanistan. we need to tighten up our act.

what do you see is the greatest need in terms of getting some accountability on the ground? we cannot continue to operate this way. contracts are going out without tight enough accountability standards for recognizable standards. when the jobs in iraq, just from looking on the job site, it uses substandard materials. i tried to talk to the workers there. i had an interpreter with me. it turns out that they are all from india. now, you have 60% unemployment in iraq why the heck are we bringing in foreign workers? you ought to put some people from iraq to work. it just seems that there are no requirements in the contracts that would help the overall cause of putting people to work

and stabilizing that country. from your own attendance there, your own observations on the ground, what you think needs to be done first and the fastest? >> i think the first thing we need to do is to encourage the department of defense to make this one of their highest priorities. we have spent in contracting $103 billion, in afghanistan $20 billion, in kuwait $8 billion. we have spent $12.7 billion in countries is supporting afghanistan. what we know is that we do not have enough contract office representatives agreed we do not have enough quality assurance representatives. we do not have enough log cap support officers. we do not have enough people watching the contractors. we have 70% of our contract going to subcontractors. our law in this country makes

it a requirement that we can only oversee the subcontractor by going through the prime. we have to get the information secondhand. i think we need to reexamine that. 7% of the dollars i mentioned are actually going through the subs. we have another issue. we have to deal with those governments if they are afghanistan employees or iraq employs three there are hopes that we have to jump through. if we're going to spend our dollars there, we should have greater ability to oversee the contracts that are done by the indigenous bolts -- folks. >> thank you. in your report at one point, you talked about having -- making the subcontractor the prime. i do keep your report indicated

that in one of those incidents, it had jack the prices of and the prime double that to pass along. -- it had jacked the prices up. >> on page nine, you have a sideboard to talk about kabul. supposedly, that is where the headquarters will be. there is a -- there are structural cracks, and correctly sized sewage systems, leaking pipes, sinking sidewalks, and other construction defects. how does that happen? someone signs off on a project like that and we get tagged for the bill. >> one of the recurring themes is accountability. how does this happen? in this particular instance, the

united states corps of engineers signs off. in this particular instance, the united states corps of engineers sign out that this $80 million contract by a turkish construction company was adequate. it is interesting because it talks a little bit to our methodology grid we interviewed the seniors. you had to be a major individual to inherit the building. this is a great example of rework. as the repairs are ongoing, the logistic contractors, kbr, is doing much of the work that this turkish country -- turkey's -- turkish compani is. in just this list where we asked for information from the responsible personnel major issues were septic, electrical,

ceiling tiles falling, fire alarm systems, power generators. these are biggest things. >> was kbr responsible for managing that turkish outfit? >> it was a separate company. >> it was the contractor. kbr came to the rescue, but that wasn't rework. what do we know with the army corps of engineer that his response will for that was disciplined in? >> know, we do not. that was the commissioners point. we have to start identifying who is responsible. -- no, we do not. i think it is a little higher than that. someone over looks at their workload. my suggestion is that we have seen military accountability in situations, but we have not seen for these situations occur. if they are and at --

>> i feel that they're probably doing business with us still. so that is one of the things you will be investigating as well. we need to make sure they do not do any more business with us and they're held accountable for it. breeding and of access to the people you need information from were the need the assistance from people in congress? are they be responsible -- are they being responsible? >> i save we have the need to explain in detail why we need information greeted the department of defense and state have supported us. where we are straining is your point about getting into the country. our first two trips were delayed about a month because of conflicts and scheduling. the trips when off really well and they supported it. we have a need for four other

trips. will they allow us to go in and do this job? if we cannot go and look at the records there, we will fail. >> you will work with our committee, and we will try to help you with that. >> as soon as we have a delay, yes. >> i would like to say it is helpful for your encouragement that we be in iraq and afghanistan. i remember that the inspector general said we did not need to be there. your committee made him go. we benefited from that. >> we benefit from when we go. it is not a vacation. you get to see things that on paper may represent themselves entirely differently. we are conscious of that and we want to work with you to make that happen. when you talk a little bit about the challenges for the contractors or the subcontractors are third country

nationals and the problems that those present and what we need to resolve those issues and challenges? >> there have been audits which we follow up on, as noted. the prime contractor mayb be kb, but the other work that is being done is done by a third country company like the first kuwaiti trading company. the audits show that those subcontractors may get away with overcharging because it is not that much in kbr's interest. the overcharges from the subcontractor get passed up with a factor for a wharf fees,

overhead -- award fees, overhead. the commission is trying to figure out the legal challenge. this is not a problem in the domestic united states. it is a big problem in the theater where we are. we're trying to figure out what could be done to increase the ability to audit such third cup -- third country companies. >> so, we have a government that is supposed to oversee the contractors and we have less than 50% of what we need. they're not specialists. they have to be taught. then they're asked to leave sooner than the contractors that are still there. then we have dcaa pointing out that most of the technology that the contractor's use is outdated, and accurate, not helpful, not providing the right information. when we want to give the information, we're getting it

from the company itself that cannot provide really well documented information. >> de are contracts now require these contractors to have updated technology with certain specifications that would serve as our needs? >> they're required to have it, but they do not. >> thank you. can you cite specific examples of services -- all right. sorry about that. can you cite sums as examples of services that can be provided under a different contractor, under log cap4, and why you believe switching contractors might yield better results? >> the way contractors ours -- are structured, every task order now is theoretically supposed to be bid out and evaluated by

three contractors. the early results are that it is a very good thing for the governments in terms of price and cost for competition greeted those are the three organizations. that is a long-running contract, also. the problem is that 90% are with all the contractors which is the sole supplier. one of our emphasis, and i will point out that i think it was general odierno identified the same issues which is to get on with the competition part of log cap 4. there is lots of planning, lots of effort, and it is not happening to the extent that it should. >> thank you. the pace of withdrawal in iraq, you mentioned some of the challenges that it presents us with.

winners of those challenges with the rapid pace of withdrawal -- what are some of those challenges with the rapid pace of the drawbacks -- peso withdrawl. >> there are a number of factors. they're planning for this, whether they have done enough planning, whether it is moving at a pace that is going to accommodate the we do not know yet. >> specifically, what opportunities are there for abuse, fraud, or waste with the rapid withdrawal? >> i think as troops are withdrawn from iraq, we're probably going to have to rely on contractors to remain there to close down at those bases or to pass them on to the iraqis. one difficulty that was brought to our attention, for example, shows a lack of planning and

forethought. they pulled out the air- conditioning units in buildings never going to be passed on to the iraqis. then they had to go back and reinstalled them. they just did not think enough about, when they took the equipment out that it would still be needed because they were going to take over the buildings. all the decisions on reset, which women get sent back to the united states for rehab, which is going to go to the reserve components, what is going to be scrapped, it turned over to the iraqis, all those decisions are currently being made by sentcom. i am not yet comfortable that there are not a lot of holes in that planning process. >> i might add, as an example, when we were on one of the basis, the military enlisted

personnel that is going to be involved in some of that support activity had --, pointed over to unused material. if they're given 90 days to get out, they're going to leave in 90 days but the outcome is contractors are going to add to go out there and figure out. there could be sensitive equipment. we cannot just give it to them. the important point is, as we see a decline in the military, there is not going to be in a similar decline with contractors. 600,000 plans have to be tracked. we have one contractor. the irony is, as we get out of iraq, we may have more contractors and we have military. it is now one to one.

this is probably in the hands of the contractors that is owned by the u.s. government. then we have items on base that no one knows who is responsible for them. just to reiterate, to review the list that commissioner great to talk about, we can donated to the government, returning to the united states, use it elsewhere in iraq or afghanistan, transferred to other u.s. government agencies, sell it, or it has no value to scrap it. we're asking people to make those decisions. they may not know what is needed at another base, so they may decide to give it away when we are still going to purchase it somewhere else. why is it that just speaks to the need for more coordination. -- >> that just speaks to the need for more coordination. >> to follow up on commissioners

shay's first point, i think we needed to think hard, as does the subcommittee. there is an inherent, implied concern that we have too many contractors, whether we do or not i'm not prepared to answer that. the joint staff has a task force looking andt what things are appropriate to beat contract it out. how did we get to this point? what decisions were made by the services? what decisions were made by osd? what decisions were made by congress? they get us to this one-to-one ratio. i think, more importantly is what our -- would are our

options? do we increase force structure within department of defense and state so that we have not just the contract and oversight expertise but we have people to do some of the jobs that are now being done by contractors? do we change the emphasis within the services to push more things into the sustainment force, out of the operational force? do we provide less services? . .

>> i think we have far too many contractors. when i hear that we have 240,000 contractors and that 80% of them are foreign nationals, this seems like this is just a gravy train of money for these defense contractors and for all of these contractors. i think almost anybody in this country would say that it is ridiculous. it is ridiculous we are spending all this money hiring these foreign nationals and committing all the waste, fraud and abuse. i think it is really sad and it

is really shameful. thank you. >> i think the other question we asked was what is inherently governmental responsibility and what is not? what are we dealing with some of these people? are they doing a job that should only be entrusted to someone who is a u.s. citizen or someone of the armed services? security strikes me as one of those things with him is protecting him within these countries. we are looking forward to your in-depth work on that issue to inform us of the many definitions, which is the one we will settle on and how we will make that determination? nobody has discussed what is the proper number of contractors out there. you mentioned the different ratios over time. the fact of the matter is at

some point, the argument we have heard when there was not anything we could do about it when different people were running the military, was it was just cheaper to contract out. i don't think there is any evidence of that at all. it would be helpful to have some export that aspect when we look at these numbers and this difficulty going on. we have to get the numbers right and we need to have the right oversight in place that gets back to the capacity issue. that will be critical, but in debt vein, we have people stationed in over 1000 basis. -- over 1000 bases that for some reason we seem incapable of reviewing and deciding whether they deserve to be there, what is their function, are they

adding something of value to our national security interests? can you take some of those people and train them? some of them may have technical expertise. some may be able to be trained to do certain things. we will be looking into that issue separately. the other issue is national guard, and the reserves to have expertise. it may be a better identification of who is in these places. . it would be easy to train police officers on that basis. somebody in the management structure has to be looking at these issues in a much more sophisticated way, even the civilian corps will be helpful. let me wrap up my question with a defense acquisition aspect of

it. did anybody think of putting it on a disk so you did not necessarily have to connect? was that just beyond their capacity to conjure? >> i would propose they had it on a disk but they told the individual to take it on line. it got kind of silly if you don't have disks come at you cannot give them a desk. >> -- if you don't have desks, you cannot give them a disk. >> it seems like contractors are not using the equipment they have to use. these organizations 08 to their own people, the people given their lives and the tax payers, to do what the contract says so that we can follow through on

these things. the 08 -- they owe it to their own people. they know that is not funny, it may be profitable but it is not good. they owe it to the people to not just double the number. they certainly have a portion of the responsibility. if we could trust them, we would not be so concerned. when i look at the examples stated, we have a capacity issue. we have to move forward on that basis. we have lots that we want to talk to you about and we credit you for the work you have done. this is one we will look forward to you expanding that out. with the work that you are doing, it will be helpful to us

and help us focus on what we need to do in terms of legislation or oversight to hold the feet to the fire of those people who are not organizing as they should. do you have anything you would like to add >> -- anything you like to add? >> no. >> we thank you for your service. thank you very much. we will take about a five minute break before the second panel starts.

>> will now receive testimony from the second panel. he is responsible for the federal acquisition policy. prior to this, he was a vice president of at&t government services. he was counsel and staff director on the senate small business committee. he holds an degree from the school of law.

it is the policy of the committee to swear you and before you testified. do you solemnly swear to tell the truth? thank you very much. a full written statement will be placed upon the record. we would give you five minutes for your opening remarks before we start questioning. i would invite you to do so at this time. >> mr. chairman, thank you for your invitation to appear today. we are the leading national trade association of firms -- we represent businesses that provide services of all kind. we employ hundreds of thousands of americans. we have been engaged in policy issues relating to the contract and in iraq. we testified on three separate

occasions during the past four years. toys were chaired by mr. shays. -- twice were chaired by mr. shays. we conducted a formal -- we know the commissioner appointed as had the opportunity with -- to work effectively with them. each individual brings a perspective to these tasks. we have had the opportunity to work with many agencies involved in developing requirements. we appreciate the challenges they have faced from the commitments they have shown to fulfill this mission. we have worked with dozens of companies from across our

membership that put their companies and employees on the line every day to further the objectives. to many members of the military, u.s. citizens and people had given their lives in that support. i can say that the issues in an iraq and afghanistan are among the most complex and interdependent among numerous government-directed missions. all of this possible and easier to be selective in the issues chosen for review. the value of any analysis in iraq must take into account several sets of realities. iraq contract and is not one activity, it is three different subsets, at the support of the military, the reconstruction of

iraq and economic assistance provided in iraq and afghanistan. we must look at the time frame for the efforts in iraq. they presented a different set of on the ground actions from the work undertaken by the provisional authority and different from the more recent physical security environment. the final set of realities is what i referred to as situational contracting. to understand this activity, it is essential to understand differences between an emergency contract in, contingency contract in -- contingency contractingg. it would be a mistake to select any subset of regulations are

written for normal contracting and expect perfection in a wartime environment. we have known that there were few to trained professionals assigned to support the escalating operations in iraq. and the number of contractors employed. we know many contractors were overwhelmed by the rapidly changing attitude of the work and pressures put on their business operations. it comes as no surprise to many of us, and i hope it is not a surprise for anyone who had a responsibility, that the lack of contract in officers, lack of qualified representatives assigned to supervise, lack of government program had an impact

on their ability to execute 80 oversee these capabilities. we are struck by the fact that these examples did not speak to abuse or fraud, but to some of the structural challenges that are too well known. the building the dining facility had a cost to the government. it is not a case of misconduct, that may be inefficient but it is not fraud. as the commission continues its work, we hope it will use this opportunity to set the record straight on how they publicized drastic -- publicized tragic events. the commission has held only two public hearings and only government officials were invited. there are any -- many other

perspectives that need to be heard from. we stand ready to contribute to the commission in any way opprobrious. the interim report should not be treated as a conclusive document. the need for additional discussion is clear. we hope the commission's future hearings will address the root cause for these issues and explain implications and develop action plans. congress should expect no less, those who had served in iraq and afghanistan deserve no less. thank you for the invitation and i would be happy to answer questions. >> mr. flake, you are recognized. >> you heard the last panel. what if any areas do you agree with the recommendations of the panel?

>> i have had a chance to look at the report quickly last night. the panel's focus on oversight is appropriate. i think it misses an important part of making sure there are resources available to execute the work. if we don't have the right people doing the right things at the beginning, we can be assured that the oversight function will find mistakes. we have been a strong proponents for increasing contracting officers, bringing the work closer to the theater of operations rather than from alexandria. with more resources on the front end, we will address some of the issues that were failures were deficiencies.

>> other cases where fraud is alleged but never proven? what damage is done to the contractor? >> there are many allegations of fraud and contract -- contractor overbilling. there are some litigation issues. the justice department does not pursue every allegation of fraud. sometimes the discretion is that there, but everyone of those damages the reputation of the company and calls into question the function of the entire system. if there is no credibility in the system from the requirements to the contract award, if allegations are made that on knock sustained -- that are not sustained, that damages the entire acquisition.

>> you mentioned the dining hall facility. apparently it was the same contractor doing the same refurbishment who got the same contract to rebuild the facility. the commission pointed to the lack of coordination and that nobody knew the contractor, they did that no any refurbishment had been done. is there some responsibility that falls on the contractor? is there a code of conduct that the contract in community bonds by -- contract in the contractbinds by? >> i am not familiar with the specifics of the case.

i read about it for the first time last night. if it was the same contractor, i would be surprised that the contracter did not say that i am doing similar work. whether they did or not, i hope that the contractor would take that obligation to do that. many times because of the resources, it is the contractors who have the visibility into the facility. i intend to ask around to see what i can find out. i don't know -- i don't have any comments about the specifics. >> i know we have the votes coming on. i am certain that in many of these cases where these contracts are not bid out, that

members of your association are upset because they would like to bid on these contracts. do you sometimes ask for these, or can you review the material and what form do you have to go to the agency and say, why wasn't this bid out? i'm sure those types of situations come up. what remedy do you have to make sure the agencies abide by their own rules in terms of contracting things out? >> that is an important question. where there is a lack of competition, our members tell us about that because they welcome the opportunity to compete for work. they would prefer to have full work but they understand the importance of competition and a

predictable procurement process. when those issues are raised, we ask that question. congress last year required the defense department, went issuing a service awards over $100 million, to make those justification's publicly available. that will soon start with regulations recently put into place. we don't have access to a lot of the government decision making, but we often ask why wasn't competition appropriate? certainly there are national security reasons and things that might prohibit it, but even dating back to the original u.s. involvement, we were strong proponents of phasing in. if there was a need because of an emergency situation, that did not need to have a 10-year

contract. it could have been a better plan for the competition process. some of it is resources and some is the changing environment, but we have been strong proponents of competition. that should be the standard that is applied. >> thank you mr. chairman. >> thank you very much for joining us today. we are going to close the meeting in time to let the members of vote. thank you for your pace inch -- thank you for your patience. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2009]

>> the 1970's. he is intercut by the founder of -- he is interviewed by another author. it is on c-span2. >> home to america's highest court, up from the grand public

places to those only accessible by the nine justices. the supreme court, coming the first sunday in october. >> as the health-care conversation continues, the health care hub is a key resource. follow the latest video ads and links. keep up-to-date with health care events like town hall meetings, house and senate debates and even upload your opinion with a c-span video. >> good morning. i want to welcome to -- welcome you to our session today on fact versus fiction. we want to start this morning by thanking the organizations that have made this possible

starting with the robert johnson foundation and association of academic medical centers. without all of these organizations underwriting our efforts, we would not be here. our premise as the nation's leading journal of health policy, it is a non-partisan peer reviewed journal. is that a serious health reform effort warrants a serious national discussion. health affairs was founded in 1981. john would be the first to tell you that health affairs has been in the business of covering health 1981. as our system is an extremely dynamic one. periodically more dynamic than others. health reform at health affairs and, therefore, we are very delighted to be sponsoring the session this morning.

as many of you have been observing the current debate know, we have become aware the discussions now going on about health reform are not always proceeding at the highest level. which is part of the reason why we decided we needed to have this today. some of you may have seen this cartoon in the "boston globe" earlier in the week summing up how the tone is at some of the town hall meetings as you see. the questioner says that we will allocate the question time among the badly misinformed the i justidly ideological and the actively hallucinating. we have an anecdote of this morning. we understand these issues are difficult to follow this fake protester is holding up a sign saying we have no idea what we are talking about. we recognize that these issues are complicated. we recognize that the issues really demand a longer conversation than is frequently the case. as we started on this voyage of

thinking that we could do something useful, we selected several topics that we thought we could bring something to in order both to harken back to work that health affairs had published in the past and also capture some of the issues that we understood were of great concern to the public. we do not pretend by any means that this is a comprehensive systemic review of every issue that could possibly come up in health reform and by the same token we do not have a universally representative sample of speakers representing every possible ideological, ethnic, geographical or other perspective. we're not pretending that we're doing that. what we are pretending -- i hope more than pretending what we're doing is bringing you some solid, substantive nonpartisan discussion on some of these very key issues. we are most honored to have a couple of special guests 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 healthcare

trembles for quite some time and have a very special perspective personally as well as professionally on the importance of health in the united states. first, we are most honored to have on the telephone lean with us this morning from his home in hanover, new hampshire, former surgeon general c. everett koop. you have bios in your pockets that tell you more about our marvelous speakers today. dr. koop is about to celebrate his 93rd birthday this year. he was born in brooklyn, new york. he received his m.d. degree from cornell medical college following his undergraduate degree from dartmouth. after serving at an internship he did post-graduate training at the university of medicine, the boston's children's hospital the graduate school of medicine at the university of pennsylvania and received the doctor of science in medicine in 1947. he was a pediatric surgeon for many years.

he's presently the liz professor of daughter mouth as well as the c. everett koop institute. he's an internationally respected pediatric surgeon and as you a know, he was appointed surgeon general and deputy secretary of health in the u.s. public health service in 1981. as surgeon general he oversaw all of the activities of the public health service commission corps. he took a great interest as many of you will recall in smoking and health, diet and nutrition, environmental health hazards, immunization and disease prevention and make the chief spokesperson on hiv and aids. he's a force in health and health education and 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 very pleased to 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 when you're 92, i want you to remember that you always should listen to your doctor. [laughter] >> i have spent my life in the trenches of healthcare as a physician and surgeon, as a public health professional and as an educator. since my retirement from the post of surgeon general, i've devoted much of my life to the subject of healthcare reform. we're now at a place little is more important to us than having a first-class healthcare system than 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 interest. 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 advance these discussions today. signing out from hanover, massachusetts, this is dr. koop. [applause] >> thank you so 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 against major health concerns such as obesity, heart disease, cancer and the dangers of secondhand smoke. during his tenure he focused on shifting the paradigm of healthcare from treatment to prevention stressing lifelong healthy living is a key component of medical care. he's been passionate about eliminating health disparities. he's championed health literacy. he also has become a specialist in the area of public preparedness and led the nation as surgeon general in combating many global threats to health, safety and security. he grew up in an impoverished hispanic family. he dropped out of high school and experienced health disparities firsthand. then he went on to become a decorated green beret in vietnam, a police officer, a s.w.a.t. team member and

eventually graduated from college and medical school at the top of his class. his very broad medical career includes having served as an e.m.t., a nurse, a trauma surgeon, and a community physician before being unanimously voted into office of the surgeon general. he now serves as the vice chairman of canyon ranch, which is as many of you know the 27-year-old life enhancement company. he's chov executive office of their health division and is president of the noncanyon ranch institute. dr. carmona, are you on the line? >> i am. good morning, susan. how are you? >> welcome. thank you for joining us. >> thanks so much. good morning to all of you and i'm delighted to be following my distinguished predecessor, surgeon general koop in bringing you greetings this morning. like dr. koop i spent most of my life in healthcare's trenches. in fact, before i became the 17th surgeon general of the

united states, as you heard i worked as a paramedic, a registered nurse, a physician, a surgeon as well as a public health officer, a hospital ceo and a professor of surgeriy jus to name is health. as surgeon general i became more acould you telly 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 healthcare 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. and, susan, thanks for yours and health affairs and our colleagues' leadership to bring

us together for this important conference that hopefully brings clarity and transparency to this complex issue. and from tucson, arizona, where the probably hotter today than in washington, this is rich carmona signing off. thank you. [applause] >> thank you so much, dr. carmona. we had also invited dr. david sacher to say a few words this morning. unfortunately, he was unable to join us even by telephone but also sent his regards and support for this conference. i'm most pleased now to introduce david colby from the robert wood johnson foundation. he's vice president of research at the foundation. his bio is in the packet and he has a few words of greetings 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've all seen over the last couple of weeks, over the last month, the facts of health reform are too often getting lost in piles of myth and gigabytes of fear or maybe i should say terabytes of fear or if i could, i think, make up a worth zetabytes of fear. as some of you know, i spent nine years at the physician payment review commission and then at medpac. and i was there during the last health reform debate. i'm proud of my years in washington. unfortunately, i had a front row seat to watch the last debate on health reform be derailed by panic and the politics.

as a researcher and a fan of dragnet, it pained me to see cold hard facts and painstaking research drowned out by the likes of harry and louise. so with joe friday ringing in my ears, just the facts, ma'am, i want 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 our healthcare system, reform efforts must be driven by research and data and for this go-around, lawmakers and policy expert have no shortage of objective information. they are now guided by tremendous arsenal of what's wrong with the healthcare system and how to fix it. we know much more than we knew last time. we know definitively that americans receive the wrong care or at least not the right care about half the time. we know that even though we spend more on healthcare per capita than any other country on

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

the foundation's dedication to objective research and above all just the facts is why we are 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. thank you, susan. [applause] >> thank you very much, david. david mentioned the health policy briefs. we are 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.healthaffairs.org. they are available for free and we encourage all to access them. we are now going to move on to our first panel discussion. and again, we selected some specific topics that 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. and that we believed was this whole question of the fear of government-takeover of the healthcare system. all of you have heard variations on this theme. i simply selected one here that was written up in roll call a few days ago about a woman who went to a forum with senator chuck grassley out in iowa. this woman is a 61-year-old factory worker who was one of 2,000 people who showed up last week at one of grassley's town hall meetings. as you see here, like many of her counterparts, she had a message for the iowa republican, a key healthcare negotiator stopped president barack obama and congressional democrats from enacting their healthcare plans. and she goes on to say, quote, when 9/11 happened i was very

terrified. i honestly am more terrified now than i thought my government was going to protect me. now i'm afraid of my government. we have the car industry being taken over, the banks were taken over, now i feel our healthcare. i think we have -- we're leaning towards socialism and that scares me to death she told grassley and this is in the methodist church where the town hall had to retreat 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 providing for healthcare? and how might this change under leading health reform bills now in congress? and we've 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 at the new america foundation and he's going to lay out just so we're on the same page what does the u.s. federal government do in healthcare today? then we'll hear from gail wilensky who's a senior fellow at project hope, a veteran of many positions in government in particular having been the administrator of the healthcare financing administration now the cms from 1990 to 1992 and also having served in the white house under president h.w. bush as a health policy advisor there. gail is then going to talk about how the government's role might change under leading health reform bills now in congress. so first let me turn to you, lynn nichols. ..

>> thank you. it is a pleasure to be here and beat on a panel with susan and gail. my job is to talk about government. i am here to explain. what i want to do is talk about the role of government in a free society. research, regulation, delivery and financing. this is the two minute version of the role of government in a . basically, you want a that you want done that we cannot do alone or we cannot get done through the marketplace. the simplest example is national defence.

it is something that benefits us all. because of that, free society left alone will not had a enoug. conquered by the al qaeda or whatever is this year's enemy, so national defense is essential. similarly, police, fire, things that benefit us all that you would -- it's hard to skewed people from, that you'd have free rider problems. externalities, things that are so good or so bad, they affect people beyond what people do naturally. like public education. think about it for a minute. we're all better off because everyone can read and stand in line. sometimes i debate which of those two things you learn in school are most important, but they're both pretty essential to civilization. similarly, pollution is a negative externality, something that if we don't intervene on, we'll have too much of. so government steps in when things spill over from one person to another. little known function except to

economists but it's really important, promoting competitive markets. if we don't have markets that work, it's kind of hard to depend upon them, so paying attention and making them work is an extremely important function and this is by far the most controversial.@@@@@@@@@ @ d people would starve. we don't want that to happen so we do some redistribution. finally macro economic stabilization. if you don't intervene, you can actually have an economy implodes. that is why sometimes you have to intervene. how does this translate into health care? a good public good example is knowledge. knowledge comes from research and dissemination. what we do in this country is we pay for basic research through the national institutes of health.

$30 billion of nih money creates new knowledge. the agency for health care research spends $50 million on s research. million on comparative research. we spend $30 billion on new knowledge. $50 million on comparative effectiveness. centers for disease control, $1.9 billion protects us from diseases that could be imported by foreign agencies. electronic information highway is a public good, is a thing that can make us all better off. we'll have too little of it if we don't have intervention. food and drug administration, making sure that the drugs we get are safe and effective, making sure that labels of food are clear. and indeed, professional licensure is pretty important, because you wouldn't want me practicing medicine. the time i'm most nervous in my life is when somebody calls me dr. nichols, because they think i can actually deliver a baby or

stop a wound. second hand smoke laws, thinks about that. we learned from research, david talked about, that somebody else smoking can actually give you cancer. how can you stop that if a free society unless you have some kind of loss? so there's a lot of stuff going on. no state and local governments deal with restaurants. federal laws, the reason you don't have smoking in hand airplane anymore, because that's interstate commerce. promoting competition. insurance market regulation. left alone, like all good folks trying to make money, they'll colewd. this is normal. so in 1944, anti-trust case stopped it and we turned regulation of health insurance hover to the states. as long as they did it pursuant to federal interest. anti-trust of course. anti-competition. hmo act actually was a crowbar used to force a kind of competition into the marketplace that was being suppressed by lots of different interests. medicare advantage plans came out actually in their oldest form, 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, medicare modernization act, do the same thing in competition and provision of drug coverage for the medicare population. now here's the most controversy lal. redistributing access to health through government. there is direct provision. the v.a., we spend $39 billion on about 9 million patients. indian held service, we spend $2 billion on 2 million patients. state and home public hospitals, there are over a thousand of them, 23% of the total of all hospitals. 15% of beds, that means most of them are small county hospitals. by the way, just for comparison, non-profit are 60% of hospitals. we have make direct grants to community health centers. $2 billion federal. 500 million federal, state and local. and then of course, the biggest expense is redistribution of access to health through

insurance, public insurance for the poor, for the disabled, and the elderly. and that of course is medicare, medicaid, and schip. the most recent data i could get to compare everything was 2007. we spend $418 billion in medicare. we spent $340 billion in medicaid and schip and of that 340, 59% is federal. medicaid is a federal and state share. so the federal public insurance payments per year, right now, $610 billion. now, just to give you a little bit of perspective over time. in 1960, before we had medicare, before we had medicaid, we spent about 5% of gdp on health care, and that's now 16. out of pocket spending used to be 47%, now it's 12%. go to bottom row. public spending used to be 25,

now it's 46. fundamentally, what has happened is that we have substituted collective dollars for the out of pocket payment, of mostly the elderly and the poor, who had no coverage in 1960. that's the biggest change in the way we've organized our health system. we pay for people who couldn't pay for it otherwise. ok. in perspective, this is total health care spending on personal services, 22% comes from medicare. 17% from medicaid. others include v.a. and d.o.d. and just think about medicare, medicaid and then private insurance. private insurance is bigger than either medicare or medicaid, but not bigger than both. for hospital care, med compare is a bigger relative payer, because the elderly obviously go to the hospital more than those who are not elderly, so they pay 28% of hospital care. note again, private health insurance is more than that and medicaid is 17.

for physician visits, what you see here is a reflection of both the fact that most of the medicaid population is relatively healthy and we pay relatively poorly for doctor visits and medicaid. medicare is 20, medicaid is 7. private insurance is 50. so 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 the different percentages. now one thing you should know about public payment rates, in case you don't. is that two-thirds of all hospitals, two-thirds, have a negative medicare margin. medicaid pays differently and less than medicare. in general. so our public payers are not what you'd call wildly generous. both pay less than private payers an of course this is one of big controversies that is role, but it's a very serious fact. private payers pay a heck of a lot more per patient relative to cost than do medicare and

medicaid. i'll close with a reminder of what this debate is about. what i'm showing you here is that 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 not, actually have employer but 35% are uninsured. they represent 36.5% of the uninsured. ok. and the big point here is that roughly 60% of the uninsured make less than two times poverty. also, interestingly, 10% of uninsured make more than four times poverty. uninsured are heterogeneous. most are low income, but not all. let me remind you what the cost of health insurance is, which is why this stuff costs so much. what you have here is a family policy in 2008 according to kaiser 12-6, a family of three at two times poverty makes 35-2,

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

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

have any health care reform legislation passed, which i do believe continues to be likely, although we are in a point right 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 that 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 health insurance reform. i'm sure all of you have noted this difference. 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, it this really reflects a difference in focus, in terms of moving away from him care reform, -- health care reform more generally, that is focusing on the delivery system changes that we all have discussed in these types of groups, to much more of a focus on making sure that health insurance is expanded to the population without it. the real problem in trying to have a 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 and they differ in some important ways and of course, we have not seen what could be the most important of the bills, because it is the one that has had the most effort the being bipartisan and that is the bill that the senate finance committee will be releasing sometime 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 in a very general way by the administration of the points and the principles that they think are important. there's not been a lot of specificity. i think this is clearly in response to what they believed was a strategic mistake in the attempt in 1993-1994 of the health security act to get health care reform passed. we have 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

provisions. now as you look in terms of the kinds of changes that people talk about, when they talk about the changing role of government, we need to understand that it's not just more government. clearly, people are concerned now about how much more government may be in their lives. susan mentioned in her introduction that what we are seeing in her opinion and i 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 concern about the expanded role of government is reflecting what they have been experiencing in the last year, where they have seen very substantial increases in the role of government in areas in which we as americans are not used to seeing them. in the financial system. overseeing c.e.o. pay. and now to directly subsidizing people to buy new cars. it is in that context that i think a question about what exactly is likely to happen to the role of government with regard to health care takes on a new reflection of concern by the american people. just as the ability to finance unfunded expenditures for health care would have been very different without the stimulus

package, the concern we are seeing reyes right now about the expanded role of government would be different had we not had these other events occurring, but we have and we need to take them into account. . . changing role, it's important to understand that itwa&+ j4 >> while i have indicated it that we do not know exactly the

dimensions that we are unlikely to see because we do not know which of these different bills will prevail in the end, if any legislation is passed, and i have indicated that i think that is likely, there are some 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 everybod covered were about $1.5 trillion. i don't think right now that is the number that 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've had to deal with over the course of the lack year. what we have seen in legislation are numbers like, $1 trillion over 10 years or $900 billion over 10 years. it's hard to believe that a trillion in the context of a trillion and a half is starting

to sound more modest. whereas, even for somebody who used to run the medicare program and thought that big numbers were a part of my lexicon, it is hart to be quite so quick about throwing around numbers that start with trillions rather than billions. it is also possible, because of the issue that 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 bill that we're talking about. i just threw in arbitrarily $600 billion. lower number might be, but it is possible that it will be a smaller piece initially, of expansion, than what we have seen now being discussed which is $900 billion to a trillion dollars. again, it will fundamentally depend on the financing strategies, that will be able to be passed by the congress.

so for sure, the first change that you will see is substantially greater spending by the federal government on health care, if there is any health care reform passed. 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, so a lot of discussion about this, a lot of concern raised by people on medicare beings as to whether or not this type of change will impact them as seniors, and 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 need to understand that in general, what we've seen what we've seen substantial reductions in spending is that

some of the reductions are good, 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 drg's were introduced with a deliberate attempt to lower the length of stay by moving from a per diem payment to a payment of diagnosis at the time of discharge. it took about two months after drg's were introduced, quicker, but sicker. and what that was reflecting was that while the days were shorter and many of the people who were discharged earlier were ok, 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 downward pressure, it's very hard unless you have a lot of

selective changes going on to be confident that there won't be any unintended consequences that occur, and so the exact savings is something that 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. 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 ofúwhat is being proposed, is a lot more federal government responsibility in what has been an area where there has been very little federal 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 reforms is that we will see this taken over by the federal government. it is particularly an 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 erisa exemption, the law passed in the 1970's that allowed self-insured firms not to become under the purview of state government, but basically, in health care at least, not to be under the purview of the federal government either. if there is an insurance exchange, it may or may not be at the federal level. it depends on which of the bills that you look at. some of the exchanges are being proposed at the national level, that would of course mean more federal government involvement.

some are being proposed to occur at either a regional or state government level, so it will clearly be more government, but it's not clear which level of government that will be, and finally, if there is a public plan, that would indicate a very clear additional role at the federal level. you would probably need something like a cmf style agency to operate and manage the public plan. you would have to make various decisions about how it would function. it is, i think, less likely to occur now than it seemed a month or two ago. but i would sale, it is by no means off the table. it is something that is still being under consideration and clearly, a very important issue 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 the administration early on,

although they have indicated all along, the president has indicated all along, he prefers this strategy but he doesn't regard it as absolutely central to reform. the fear is exactly what lin 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 private rate to physicians. the concern both by the provider community and also by the private insurance community is that a public plan would have the full authority of government. it could will have those kinds of pressures reduced in producing lower payments to the providers and thus restabilize private insurance on a going-forward basis. that is probably one of the most controversy lal issues that we

will have to -- controversial issues that we whether have to see played out, not just because of the increased role of the government, but because of the potential repercussions on private insurance and on the provider community on a going-forward basis. the house has attempt he had to deal with this by including a provision that says that the public plan would not use medicare rates.s@ i have probably lived in washington far too long to take such an assurance, even in stattory language very -- statutory language very seriously. one short sentence or one piece of legislation removes that language and then you have a plan with the full power of government behind it. there are some other very important changes that are at least being considered. i just want to mention them. because they also have significant changes on the role of government. we have what has been referred

to as med-pac on steroids, sometimes called imac, independent medicare advisory council. it is an attempt to do something like the federal health board that senator daschle has mentioned and others have mentioned as a strategy to try to slow down health care spending. it would basically like some of the provisions of brac for the defense department, aow decisions to be by an advisory group, appointed by the president, confirmed by the senate, with regard to changes in medicare pricing. 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 at this disapproval would have to be paid for in some other strategy.

it clearly represents a very significant shift from the legislative branch, where decisions are normally made about reimbursements under medicare, to the executive branch. there is some recognition arising by members of the congress that is in fact what would occur, so we will see how much credence there is toc including this in a final piece of legislation.c there has been discussions about individual mandates, either of a hard or a soft nature. i would regard what massachusetts has as a soft mandate. you have to have insurance, unless you're if a category where it's deemed that there is not 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 not clear. and what kind of penalty will be i am poetsed 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 whatever the minimum benefit standards will be, that will be available for plans that are part of the insurance exchange, or else you will pay some kind of a taxn it looks like 8% of payroll is the number that is coming up most frequently, but that is again, not yet been decided. it could be something less than that. in any case, who enforces this and how the penalty is collected will mean expanded roles of government. all of these that i've described, all of the insurance changes, the insurance exchange, the potential role for this med-pac on steroids, the mandates both on the individual

and the payer pay provision, represent significant increases in terms of the role of government. so for me, the bottom line assuming legislation is passed is to say there clearly will be a significant increase in government spending. we've talking probably in the neighborhood of $1 trillion over 10 years. give or take a little bet. -- a little bit. we are indeed talking about an 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. the numbers that lin cited in terms of their distribution are numbers that have been present for the last 30 years. a study that i was involved with, 1977, expenditure survey,

had one-third of the people who were uninsured below the poverty line.c 10% or 11% above four times the poverty line. this is clearly a problem we will only fix by active legislative and policy changes. what to me is actual little the more relevant 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 are going to reform some of the concerns that haveúbeen raised about 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 far greater in my mind. whether we will really see spending slowed over the next

decade or so, whether we'll really see health outcomes improved, more emphasis on wellness and preventive care. all of those are far less clear if i had my choice i would have people worry much more about whether or not we are actually reforming the health-care system in terms of the legislation work we are considering rather than just worrying about how much additional government we are imposing. but in fairness, that is a legitimate question to raise as well. thank you. [applause] >> thank you very much, gail. and we are going to take some questions now from the audience. we have some roving microphone as we would ask you to wait until the microphone comes to you before asking a question,

and if he would identify yourself by name and affiliation as well that would be very helpful. waiting to see if there is a question from the audience, i'm just going to start with one from the pod rater's prerogative here. linl what i understood you to be saying is the single biggest change we've underken in our society is we 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 what we're talking about now is adding some more to that pool. more of the poor who we have not covered to date as gail said and this has been a stubbornly resistant problem. so if you had to characterize that, are we talking about a huge change or are we talking about a change at the margin? >> well, it depends on how you define margin. the reason i put the numbers up there that we spend over

$600 billion a year to take ce of the poor and elderly, what we're talking about, a fully phased in coverage of all the uninsured would probably be about 150 become dollars a year. -- $150 billion a year. that is a big number. it's not as big as 600, but it's a big increase. i would say think about it as a fraction of g.d.p. over 10 years, 1.5 maps into 1.6 trillion, as a fraction of g.d.p. over 10 years, that is 0.8% of g.d.p. now, that's a little more than gail and i make, but it's probably affordable for a nation as rich as ours. the question is, and i think this is the single biggest question, are we willing to do what it takes to pay for to, and there are only three buckets. you can increase taxes, you can 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 3 buckets are necessary. we're going to do this right. and the third in particular, in order to bend the cost curve in the long run, i think we've got to be willing to do all these things to be willing to pay the price. i don't think it's too big a price. but it's a non-trivial -- it's certainly a significant change. >> but it's not 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 group that are below 200% of the poverty line as we did with the children's health insurance program.c it is to say and as well, we need to see covered everybody, but it is to take not just who we have already identified as appropriate targets of government action, which is poor or even poor 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. >> gentleman those were employment based insurance, those who are working but not getting coverage through an employer, who we would say have to get coverage through an employer, that's what you're talking about. >> this is not to say that they shouldn't be covered. i believe that 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, low income and old, to directly receiving subsidies, whereas otherwise they indirectly receive very large subsidies because of the tax laws if they're receiving employer provided insurance, so it is expanding the role of government for these other groups, in order to make sure everybody has insurance.

>> and gail makes a really important point and that is we're not used to thinking about people above poverty needing a subsidy nor 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. at three times poverty, it's 24. the truth is sports fan, we waited too long to do health reform, it got too expensive, but we're in a situation where we have a disconnect. we think of the poor as needy, but for health insurance, more than the poor are unable to may for it. that's the question before us i think. >> all right. let's take a question here in the rear please. >> let's pick up on 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@@@@@@@ @ @ @ @ @ @ @ @ -- is it not enough? is it just right? is it probably not necessary if we are going to accomplish the goal of covering the uninjured? is it not enough if we want to bend the curve? how do we reach a judgment on this? and i know this is a qualitative question, not a quantitative question and it may make a few economists uncomfortable, but i'm asking it anyway. >> the increased spending and the increased amount of government is not as worrisome to me as the lack of focus on nt two, some of theery 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 the 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 is talking about hundreds of billions of dollars in savings for medicare, cuts supporters say will trim fat from the program, including slashing and this is a very important word that people in the news media often use, slashing, just very graphic slashing $156 billion in subsidies to the medicare advantage program. the privately administered medicare program. this is the cause of such concern, that we thought it was particularly important to just focus on the medicare -- proposed medicare changes, in many of the pieces of legislation today, so we're going to discuss now, what are the implications of slowing the rate of growth in medicare spending, and we want to 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 beneficiaries 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 fm

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 there'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. : >> by the 10th year an increase of spending of perhaps about $150 billion perç year. i'm taking the $10 trillion -- the trillion dollars over the tenure's i'm talking about. we have increases scheduled closer to two to three times that amount, perhaps 500. that is change already occurring under current law. we of programs for children that are scheduled to stagnate. and tax rate increases by allowing people to go to an alternative minimum tax and also raising hundreds of millions of dollars. in many ways, the health -- the debate over health reform is small as a change compared to the changes that are already built into the current system. the real question that we have to address, conservative or

liberal alike, democratic or republican alike, is that we take all of these changes and put them into a package and -- that is affordable and decide what we want the most of. if we are middle-aged, the one most of government growth to go to ourselves or our children? we like some of it to go for the uninsured? that is the question that faces us in the ways. there is a fiction that comes about, again, on both the liberal and the conservative side about fixing medicare. there has been younis and on not fixing medicare. from the left you'll get the argument that you cannot fix medicare by itself. we can only fix medicare if we fix medicare as part of some very grand scheme of fixing total health care in the economy. by the way, i am not opposed to trying to fix the health care in the economy in this -- and this health reform bill attempts in moderate ways to do some of that. but the notion that you can leave kit -- leave medicare alone and operate without a real

budget in the midst of all of this is somewhat silly. medicare is in many ways like the lion in football, it leads. as you talk to insurance companies, they even indicate that many of the prices that they set for the goods and services they provide is directly related to what they see that as they're sending a price. medicare tries to do the same. they say, maybe we can set a price war of our price depending on what private payers are paying. medicare is the big enchilada. it actually makes a a big difference in how total health- care costs grow over time. there is another metaphor, if i can use it. it has to do with the notion that we do not know what to do about curing medicare or we do not know what to do about health reform. 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 diit 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 micare, 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 2010 it is about 10% and in about it will take almost entire social security tax rate we collect now a 15% just to pay for medicare alone by 2003. those are changes that are built in the current law. those are changes we have to deal with. those are changes we hope to deal with when we deal with health reform in the grand scheme of things, but right now we are not dealing with them in his health reform package. thank you. [applause] >> i am here to speak about the situation ostensibly from the doctor's perspective. i don't pretend to represent all 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 ways 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 nurse and then you detect the most acute part of all of this is the primary care. fewer and fewer physicians want to go into a specialty that is undervalued and under reporter. -- under rewarded. but we're not producing the people to do it. the most encouraging thing in the legislation so far as well as the president's budget proposals is an effort to reverse these trends. there are a large set of programs, including the national health service corps, something in this urge to serve that i see in so many young doctors that can be strengthened to put those doctors were many of those poor and underinsured patients are. the so-called title 7 and tidily programs that not only help us expand numbers, but will help build primary care and diversity in medicine. these are embedded.

they're 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 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, medical schools, you have typically, physicians and doctors working together under a single umbrella under this old fee-for-service problem doing lots of procedures. but as i talk with them, many of them lament the fact that we do not doing very good job of keeping populations well, of falling patience longitudinal lead over time. there really eager to move into

better models, but they have lacked the tools in many cases. medicare has for many years had a lot of demonstration authority, but they have been very limited projects. . . 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 course of the rest of this debate to do what we 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 mar areas. just 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 the session talks about, impact of medicare beneficiaries in a very positive way. if you think about these areas, surgical, infections and competitions, centerline associated bloodstream infections, too bad bugs, mercer and sita, ventilator associated pneumonia, catheter associated urinary tract infections, adverse events from medication errors and reducing pressure ulcers, or bedsores. these are again issues that we are working on today, hospitals are making strides in improving. thate can accelerate broadband and deepen these even further and we are committed to working with all our hospitals to share best practices, and to report nationally our improvement. so actual measures on how we are doing in these areas. in addition to those 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 from 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 have to address it. if it is a payment cuts, there is a risk in services. hospitals will not compromise quality. it must be met with comprehensive reform. the innovations, demonstration projects have to be part of this in terms of the oliver reform. if they are a part of it, we can do better. -- the all over reform. >> let's take some questions from the audience. >> good morning. i am a clinical social worker. since this is the medicare section, i had a question. i was part of dave will making committee in the late 1990's on

providers sponsored 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 vitalealth 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 budget constraint the incentive to take advantage of these information systems is pretty small. in fact, i often appear before doctors and often shocked them by the state about half of all doctors are below median. at which point they said that for a while and think about and finally realize that's going to remain true under any information system. and the only information systems can really have the pressure to do something is when there is a budget constraint. gm did not improve or try to make more efficient many of its cars until its budget constraint forced them to do it. this is true of every industry, true of every discipline and it is true in the hospital sector. one hospital can make a lot more profits by increasing volumes and we provide all these great information systems, but the hospital that is more concerned about volume increases than it is concerned about quality of care continues to make money and drives the other one out of business. 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

>> the health-care discussion of continue in a moment with a look at end of life issues. our coverage of this event resumes shortly. the health-care conversation continues, the one line and follow the latest tweets and links. keep up-to-date with health care events, house and senate events, and up load your opinion with citizen videos. c-span.org/healthcare. >> members of congress are holding town hall meetings across the country while they're on their summer break. lungren talk to constituents this week about health care

legislation. see his comments and their responses here on c-span. tonight, are three are in that conversation with alice walker who won the pulitzer prize for "the clor purple." at last week's netroots conference, see there, 9:30 p.m. eastern here on c-span. before leaving for camp david today, president obama @ talked about yesterday's election in afghanistan. their commission is expected to release preliminary results on september 3rd. final certified results expected two weeks later. >> the afternoon. i want to say a few words about

this week's election in afghanistan. this was an important step forward for the afghan people's efforts to take control of their future even as violent extremists are trying to stand in their way. the election was run by the afghan people. it was the first democratic election run by afghans in over three decades. more than 30 presidential candidates and more than 3000 council candidates ran for office including a record number of women. some 6000 polling stations were open around the country. security forces took the lead in providing security. over the last few days, particularly yesterday, we have seen acts of violence and intimidation and there may be more in the days to come. we knew they would try to the real this election. even in the face of his brutality, millions exercised

the right to choose their leaders and determine their own destiny. as it watched the election, i was struck by their courage in the face of determination and their dignity in the face of disorder. there is a clear contrast between those who seek to control the future of the ballot box and those who would kill to read that from happening. once again, extremists have shown themselves willing to murdered men, women, and children to advance their aims. i believe that the future belongs to those who want to build, not those who wanted to destroy it. that is the future who was out of the afghans who went to the polls and the security forces to protect them. the united states did not support any candidate in this election. our only interest was the result fairly, accurately reflecting the will of the afghan people. that is what we will continue to support as the votes are counted and we wait for the official results from the afghan independent electoral commission

and the whole electoral complaints commission. meanwhile, we continue to work with our partners to strengthen their security, governance, and opportunity. our goal is clear. we will defeat the extremist allies. that will be achieved in mergers will be able to come home as they continue to strengthen their own capacity to jiggers funds ability for their own future. our men and women in uniform are doing an extraordinary job in afghanistan. so are the civilians who served by their side. all of them are in our thoughts and prayers as are their families back home. this is not a challenge that we asked for. it came to our shores when they launched the 9/11 attacks from afghanistan. america, our allies, and partners share a common interest in pursuing security, opportunity, and justice. we look forward to renewing our

partnership with the afghan people long as they move ahead with their new government. i want to congratulate the afghan people were carrying out this historic election. i wish them a lesson month -- a blessed month. [inaudible] >> are you going to play ball with tighter? >> shortly after his comments, he and his family left for a weekend at camp david. from there, they will head to martha's vineyard beginning sunday. >> his readers -- his years as kennedy's secretary and the time when walker. walter cronkite was considered for vice president. this sunday night on c-span. this fall, and to the home to america's highest court from the grand public places to those

only accessible by the nine justices. the supreme court is coming the first sunday in october on c- span. our coverage of this week's conference hosted by the "health affairs journal" continues with the conversation on end of life costs. this conversation is about an hour-and-a-half. >> welcome 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. we know we're going to get there sometime and so it's an issue very close at hand. therefore, understandable that it is so fraught with emotion and with often lack of reason. this protester probably kind of a fake protester holding up a sign at one of the recent forums -- it's hard to see. one protester is saying no to healthcare reform. but the other fake protester, i think, is saying, oh, i'm sorry. we thought reading the bill was your job.

and your is spelled u-r. the standpoint being made is it is very difficult to read through legislative language and 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 always possible. so hospitals have to actually provide a lot of pallative care and they have to be able to shift gears and have the skills and the capabilities to do this. you can also see -- well, the other point i want to make about this is that it isn't -- it could be 54.7% is exactly the right amount of money. we don't know how much is the right amount. what we do know for sure is that we're not spending it on the 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 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 . . it is hard to think about what might lie ahead. as you think about advance directives, is now that you have to -- imagine every possible circumstance, but you can make a decision on who you would like to be making those decisions in the event you are not able to make them for yourself. the advance directives are a way to empower patients, not to turn these decisions over to doctors, hospitals, insurance companies, or 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 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 started recognizing 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 incalculable both for the patient and her son and this is the nightmare that everyone fears and this is business as usual in the american healthcare system. think about the incentives, okay? the incentive for the nursing home is to refer to the hospital. taking care of such a sick complicated patient in the nursing home -- they can't afford it. they don't have the staff to do this. the incentive for the hospital is to have more hospitalizations 'cause we get paid for every stay. right? so the system is perfectly designed to get this result for this patient. 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. he did give her six great quality years. he is not trained and not comfortable and is not have time to have long conversations

about what the future holds, what the pros and cons of different treatment options are, and help judy come up with a plan based on the facts and their preferences and goals. we think that this is a good doctor. he is not ignore the issue. he refers her to someone who can help her. me, in this case. in fact, what she taught is what i call a conceptual shift where patients receive both life- prolonging treatment and a palliative care until the point that life-prolonging care is no longer beneficial at what point they are referred to hospice. we have concerns about throwing

this term "and of life" around. -- end of life. if we had waited, her last 14 months would have been in misery. this is her during the three- week time at home. they moved to bed into the living room because it was the most sunny room and sarah and george were taking care for at home. 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 perhap 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 wrote about my father's illness in an essay that you've heard about that first appeared in the narrative matter section of health affairs and ended up getting excerpted into the "washington post" outlook section and i awoke that sunday morning in august of 2005 to find 500 emails in my box, thousands more followed. i was not prepared for this. i've spent my life trying to solve my patient' problems, patients like dorothy here. but i tried to solve these problems one-on-one together with families, the basic principles of medical ethics as my 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. would she want this? if i say enough, and my committing a sin? will my mother forgive me, my sister, will i be able to forgive myself? i consider it my responsibility to help people make difficult decisions and for decades i have done so. i've spent hours and hours with patients and spouses, hours north children and siblings. the conversations are often complex. as far as medicare is concerned,