[captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2009] ♪ and for our first half hours morning, your thoughts on banks according to this storm is refined in the papers this morning.

-- according to the stories in the papers this morning. your thoughts on the u.s. banking system and if you believe is at risk. we will start with "the wall street journal" with the headline on banks. the federal -- fdic said about 5% of the nation's banks, 3 up banks05 at the end of march and 117 at the end of june 2008. problem banks had a combined $299.8 billion of assets at the end of june.

banks are the subject of the front page story of the "washington post." a year after the near collapse of the financial system last september, the better response has redefined how many americans get mortgages, student loans, and other kinds of credit.

again we want to get your thoughts on the u.s. banking system. do you think it is at risk? the stories in the paper this morning are suggesting that. please call the numbers on your screen. the ftse chair in a bear spoke on this issue yesterday -- fdic chair in a bea sheila bair spokn this issue yesterday.

as banks continue to clean up their balance sheet, the number rose to 216. the problem has hit a historic low in 2006. although the number continues to increase, it is well below the levels seen during the last crisis. we expect the numbers of problem banks to remain elevated even as the economy begins to recover. >> more u.s. banks are at risk? your thoughts? we have a caller on the democratic line. caller: without a strong and vibrant and angel sector, but we cannot have a strong and vibrant -- financial sector, we

cannot have a strong and vibrant economy. we do not know how many banks are having problems out there. we did not know how many banks were out there that were in trouble when we first past the first part of legislation. the $700 billion that was appropriated for the program may not be enough money to get the system back up and running. unless you get the financial system up and running, you cannot have a true economic recovery. without credit markets and credit being available to people, you cannot have consumer spending. host: we will leave it there. we have someone from los angeles on the independent line. caller: until systemic fraud is addressed, systemic risk is meaningless.

ben bernanke said in february that their rescue for banks included the maintenance of all, and shareholders and bondholders. this means that the federal reserve bank and the treasury are going to continue to attempt to securitized, driven of markets in credit default swaps , characterized in congressional testimony as having a magnitude of hundreds of trillions of dollars by simon johnson. it was also acknowledged but the treasury sector -- secretary. another person said the same thing in another meeting when a republican was sitting next to him and did not challenge the number. to try to securitized the derivatives shuttle banking industry for hundreds of trillions of dollars when it

taxes coming into in an states government is to $0.20 trillion is ridiculous. the system that -- $2.20 trillion is ridiculous. the system that they are trying to save that made a bunch of people billionaires and now they want their losses to be underwritten by taxpayers. host: here is a headline in another paper. we have a caller from the republican line. caller: my question is in where i live, there has been one bank that foreclosed and a group of investors took it over, i think it was in gmadymac and i think wachovia took another one over. if we have other institutions that can buy them, it seems like

we will still be in the same situation. i think it would be better to have less banks and institutions so we could deprive? it seems like we are propping them up with money and fdic. just pay the people back and let them go to a different bank. maybe you or a congressmen can answer that question. host: one of the things that we are concerned about letting banks fail is something that david chio about this morning. there would be fewer choices for services in the meantime. and who would larger banks have to turn to when they get into trouble? caller: i do not know if that answers my question. if you have 100 banks and are not making money, is it better to have 70 banks and use those

to be smiling? that is kind of my question. thank you for your time this morning. host: call the numbers on your screen if you want to call in. you can follow us on twitter. we have a caller on our democrats line. caller: the morning. behold, ronald reagan, [unintelligible] it came like gangbusters and they are allowing big businesses to do with a one on society without regulation. i do not know what people cannot see this business has not gone amok. i was home the other morning and i saw an ad on television for jumbo loans. the highlights to get this loan

was less paperwork for the government banned no appraisal needed. -- government and no appraisal needed. we have to get regulation back here like yesterday. this is terrible. the sooner the better. i thank you for your time. host: more from the wall street journal this morning saying the percentage of delinquent loans that is barbers who are 30 to 89 days past due declined modestly in the second quarter . large healthy banks that are paying back the fans are chomping at the bid on thest toy failed lenders from the fdic.

they are looking at it as more of an opportunity to acquire banks. caller: what is happening with the banking system in this country? there is no oversight with the banks. it looks like when george bush left the office, he left a huge problem for the global economy. i think it is the main cancer of this banking system. host: do you think there is more oversight needed on what currently is in place? caller: yes. there was a lack of oversight to begin. the bailout was a huge mistake. the bank is doing horrific work on consumers for the credit cards, mortgages -- they're so

far to the right and before they were so far to the left. host: in terms of oversight, what more do you think is needed? caller: if you look at wall street and the bailout with aig and all of these other big banks that they bailed out, what happened was -- billions of dollars were used. that is ludicrous. i truly believe all of these banking bailout have not been good. if you follow the news, but these bailout, some are

celebrating and applying private jets. host: of a new york on our democrat line. caller: >i have been thinking -- at a bank for years. i switched to a credit union bank. why wouldn't the government regulate or try to combine the ideologies of a regular credit union bank with the national bank? maybe the crisis would not be upon us right now. host: can you expand on ideology? caller: federal credit unions are more less set for the people that they deal with. better finances, refinances, rates. everything is better with the credit union bank.

when i see my brother and the service -- he retired and is with the naval federal credit union bank. i wonder why banks are bailed out and people suffer, they denied the buildup. the credit goes down, they build their credit back up. they suffer. host: we have someone from georgia on the independent line. caller: along the line of what the gentleman was just speaking on, the banks have exacerbated the problem on the consumer side in terms of their restoring consumer confidence by the credit scoring system when the closeout consumer accounts that had no balance with may be a

$20,000 line of credit, to try to clean up their toxic assets. they have hurt consumers because of the credits or debts due to the credit ratio will you may be able to a 8% in debt and 20% of credit -- 80% in debt and 20% of credit. and your credit has gone down because it has been stolen by the banking system. nobody has addressed that. the credits for has to be addressed in order for consumers to spend. no one is speaking to that issue. host: the future of gov. mark stamforanford is being discusse.

nyc on our independent line. we are asking if the u.s. banking system is at risk. caller: good morning. you have a great show. donald trump was on tv and he stated that he sold all of his real estate. the reason he did was because of the high oil price. i'd like to say that i am a professor of business. i co-wrote the cases on market value accounting for banks. what these things did was they bought oil contracts from $60 to $140 a barrel. they had huge losses that have not been reported.

i am talking about the major banks not the minor banks. this argument about these sub- prime being the core of the banking crisis is 100% not correct. what the banks did was they sold out those mortgages to pension funds. the pension funds took the loss is not the banks. these banks and goldman sachs and the rest are maybe $3 trillion dollars worth of oil contracts. under market value accounting, and you would value the loss. the change the accounting rules. they did not show the loss unless they sell the oil contract. this oil price is a cause. bush is responsible because he bombed the no. 3 producer of oil in the world. in the middle of bombing iraq,

he goes out and buys $4 billion -- 4 billion barrels of oil. host: we will leave it there. here is information regarding the funeral event of senator kennedy. he lies in reposed in the library. you can see that on c-span2 starting at 8:00. his memorial service in boston later. that'll be at c-span. at 5:30 in the afternoon, his burial in arlington national cemetery. the president is going to speak at the funeral. that is tomorrow. we have someone on our democrats line from new york. caller: i just have one comment. congress should immediately restore bread sticks.

we did last a go. -- glass steigle. banks should not be buying these oil contracts. banks should be a bank. that is the primary problem and very few people are talking about it. host: maryland on our democrats line. caller: i want to thank you guys first for the public service you provide. i have been watching c-span for a long time. i want to talk about the banks this morning. one of the unfortunate part about so many are still hurting is that we were told that with the bailout this would remedy the situation. it obviously has not. i own a music school in one area. it would be a shame if the local government said we cannot let your school go under because people would lose jobs. it interferes with the free market.

i think institutions should be allowed to fail so they can restructure and they can make money and will rise to the top. host: "the washington post" this morning. it is regarding the search of contents of traveling.

the new policy is an enhancement of oversight. we have someone on the independent line. caller: out was wondering if there were any theories floating around as to what the ultimate result of all this borrowing and spending was china? what is going to happen when they say enough is enough and stop giving us money to bail out our banks and troubled institutions? host: from the "washington times" this morning. it says that on thursday an

unsolicited pre-recorded telemarketing call ban. somerville, ohio on our independent line. caller: i think the bakkers and the government are totally criminal. this bailout, if you remember, 99% of the people were against the bailout. they went ahead and did it anyway. it is ridiculous. with no representation, no taxation. technically, we should not have this. host: just a few minutes from now, we will complete a number

three part series we have been running, looking at medicare. we started with an examination of part "a". we are moving onto part "c" as we discussed part "b" yesterday. we have two guests coming up to discuss that. until then please call us at the numbers on your screen. we turn to our democrats line from tampa, florida. caller: good morning. i am a certified appraiser in the state of florida. recently the bank administrations have restricted the use and instituted new forms on the appraisals. the congress and the house of

representatives are not even looking to see if there is any federal prosecutions of where this unmarked tarp money goes to the banks. there should be an fbi investigation to take those to court and to have a those executives prosecuted. only then will the people regain their confidence in the financial system. it is important that we find out where this money went to, because where it was to stabilize the financial situation, it went into the pockets of executives. now the burden is on the american people. i think the country has to come together both financially and government-wise. i hope that comes soon to improve the quality of life. host: day on our independent line.

-- dave on our independent line. caller: can i give you a free web adjust the blows the lid off of this whole banking scheme? www.worldslave.citymax.com it is a banking scheme. this site blows the lid off. thank you for your time. host: before you go, why do you trust this site? are on our independent line. -- barbara on our independence line. caller: i keep hearing about people and their mortgages. i do not hear about homeowners are losing their homes because they cannot afford to pay the property taxes. this is something i like to see

addressed here in michigan. it is not so much the mortgages, but people cannot afford the property tax. that seems to be the problem. host: in our last hour of this program, we will continue on with our series that we have been doing for the last several days. it is the author of the "secret century." he steadies these things in washington d.c.. we will take your questions in our final hour. that will start at 9:00 eastern. you're welcome to call in. we have someone on the republican line. caller: i have been reading a book about the culture of corruption. it sounds like the banks and all of the people that obama has gotten to be his czars are full of corruption.

obama is making it when he says he does not know this. it is costing millions of dollars through their corrupt ways of doing things. i am very upset about of our country. i do not know what is going to happen to it. we need to try to stop this terrible, cheating people from running our country. thank you very much for taking my call. host: one more call on our democrats line. caller: in july 2007, one person proposed the homeowners protection act. it was in 149 municipalities in the united states. he proposed a certain things regarding financial reorganization. once again, this man considering

the banks are bankrupt and the fiscal year ending, 23.7 trillion -- $23.70 trillion according to one source has been guaranteed to the financial system. he proposes quiting the better reserve system, a bankruptcy reorganization based on the glass stiegel standards. in setting up a global credit system with russia, china, india, and the united states. and setting up a new bank of the united states based on this credit system of 2% interest for 50-year loans.

host: we will leave it there. we appreciate all of the calls this morning. a round table discussion coming up looking at medicare part "b" and supplemental health insurance. we will be ♪ right back be -- we will be right back. ♪ >> as washington and the nation continued to focus on health care, sunday on c-span, which will talk about dealing with a swine flu virus with this doctor, director of the cdc on "newsmakers." and on the "q&a" and look into the va hospital center. the u.s. ninth court of appeals discussed u.s. veterans and the appeals process.

watch the oral argument saturday on c-span. in 1959, in the heat of the cold war, one person took a two week tour of the u.s. and other person recounts that trip on c-span2 during book tv weekend. the health-care hub is a key resources online where you can follow the latest links, and information, including town hall meetings. you can share your thoughts on this issue with your own citizen video, including any video from your own town hall that you have gone too. >> "washington journal" continues. host: we have looked at medicare part "a" and "b".

today we will look at part "c". what is this? guest: it is the part of the program that pays private insurance plans to provide benefits to medicare beneficiaries. mostly through hmos or health maintenance organizations but through other kinds of private insurance arrangements as well. it offers an alternative to what is sometimes referred to as traditional medicare instead of having the benefits provided directly through government contractors, the benefits are provided through private insurance companies. host: it someone has medicare parts "a" and "b" would you get

"c"? what is the purpose of it? host: say the average medicare payment is a certain amount of light $1,100. instead of having "a" "b" and "d", you can get a medicare like hmo with parts "c" because it is all compiled into one private option. it is covered but your private insurance company.

they provide medicare-like benefits. they are very different, but they have to be equivalent. it has the same value of medicare. 22% of the singers do that. host: this was developed in 1977? guest: it goes back to 2003. managed-care plans have been participating in medicare since its deception in 1966. payment on the basis not just on the cost but on a formula designed to try to attract more private insurers that has occurred since the mid 1980's. in number of changes upwards and downwards in the payment rate has occurred. the base rate idea of giving people the alternative of

enrolling in a private plan has given medicare -- has been in medicare throughout its history. guest: it has gone up and down. mistakes have been made. there were about 7 million people in 1977 on medicare on medicare choice plans. congress made some changes. they cannot agree upon the name. in 1997, congress passed a bill to improve it. it pushed more money into rural areas. it kind of backfired. it reduced the money in urban areas. the payments in new york, chicago went down significantly. the program went from 7 million

to 5 million seniors. we made changes in 2003 and made payment changes trying to lower the premiums a little bit. it was overdone accidentally. the trend has gone back the other way. 10% of the population on medicare advantage went up to 22%. in a lot of areas, it is a great option. if you are low income, the hmo is a cheapest option. you have lower co-payments and deductibles and out-of-pocket

costs. and if you can get a dual coverage, you do not have to generally by a medigap insurance. it the cost $300 a month which many seniors have to buy. you do not have to buy that. for a lot of people, it is more attractive to low income people. it is not for everybody. i think it became less attractive in the late 1990's. when a payment adjustments that have affected the attractiveness of it. host: explained medicare part "c"/ . guest: in the early days of medicare, and number of medicare beneficiaries were people to

have retired and enrolled in the old fashioned hmos. they were not even called that back in the '60s and '70s. they wanted the option to keep the care. that thinking was transformed in the 1980's when a large parts of congress became enamored with the belief that a private enterprise could always do better than government could in the provision of health insurance or health care. it began pushing a systematic way to shift medicare out of government administration into private insurance hands. even talking very openly in the 1990's and the contract with america congress about eventually privatizing medicare altogether. most of the debate over the last

couple of decades as an ideological. it troubled me a little bit because we have 30 years of experience with private health insurance plans in the medicare program. their performance in terms of quality of care people get does not look dramatically different from the traditional fee-for- service system. when we pay the plants to match, they operate with generous benefits and not the people sign up. when we tried to equalize the amount we pay private insurers which medicaid costs in its traditional form, many of the private insurers leave. we have to make a decision longer-term about whether we are going to make the determination on private plans on the archaeological ground or we will

establish a living -- level playing field and see if we can outperform government. so far that has not been the case. guest: i tend to like private plans. you want to get to the point where you are comparing apples to apples. there are a bit over pay for most of the country in 2003. guest: who is overpaid? guest: the plan. i will give you an example. let's say you are in philadelphia and the average payment in that county is

$11,000 a year for a beneficiary. in part a" and "b" you will spend about $1,100 a year. you can buy an additional private, supplemental on top of that. or you can go out and say independent lacrosse for i want to apply your plans in that area. if the government is going to pay $11,000 for its traditional plan, you will play a certain amount. the numbers of people in managed care were dropping because the payments were too low. we were trying to make it more attractive for a few years.

some technical errors were made in the drafting of it. some were paid more. it is not that the plants make our money. hmos are regulated and they make 85% profit by the regulator. -- a 5% profit by the regulator. it is difficult for congress to fix this because seniors are happy. they get lower premiums and more benefits. there is a great debate on how much should we cut medicare at the damage payment. -- medicare advantage payment. one person has a reaction that

is unfavorable. the horses out of the barn. we clearly made some technical errors and overcompensated by making it almost too attractive. getting that money out of the program so we can have an apple to apple comparison is typical because they are working against some seniors across the country who are happy with their benefits at low cost. host: does medicare part "c" say the government money? guest: yes. host: what was it developed if it cost the government more money than original medicare? guest: originally in did not. $10,000 as the average cost of medicare.

then someone says will pay united $500. you pay -- will pay $9,500. now you go off and take care of that patient. in the late 1990's, we cut their payments. the plans to not want to be in private medicare. they were dropping. i wanted things to come back on an even playing field. congress in 2003 primed the pump to catch up. dollar for dollar -- we could debate four days which program was better the old or the new. the average person in the medicare advantage plan which is a private health plan, their plan is subsidized about 12%.

guest: there has always been an alice in wonderland type of character in this discussion and debate. if you go back a few years, you can find the congressional record of members of congress saying we need to reduce medicare spending so we have to pay them more. the data and the evidence has been clear for 20 years that you cannot save medicare any money by encouraging greater power dissipation of private plans, get the ideological thought that having private plans in the system will save you money has been so powerful that congress made a decision that to save money, we will pay private plans more than we would have if people stayed in the other system.

i never quite figured out how that was supposed to work. i can tell you that forever -- every dollar over and above what traditional medicare would cost, that the government pays to private plans, there are substantial benefits, additional benefits that go with that. the beneficiaries have noted this. but about 30 cents of every extra dollar that the government pays for private plans stay with the plans. it does not show up in actor benefits. it shows -- show up in extra benefits. while 25% of medicare beneficiaries benefit from the extra payment, the other 75% bears some of the cost of that because those higher costs are included in the part "b"

premiums. everyone who does not participate in the private plans pays a surtax to help subsidize them. guest: this is difficult -- philosophical debate. medicare is 18% part of the population. they consume more health care. medicare pays every hospital and doctor the same thing. it drives most of the behavior in the system. if you go to a hospital in of a perkyone area -- there is very competition in insurance plans. price-fixing causes a lot of volume problems.

it is one of the fundamental flaws of medicare. it drives that behavior. we were trying to get as many people in medicare as we could because of better benefits and getting people back in insurance companies that pay different rates to different people. the level of health system if you let this area pace different rates. they do not pay every doctor or hospital the same thing. we think it concerns us to have the bulk of the consumption of health care go to the system where the government is fixing prices. medicare is a wonderful program. no senior or disabled person is uninsured.

but it is horrible because of price fixing drives bad behavior volume-wise. there is no differentiation between cost and quality. that is probably the basis for the philosophical disagreement between republicans and democrats. host: in any health insurance company participate in a part "c"? guest: it depends on certain requirements. we would pull out 25 and say if he did not change the benefit, you are out of here. about 600 plans are offered. an average of 34 plants private

available to seniors. host: there are 45 million medicare beneficiaries today. the figure $11,000 per each person per year. for medicare part a there is a deductible. for part b. there is a 40 cent premium. what is the premium that a medicare part c person would have to pay? guest: if you turn 65, your premium for part b and is taken out of your social security check automatically. or if you sign up for the medicare advantage plan. host: how much would that

premium be? guest: the part a and b payments go to human of. -- humana. 94% of seniors are offered a plan with no additional premiums. most of them have drug benefits which is a part d premium. ceo of a traditional plan which is -- say you have a traditional plan apart eighthof part a, b, . if you'd say i want a united

health plan. you will pay no additional premium and get more benefits in most cases. in some cases, they can rebate some of the premium end it will come down. you would get some of your part d premium back. it is very attractive to seniors. is it overdone and unfair to the traditional program? that is the question. in most cases, singers like it -- singers like it. many seniors of by a supplemental insurance the cost around $300 a month.

you could get one package that is a lot cheaper which is what people go with it. the issue basically is, easy to do. getting extra money that makes congress want to say, do have to take some of that money back. host: anything to add to that? guest: no, i do not disagree with his description of the process other than his notion that the overpayment of the plan over the last few years has been the result of an accident. he may have been intending something different, but i'm pretty clear that the congressional leadership was very clear about wanting to induce medicare beneficiaries in the private plan so that sometime down the road, they could politically the squashed

the game as much more easily than would be the case if they tried to take traditional medicare. guest: i was the it ministration negotiator for this. is law and the people deal with this. we look at eight other. -- each other pretty wanted to get people back into medicare advantage. we wanted people to realize this is a good deal and get them back in. i left the government. i came back. there were a lot of old laws. we were trying to get people back into the private health plans.

it did work. but we overdid it a little bit. it was a technical error. host: our phone lines are divided differently. they are divided by age and there is a health-care professional line. we are talking about medicare part "c". when you turn 65, what are your options and which options will you choose when it comes to medicare? guest: 5 primary optiomy great e

purchasing an individual supplemental policy, a medigap policy in new york state. by the time i turned 65, it is so far away, maybe $400 a month or enrolling in a medicare advantage plan says the positions i use most regularly to not participate in most of the medicare advantage plan, i would expect i would do the subjecpart "a" and "b" and by ag benefit plan. host: what about a private plan? caller: i would need to buy debt as well. -- guest: i would need to buy

that as well. host: what would you buy? guest: i would put my mom in a minute cut advantage plan. -- medicare advantage plan. her costs are lower and she is not playing $300 a month for a private, medigap, supplemental plan. she is in northern virginia. i signed up for a bold plan. she is pretty happy. there are differences. she has out of network doctors trained ppo. -- through a ppo.

in some cases, it is better and in some cases it is worse. it is confusing. seniors have to look for all other options. i think medicare advantage is very good for some people. if you have significant resources and you do not mind the cost, i think taking the old medicare program and going to any doctor and hospital you want to emplane the supplemental premium is the last option with hassle. basically it is hmos and ppos. host: if someone is a member of parts "c" do they have recourse with medicare if they have a complaint? guest: they do with the insurance company first. eventually then medicare.

you appeal to the insurance company first and then if it is not taking care of for really an appeal to medicare. you can only drop out of parts "c "c" once a year. there is an open season. it is much clearer. the seniors did bush year -- get brochures once a year. they make the choice they want generally in november and december of each year. they can change once a year. that is generally. you can also change in the spring for a couple of months, but you cannot change if you are involved in a drug benefit. host: 45 million people in the medicare system right now. 22% of them are in part "c".

guest: some type of private health plan that is an alternative, yes. if you are happy with what you have and you retire at 65 and happy with what your company has, they can roll you in to medicare and still keep a chunk of that. there are a number of companies that have a retired reemployment plan that works and to the medicare plan. host: it is mandatory to be in medicare at age 65, correct? guest: it is not amended -- mandatory. eligibility for part "a" it's automatic. if you do not wanted for some reason, you are not required to

enroll. you are automatically entitled to it and eligible for that if you have a work history in the united states. host: when you turn 65 years old, do you get a letter from medicare? guest: before your birthday at the age of 65, you will get information about it when you become eligible for social security. .

to pay for the commercial insurance reform which is to lower it. is it the right thing to do? it is. but for every other grandmother smith that is getting aetna or blue cross, it's a great benefit. that means the premiums are going up, the coverages are out -- the politics of taking away the subsidies from seniors who are oversubsidized and redistributing it to long-term uninsured which is what the issue is a big piece of what's going on in congress right now.

host: bruce vladeck. guest: well, i think from the 1990's through the middle of the decade wanted to buy it to benefit the insurance industry and to promote the privatization of medicare in and of itself because once you've given it, it's difficult to take them away. i think the administration and democrats in washington would argue that the reason the benefits will be taken away is not because they're reducing the payments . they are single payer

government plan. and if they can't, the notion that all medicare beneficiaries should pay higher benefits is sort of hard to justify i think. host: now, we went a little longer in our conversation than normal this morning because we have these two gentlemen here. tom scully and bruce vladeck. kathy, your first question. go ahead with your question. caller: thank you, and i appreciate c-span for having this on. this is crucial to medical companies. last night i caught your show at about 4:30 in the morning as a rerun. and mr. vladeck and there was mary agnes carey from the health news. they are very misinformed about what's going on in the home medical equipment industry. i've been in the business for five years. i'm of the baby boomer, and as

i understand it if you take a person and they're in a nursing home, it costs about $45,000, as i understand, for about a year in a nursing home, is that correct? and these were statistics i read. and we would like to keep our family at home. they're more comfortable. they do better at home. they have an opportunity to get healthier. so we as a home medical equipment company, we are the people that work with the families, with the caregivers, we're the ones that work between the doctor. we have to almost be like social services. we have to have respiratory care therapists to do cpap machines. the patients have 10 times -- we go out there to use a roll --

host: kathy, what's your point? caller: this national competitive bidding which may try to eliminate thousands of our home medical equipment companies for -- they're going to take away the quality of it. and we've just gone through a tremendous accreditation program that cost my company about $8,000 and i only have five employees. and if i don't get into the competitive bidding program i'm going to be out of business. and in the united states there's between 12,000 and 15,000 small mom and pop home medical equipment companies. we don't set the price on what we're paid on equipment. equipment comes from china and it's not in too good of sturdy condition. all of it comes from china. host: kathy, do you get -- do you know -- do you get paid through part a, b or c? caller: part b. caller: do you have any --

host: do you have any c customers? caller: no. host: i know both gentlemen want to answer. bruce vladeck, if you want to start? guest: i'm all for providing medicare beneficiaries who have home medical equipment and the education and service that goes with it. but i still don't understand why medicare should pay three times for certain equipment what it would cost if an individual went on the internet. i think our argument yesterday was not if home equipment was a good thing or a bad thing. it was the extent to which congress at the behest of the industry continues to insist that medicare significantly overpay. guest: and i watched your program last night, bruce and marying a sess and i agree with what they said. this gets into it ties us back to part c. it's a very political system. when government fixes price and durable equipment is based on a 1982 fee schedule, it's been

adjust -- it hasn't been adjusted for inflation since and that's what you get paid. this equipment is overpaid from a price list from 30 years ago when you can buy the stuff for a lot less. i spent years trying to fix wheelchairs and scooters. i had an operation, wheel ordeal. medicare paid $6,000 at a time no matter what it looked like or how many gizmos it had. there are some wonderful wheelchair operators and a lot of scam artists selling wheelchairs to the wrong market. every got -- everybody got paid for a 1982 fee schedule. when the taxpayer money is at risk in the trust funds and you're making decisions like this on how to pay for d.m.e., people at c.m.s. care and try but every time you try to fix it and god bless it, the demi provider in every shopping mall

in america. everyone goes nuts. i understand it's a business but it's a crazy business in many cases. you're a small provider and you sell wheelchairs and bed pans. if you give money to blue cross and aetna and said, you know what, it's your cash, they don't overpay for wheelchairs and bed pans. it changes the behavior. i know that bruce disagrees with me. to me that's the behavior. when aetna's money is at risk or blue cross' money is at risk they are not going to pay too much for a what he will chair or bed pan. when the political money is at risk, whoever shows up at the town hall meeting, that's the fundamental changes. and that's the difference for me. host: next call, under 65, please go ahead. caller: hi. thanks for c-span and thanks for taking my call. not to get off the subject here but i think part of the problem is when you have c.e.o.'s like

united health care taking a $1.1 billion golden pair schute to walk away -- parachute to walk away and $500 million in options, isn't that the problem wasting money giving these guys money? host: tom scully. guest: it's outrageous and has caused a lot of problems over the years. and certainly it's bad for the insurance industry. on the other hand, if you look back to dr. mcgwire, the long-time c.e.o. of united health care, he took over united health care, if i remember, back in the 1990's when it was metropolitan insurance company, and archaic, one of the two worst companies. he merged them when they were poor, poorly run and turned them into the biggest most efficient. he's a doctor. over 15 years he created the biggest insurance company in america, 40 shareholders. their margins is what everybody else was. and they are stock went nothing

to very valuable. if you are a shareholder for united you thought he got a lot of stock options worth nothing. he turned it into an $80 billion. the point is having the company not be at risk and having some shareholders like me investing in united health care and he did a hell of a job, after 15 years they're worth a lot. on paper you can never defend anybody making $1 billion but he did create from two pretty lame insurance companies in the early 1990's a very large, very comprehensive, very profitable insurance company and the shareholders were rewarded for that. it's not like the government paid them. there are two sides to the story. the government didn't pay him $1 billion. he created a massive company. he was in it very early. again, i'm not trying to defend him. certainly the taxpayers never paid united health care $1 billion. they are the single biggest

contractor for medicare. they make on average about a 3.5% profit on their part d plan which is drugs and probably a 4% margin on their medicare advantage plan which is about the average. should mcgwire get paid $1 billion in stock options? probably no. maybe the board shouldn't have given him that much. it's not like the government paid him $1 billion. i don't think that's the problem of the insurance can we live in a capitalist company and he happened to max out on the capitalist side. if you don't like it, tax him more. host: mr. vladeck. guest: well, i'm glad that mr. scully is supporting higher taxes. if you can have expanded participation and private enterprise these sort of things are going to has. it's part of the tradeoff. i think sense the banking collapses and some of the wall

street bonuses people have been a little less enthusiastic about the general desirblete of unregulated -- desirability of unregulated firms of performing important functions. but, you know, i think bill mcgwire was overpaid too but that's what's going to happen when you encourage private -publicly held insurance companies to take over governmental functions. host: is that a fear of yours when it comes to medicare part c also? guest: not particularly. again, it's not a fear in the sense that it's a known quantity. what i would fear is that well long-term financial well-being of medicare will be damaged by the overpayment on behalf of a fraction of beneficiaries who get some of that back in additional benefits. but the rest of it sort of disappears into the private insurance industry.

and as a result, the federal deficit is worse and the long-term financial prospects of medicare are bleaker. guest: and i agree with bruce on the overpayment. i think it's a political difference. there is a lot of regulatory discussion on fixing the structure. and california had a medical loss ratio of 85%. if you collect a dollar in premiums you have to spend 85%, 85 cents on the dollar, and that's a standard state regulatory form. so every dollar in the medicare plan, private plan collects they spend 86.6 cents in benefits which is much better than the commercial sector. they're much more regulated. if you turn back the benefits to seniors higher than the commercial sector -- and, look, could you regulate medicare advantage plans more? you probably could. c.m.s. watches them pretty closely. the issue is they don't make extra profits.

they have extra benefits to hand back to seniors. i agree with bruce they should be changed and they should be in a level playing field. i personally think that, you know, we live in a capitalist country and i prefer to have a third party capitalist with their money at risk providing services than the trust funds with these giant funds that nobody -- if somebody overpays for a wheelchair nobody cares and they move on. i think capitalism, well regulated capitalism works. i would rather have that than the government fixing prices. that's the fundamental issue. host: muncie, pennsylvania, please go ahead with your answer. caller: hello. thank you for taking my call. i have humana gold choice. host: are you part c, naomi? caller: am i part b -- host: c? caller: right. yes, ma'am. this is what you're calling part c? host: yes, ma'am. caller: yeah.

and i'm very well satisfied with it. and it is not a -- i can go to any doctor that i want to. and i pay a $15 office visit co-pay and a $30 specialist co-pay. it also includes my drug program. and it's not, you know, where you got to go to this doctor that they say you go anyplace you want to. but i know the president is saying that geisinger has a very, very good plan. i use it but they no longer take medicare or the part c. and you sign a paper that you may be charge extra, you know, but the problem in there is

they're taking you. but now they have this little piece they call geisinger fee. it's like -- it's like down in tennessee, the one hospital calls it a facility fee. and it's $100 when you walk in the door. so i had changed my eye doctor to where i don't have to pay $100 to walk in the door or my insurance company doesn't and he accepts the $30 fee. i'm very, very well satisfied with that. host: naomi, could i ask you, what is your monthly premium for your medicare part c? caller: my part b? host: part c? caller: nothing. i have nothing. i pay nothing. pand i just -- and humana has gotten in touch with me and told me that with the income

that i have monthly from social security, which is all that i have, that pennsylvania has a program to cover the part b, which is the $96. and i've been approved of that. was approved july 20. and that will give me an additional $96 a month in my pocket. guest: you should have her on the program. she has all the moving pieces. she is called partial dual eligible. because she is low enough income that she just has social security, medicare, the state of pennsylvania's medicaid program will pay her part b premiums. that $96 will no longer come out of that social security check. if she has lower income, they would pay other things as well. so she's getting part of that. now she is also in a medicare

part c plan, humana gold choice is a private insurance plan, i don't know, given where she's from. it's a little unusual you go to any doctor you want. your co-payments are $30 and $15 and that's because, as bruce said, they probably have a plush plan that covers eyeglasses and other things and she's happy. if congress comes away and takes some of these subsidies down, which they could take 10%, 12% out of it, your monthly premium will be $30 plus your co-payments going to the doctor will be $25 and $40 and your costs are going to go up. it's basically two moving pieces. there are a lot of seniors out like this woman and they get a note in the mail and say, guess what, you're paying more and you are not going to be happy. whether you're a democrat or republican, it's going to be tough. this is largely me. i tell you, i don't have any cynical -- i was the primary person in the administration

driving this. me and secretary thompson. this is exactly what we intended. the payments went a little farther than we intended. getting it back will be tougher. this is the dynamics with the seniors that are the moving pieces that are causing the issues. host: bruce vladeck, any comment to naomi's comments? guest: i hope in fact if the government cuts their subsidies to humana for the caller's part c plan that humana steps up to the plate and maintains her benefits, even if me take lesser profits out of the plan. host: what was her reference to geisinger? guest: she is in a managed care plan or p.p.o. plan. it is a huge hospital complex in kind of mid eastern pennsylvania. penn state. she's in geisinger and she is probably around the herbie area. probably one of the better sfailts there. said if you are with humana

we'll hit you with a splell -- supplement fee of $100. if she was in traditional medicare, assuming she wasn't as low income, she would get part a and part b and by a united health plan supplemental coverage which would probably cost her $250 or $300 and get any doctor anytime and geisinger wouldn't do that to her. she has a few more barriers to hop over. host: fred, health care professional, hilton head, south carolina. caller: i am a firsttime caller and represented most of the insurance companies in the past seven or eight years in our area. when part c came long, the plan f, the medicare supplement, not everyone qualifies. if you don't sign up within six months at age 65 it is underwritten like a normal health plan.

most don't qualify for a plan f. and typical medicare a and b is basically an 80/20 plan. so if you would have bypass surgery at $100,000 you would have the deductibles, the government would pay 80% you would pay 20%, $20,000. they're expensive. the other problem is if you could get a plan f off the batch you are only paying $100 to $125. you get to the age of 80, 85, that plan f could turn into $250, $300 a month. not good for people living off a small pension plan or living off of social security. the other problem is these companies, such as care improvement plus, was a company that covered chronic illnesses, is a chronic illness plan. they plost $16 million the very first year. of course, what happened the next year they doubled their premium for their part c. the other problem is in south carolina we had seven companies, insurance companies -- excuse me -- little nervous -- drop out of the plan.

blue cross and blue shield of south carolina has a company called instill. at this time my clients in september are receiving a letter saying they are disenrolled. the company lost so much money. but the part i am trying to get to is, there's not a lot of profit for insurance companies, the doctors take a lower cost and the clients. now, they say the average senior from 65 years old to their demise will spend over $300,000 in medical costs. so if the government is only giving an insurance company $11,000 a year to maintain, to put the responsibility on the insurance company, i would think that would be a very insignificant amount for the government to pay for seniors. the other problem is insurance agents took a real hit. they really need to get together. i got a contract with united health care just on part b. commission was $70. without -- it dropped to $20. i now owe united health care

$700. so it's not feasible. mr. scully, if you would speak to a senior and explain medicare a, b and c megagaps you'd totally confuse them. my question is, part c is very important to seniors in this country. host: and you're a fan of part c? caller: yes, i am. marv: ok. thank you very much. -- caller: yes, i am. host: ok. thank you very much. let's start with bruce vladeck. guest: there's no payments at all to insurance agents or brokers because the government takes care of all the expenses associated with that. i'm sorry as well to learn that south carolina, unlike most other states, permits medical underwriting for medigap supplemental policies and excessive age manning. i think the underline problem

is that, again, $11,000 a year is a lot of money. it only accounts for about half the total health care costs of people 65 and older. so we have this dilemma in the medicare program that's most fundamental that we don't think we can afford its growth at the current levels when in fact the benefits have major, major holes in them. and the real long-term challenge of medicare reform, which is not being addressed at all this year i think in the health reform is that as the population gets older and as older people get less affluent, which is the result of the economic development in the last decade they are going to be, medicare does a very good job of paying for the part of health expenses they encounter which it pays for, but, again, it only covers about half or

55% of the total health care costs that people over 65 experience. guest: we mentioned $11,000 per senior, that's an average. one of the major changes in the 2003 legislation was that every senior has a risk score now. if there's 45 million seniors, there is a process to go through and figure out if you are a 66-year-old marathoner, your plan may pay demrr 5,000 for you. if you are a 92-year-old chronic cancer patient, you may get $42,000. it vastly depends on your age and health status. if you have older, sicker, frailer seniors, they didn't want them. we flipped the incentives in 2003. so now all these insurance companies are chasing older, sicker people. you have a patient that gets a $45,000 patient and does a great job for them at $35,000 you make a profit. everybody doesn't get paid the same thing. the payment per patient varies

massively by age, sex, geography and now health status. now they have 83 little things they get through your medical records privately that tells you what your value is to the insurance company. and so now it's very attractive for insurance companies to go after older, frail seniors to get them to the private plan which is exactly reverse of what it used to be. host: under 65, good morning. caller: good morning. you discussed durable medical equipment spending a couple of times this morning. this is the slowest growing sector in medicare. it's less than 1% per year. and yesterday mr. vladeck said that congress has prevented cuts in spending. actually, that's untrue. it was cut in 1997, 2003, 2005, 2008. it's less than 50% of what it was even 10 years ago.

host: is this michael rhinemer? caller: so with competitive spending in this sector, yesterday you failed to mention that the delay in the program was paid for by the durable medical equipment sector through a 9% cut effective january this year which paid for all of the projected savings and the bidding program was expected to project. host: ok. is this michael? caller: yes. host: i was going to read your email to mr. vladeck in the program once we got done talking to part c. he's the vice president of the american association for home care. he had some issue with a couple comments mr. vladeck made yesterday and we have his email and we will read that a little later in the program after our discussion on part c.

so we'll just ignore that for now but we will come back to that. loretta in for the valley, georgia, 65 and older please go ahead with your question to tom scully and bruce vladeck. caller: yes. i am a retired teacher and i have united health care and medicare part a and b. recently they had the open enrollment, i received a letter saying i would have to take cigna medicare standard. either a premium of that. and united health care medicare standard plan or premiere plan. and my concern is this. if i don't -- if the doctor doesn't -- my doctor doesn't accept it so i have to go to another doctor but i like the doctor i'm using and i prefer having mine separate. butter in saying that it's not so if i have to get it i would have to pay $500 more out of my

pocket. and i am on a fixed income. and i asked why and they said that the government changed this. there's a legislation that did it. i'm concerned if this goes out then what will happen with my regular -- my private insurance, united health care private? host: loretta, if you stay on the line. bruce vladeck, your comment. guest: i am not sure i understand the question. there is a real problem in retiree health benefits are being cut back by school systems by governments and so forth all over the country. and it sounds to me like part of the problem here is that -- the georgia system says that her premiums will have to go

up. well, those plans are in big financial trouble as well. and this is a problem retirees all over the country are facing. but at the same time the part c plans are raising their premiums in anticipation of sort of reductions that are going to be taken in their payments for next year. so i totally sympathize with the caller. and certainly her desire to keep her current doctor. but if the school retirement plan is unable to maintain her level of benefits, you know, that's what's happening to people all over the country. guest: i think -- i believe what she was asking, she is in traditional medicare part a and part b and not in part c. she has a supplemental benefit which is separate from medicare. provided for by her school district that is like a medigap plan. the georgia school system

apparently has said the cost of that, which is the private relatively unregulated nonmedicare supplemental insurance which could cost you $200 to $400. they say their costs are going up and raising her premium. she has to pay for. what are her choices? getting subsidized by her retiree plan. she probably wants to stick with it. one alternative is to look at an medicare advantage plan. aarp and united health care has a contract with the georgia school system, she should look at the medicare advantage plan. host: which is medicare part c? guest: which will have lower costs. probably going to be a managed care plan. she probably can't go to every doctor. it will cut her costs. probably give her more benefits at a lower cost. host: loretta, do you have a follow-up question at all? caller: yes. my understanding is that the -- that the governor chose not to

meet, you know, what i pay, my premium. the legislation, they decided that. so that put me out of it so i will have to pay like i'm getting a private insurance on my own, the premium. guest: guest: well, if you live in atlanta, there's a state health insurance, it's called chips, they are a private entity that's contracted with medicare. they'll give you lots of help. they won't choose a plan for you but they can talk you through the options and give you a lot of great options on which plan to get. they help seniors make those choices. sounds like you have a choice you're not excited about. they will help you find the best alternative. host: bruce vladeck, could you talk a little bit about the power of the american medical association or the role of the american medical association in our health care system, your views on it and how if participates in the current health care debate going on?

guest: well, i think the american medical association these days is a lot less powerful than what it used to be. a lot less powerful than what people intend to think it is. the physician community has become so sort of fragmented and divided into different groups with different sets of issues. so that on issues like medicare physician payment, for example, every physician wants to get paid more rather than less and the a.m.a. can represent that very well. but there's enormous fight, for example, between the surgeons and the primary care doctors over pieces of the pie. the extent of the conflicts sort of neuters the a.m.a. in some ways in terms of mobilize physicians effectively on the

political front. and these days in washington the specialty groups, whether it's the college of surgeons or even more the subspecialists, the thoracic surgeons, the cancer surgeons, the family practitioners whatsoever are the most aggressive and effective representatives of the medical communities rather than the a.m.a. as a whole. so one of the real issues that i think dr. nielson, as head of the a.m.a., has really had undertaken a remarkable role in the last year of her efforts to re-establish a.m.a. as the voice of american medicine on health reform and i think she's made a lot of progress. but the underlying issue remains the a.m.a. now represents fewer than half of american practicing physicians. and increasingly physicians that identify themselves not just as doctors but as cardiologist, family practitioners, and that's the vehicles through which they

participate in the political process. host: and what's your view on that? do they have too much power, enough power? guest: i think -- i think on economic issues they behave exactly like every other recipient of -- professional recipient of government payment. i any over the last decade or so the government has both in the congress and in the executive branch has done a much better job of engaging physicians in decisionmaking and those areas where you most need physicians and where the process could most benefit from them in making decisions about ways to improve the quality of health care, increasing patient safety, developing new technologies, which ones ought to be paid for and which ones shouldn't and so on and so forth. i think there's an

indispenseable role for physicians. again, it's not through big organizations. it's through the thoughtful, knowledgeable skill folk and getting them the central part in the whole range of the decisionmaking processees both in the executive and legislative branches. guest: i totally agree with bruce on everything he said. i think there's like 40% or 35% of docs that are part of the a.m.a. and the a.m.a.'s power really comes from structure in the ways they write the c.p.t. codes, they convene the ruck, the resource advisory group, the u.k. convener. so has a lot of power process-wise. but politically, i thinker in' increasingly weak for a variety of reasons. groups are much more -- they have different issues and they fight them. but the other thing, and this

is my opinion, the a.m.a. has very good staff but it's run by members that's very top heavy. i've been dealing with it for over 30 years. they're run by people that don't know about washington and that come in and change course over two months and a different guy running the place every year and as a result there's no message. the a.m.a. staff is good. it's like running the namplet there. if you look at ahip, the insurance plan, whether you like them or not, they have one person leading the charge for years. if you look at the other one, chipcon, who i used to run at the federation, you know, the members have one focal point. the a.m.a. to me, people say who is the a.m.a.? they are five different thousand people. most of the effective trade association town has a person who is the lead person, coordinates what they do and has a message. i like the a.m.a. but the

a.m.a. has been messageless for years. the staff deal with a hundred different chiefs. host: tom scully ran the medicare and medicaid during the bush years. and bruce vladeck ran it during the clinton years. danville, hi. caller: you've been very informative over the last three days i've listened to you. my first is just a comment is that even though it's been several years into the advantage part c program, seniors are still very confused and they still come in the office every day and say they have medicare when they have an advantage part c plan. there needs to be more education on that. really, my question is related to how you -- whether or not

when you are submitting a claim to an advantage plan for a code that is noncovered by medicare but is covered by the part c plan, are you required if it's routine to code it as if it were routine or can you code it by the diagnosis that you find? because with medicare we are not supposed to submit it, and if we do we're in violation. but if you submit it as routine to the advantage plan >> sometimes they kick it out even though they have a routine benefit and they always pay for it. so if they're cap tated, i'm assuming it's ok to put the diagnosis code correctly as what the person had, but if they're not capitated and turning it one-on-one into a claim to reverse to medicare, then that would be inappropriate, does that make sense to you? host: linda, i take it you live in a doctor's office? caller: office manager.

guest: three people could answer it in the universe. probably not me. yeah, basically medicare advantage plans are effectively private insurance plans. me frequently track medicare, their payments are totally different. whatever humana or aetna secretal relationship with the doctor or hospital is has no bearing on medicare. medicare have some basic rules. it depends -- it depends on the insurance company. my guess is there are many times when a medicare advantage plan covers something that medicare does not and if you submit it according to the insurance company's rules they'll pay it. if you submit it to medicare's rules maybe they should not. if should be covered like a private insurance company. host: this is from ray, an email question from citrus heights, california. i am a 65-year-old retired member of the armed forces and currently enrolled in medicare parts a, b and tricare for

life. what are the advantages of my signing up for medicare part c? mr. vladeck? guest: well, if he's enrolled in tricare, unless he has some particularly expensive drug coverage issues, or it's difficult for me to see what the advantages of part c would be for someone in his particular situation. host: what is tricare? guest: tricare is the health insurance program for active members of the military which also provides some retirement benefits as well. retired members of the military like this gentleman. guest: it's pretty comprehensive. country is split up into three areas. something called triwest is the contract. they basically provide

supplemental insurance. like if you buy a supplemental insurance plan for medicare, triwest does that and fills in the gaps probably at a pretty low cost. it's going to be hard to see how you get a better benefit than you get out of tricare. because you're in california which has about 35%, 37% of the people have commared part c plan, there are a lot of medicare plans out there, it's probably worth looking. the cost is low and you could get something that's a similar cost. but if you you have tricare you probably have a pretty good deal. host: when it comes to these -- is it fair to call these private plans, that's medigap plans, how many are enrolled? guest: 11 million. host: 11 million have the private gap insurance? guest: yeah. if you look at the world of 47 million seniors and they are low income, so medicaid covers those gaps and all the deductibles and co-payments and there's another -- i forget the number, but probably -- i think

seven million or eight million that have retiree health plans, or tricare. tricare is the defense department's retiree health care program. tricare fills in the gap for this gentleman. there are probably 10 million or 11 million people that actually go without medigap at all. they pay the deductibles and co-payments and they eat the cost which is expensive. most people who are not on the retiree health care plan bice medigap. they are totally private insurance plans. they are not associated with the government. one of the reason i am a big proponent of medicare part c is they are generally not a good deal. their medical loss ratios which is how much you spend per dollar traditionally has been 60% to 0%. host: of what? guest: mutual of omaha for years or united health care, the aarp, let's say they go out and sell you a benefit for

$2,000. 70% will go back out in benefits. so 30% will go to profit and overhead. we'll see it's regulated. it's a high margin plan. agents sell it. bruce say agents don't operate in traditional medicare. it's a very profitable plan. in the medicare part c plan, 86.6% of what's collected goes back out in payments . so medigap to me is bad for seniors. tends to be very expensive. if you have traditional medicare part a, b and c, you have gaps. you need to go get medigap. it's not a great deal. medicare part d is no great -- medicare part a and b basically shoves you, unless you have a great employer, shoves you to buying private health insurance which is not always a good deal for seniors. host: do you agree with that, mr. vladeck? guest: no.

it's a substantially better deal, the medigap plans. i can't resist because tom has a couple times mentioned for part c plans run ploss ratios about 86% which is to say that of every dollar the government pays them 86% goes to pay for medical benefits. the medical loss ratio in traditional medicare part a and b is about 96%. so it's that 10% that comes off the top in the private plans that's the source of concern to many people. in terms of what bin fisharies of the program are getting for the 10%. it's clearly what the insurance companies are getting. it's much less what the government or the beneficiaries are getting for them. host: ken, 65 and older, you're on. caller: i got three little things to make.

pardon? host: please go ahead. caller: i go to a specialist every three months and he charges $220 for an office visit. medicare pays him $88.01. when i go to my primary care doctor, he charges $73, and they pay him every penny of that. i have another couple more statements and then i'm going to hung -- hang up and you can answer for me. i was forced into medicare part d because i was a salary retiree from general motors. when we started getting our statements back and how much they had paid and how much we had paid, i was so amazed what we pay our co-payment is or whatever you want to call it also goes against us on our doughnut hole thing. that to me does not make any sense at all.

i got a thing here that says plan paid $774.92. and i paid $223. and that goes still a doughnut hole. i don't understand that. you can explain it to me. i'm going to hang up but i want -- host: parts a, b and d. you don't have part c. ok. thank you very much. what's your response to him? guest: first, response on the doctor payments . he said my specialist -- bills me $220 and pays $83. medicare made a determination that that the doctor can charge him whatever he wants. you can bill 15% or more in certain circumstances. medicare says here's the rate and we are going to pay it. his commercial rate will be to

$220. host: does that lead to upcoding? guest: you pay the best doc $83, they'll find ways to do other services. if the government fixes prices, they'll find a way to have an m.r.i. machine next door and use that a lot or a c.t. scan to generate more services or check more boxes with things on the form. you can't blame the doc. the specialist knows when you come in the door, they know what the rate is, it's $83. you can argue if it's too low or not. you goes to the primary doc, he gets paid $73. the primary care, medicare decides it's $73. they pay the whole bill. the doctor can -- he's not responsible for paying the extra charges. you can debate the merits of. the senior has no responsibility to pay more than what medicare pays. host: bruce vladeck, before we run out of time, we only have a few minutes left, this is the email from michael, the vice

president of the american association for home care. he takes issue with a couple of statements you made yesterday when we were talking about part b. here's the first one. in the email he says that you said that every administer of the c.m.s. going back to the 1980's has tried to change what medicare pays for durable medical equipment. and according to him, this is patently false. they've cut numerous payments in medicare many times since vladeck left his job. it was cut in the budget act of 1997. and in 2003, 2005 and in 2008. guest: well, i guess i misspoke. congress has made largely cosmetic cuts to some categories to d.m.e. over the years, but none of them have approached the mag any tute that tom or i or our successors or predecessors proposed.

and d.m.e. is still overpaid. i was interested in his comments on the call to say that the industry had voluntarily agreed to take a 9% cut in its payments in order to delay the competitive bidding process. what does it tell you about prices in the industry that they volunteer to cut their prices 9% in order to avoid competition in pricing? i think if you think hard about that comment if explains all you need to know about the d.m.e. industry. host: and also when it comes to the oxygen issue, here is what you said yesterday. every effort for the last 20 years, for the last 20-some years to reduce medicare payments for oxygen has run into a large lobbying campaign from the supplier industry generally organized to frighten beneficiaries to say, you know, if you let this go ahead, congress is literally going to cut off your air supply. and congress has stepped in to prevent reductions in oxygen

payments every single time. that's what you said yesterday. this is what mr. rhinemer said. this statement is also patently false. in fact, congress has enacted significant reductions to medicare oxygen payment rates numerous times. and he attached a chart. that documents these cuts. guest: again. to the extent i apply there have been zero cuts. i overstated to the extent that oxygen is still being paid for substantially higher rates than it should be and the cuts have always turned out to be significantly less than independent analysts have suggested they should be, to the extent that medicare even after all these "cuts" is still paying more for oxygen than the veterans' administration or the department of defense or most private insurers. i would stand by my statement. it's not true that there have been no cuts, but in fact even

with all the "cuts" medicare is still significantly overpaying for in-home oxygen. host: we have about five minutes left for our two guests. both ran the agency that regulates and administers medicare. dayton, ohio, kate, under 65, go ahead. caller: i am going to listen to your archives this week so i can understand a, b and c. it's crazy. i've been dealing with my father, who is a world war ii vet teamster, had only been in the hospital twice in his life when he had a fall a couple years ago. and now we entered the merry-go-round, the insane system of our health care system. why is it so complicated for our seniors? he has now been in three nursing homes and two hospitals the last two years. i have spent a lot of time talking to health care professionals and to the residents in these places. i feel so horrible for our

seniors who find themselves in this like web. and i feel like they're old rats running around trying to, you know, trying to just survive and yet going crazy within the system wondering what's covered, what's not covered. i have talked to many of the seniors, including my father, who -- when they go into therapy from one week to the next they don't know whether they're going to be able to receive therapy or not receive therapy because of how complicated their insurance policies are. so why -- again, can't this be simplified? host: mr. vladeck? guest: i sympathize entirely with the caller's comments. sure, it can be simplified. if it is somebody would have to take responsibility for overseeing all the care some group of seniors require rather than as has been our practice

people trying to do what they do well and passing the buck to everyone else. the medicare program never anticipated the needs for all the long-term community-based care that the demographic revolution would create. it doesn't pay for much of it. and, again, everyone is so concerned about federal spending and the federal deficit that it's unlikely that it will expand to pay for most of it. the states through the medicare program ended up holding the bag for a lot of these expenses. they can't afford it. they don't want it. their principle agenda is to shift more costs to the federal government. there's no effective private health insurance for chronic care for the elder people. and they have not stepped up to the plate either. when the obama administration proposed at the beginning of this year that there be a single medicare payment not only for hospitalization for a medicare beneficiary but for all the care they needed in the

30 days thereafter, no one received those payments because we don't have an organization in the health care system that is job sees its job of coordinating the care the senior needs. we have few small organizations. we have some pace plans. we have some experimental organizations that have tried to organize and arrange for comprehensive care for people who need it. but i would say that in general both from the insurer side, both public and private, and from the provider side, just about everyone has sort of shied away from taking responsibility for the full range of services needed by the patients with the greatest needs. and this is -- once we get everybody insured in the united states, i hope in the very near future, this is going to be the next step to reforming the

health care system which no one wants to talk about. guest: yeah, it's an incredibly complicated system. i think the fact that we really have three health care systems, not one, if you're low income you're on medicaid. if you're over 65, you're a senior on medicare. two totally different single payer type systems. and in between we have a pretty unregulated which needs to be improved commercial sector. 45 million people uninsured. at some point, and it's a long way off, you have one system that has the same structure and you pay a different amount based on income. which is the structure senator wyden from oregon -- you can't get there overnight, but simplifying the system so that you can understand. host: and you like that? guest: i've told him personally it's undoable. it breaks too many eggs. it's a very complicated system. it's been driven that way, nobody's fault, doctors and hospitals are trying to do the right thing. just became very balkanized

with different economic incentives. when i was running c.m.s. during the year i was doing the medicare drug benefit, my mom was in the hospital for 5 1/2 months in six hospitals, got so many m.r.i. and c.t. scans i couldn't count them all. was trying to do the right thing. she got out of it and said the bills that i'm getting was about $575,000 which she paid nothing. so seniors don't understand that either. she was very sick, almost died, had a total spinal chord meltdown. the system, there is no coordinate nated effort to look at people. it's very frustrating. we need to take a not excitable view of it and slowly, gradually get the system to a more manageable system. you ask me what i'd do 10 years from now, i take the ron wyden fake. trying to get the system where everybody, low income, high income, seniors, commercial

sector are looking at a choice of the same basic plans and what you subsidize that depends on your income level is much more rational than the balkanized mess we have today. host: a philosophical comment on what mr. scully just said? caller: well, i think, again, it's been very illuminating to watch -- guest: well, i think, again, it's been very illuminating to watch the health care debate. because patients suffer when there's no coordination, when there's no assumption of responsibility in the health care system. and yet the fear that americans appear to have of having anyone in charge of the health care system is very real and not entirely misplaced. and until we can really have sort of an honest, calm political discussion about how much we want to avoid making decisions or taking responsibilities for some of these issues so that everyone and every doctor can do

whatever he pleases, even at the enormous cost, both human and economic that that generates, we are going to have a hard time solving any of these problems. host: and finally, bruce vladeck, what do you do today? guest: i sort of split my time between public policy work and consulting and advocacy as an employee of nexseria consulting which is a subsidiary of the greater new york hospital association. host: and tom scully, what do you do? guest: i spend half my time in new york and spend half my time as a lawyer in washington which i do mainly health policy work. host: tom scully, bruce vladeck, thank you both for participating in our three-part series on medicare. all of this is available to watch online at c-span.org. and it will reair frequently as my guests as the health care debate continues on capitol

hill. and now a news update from c-span radio. >> it's 8:59 eastern time. the commerce department reporting this hour that consumer spending edged up in july with help from the cash for clunkers program. household incomes, though, stayed the same. more on health care reform this morning from house speaker nancy pelosi. she's plauveraging a drive to raise $100,000 by this monday to help combat what she calls g.o.p. smears about health care reform. the speaker's appeal is aimed at small donors. she's asking for donations of $5 or more. united nations secretary general moon is urging the world to seize the day on climate change. ahead of a major conference on global warming set for december in copenhagen. speaking earlier in vienna, the secretary general said the world must take all action and the action of the copenhagen conference will impact the generations to come, his words. u.s. army chief of staff general george casey says he

expects the number of american troops in iraq to go down to around 50,000 by this time next year. he spoke earlier today while on a visit to kuwait's port which will be playing a key role in the withdrawal of the american forces. nearby in iran, president ahmadinejad is calling for the prosecution of opposition leaders over the postelection turmoil saying that senior activists currently on trial shouldn't be the only ones punished. and finally, a lawyer for pakistani nuclear scientist, kahn says a court has ordered the government to remove any restrictions on him following his release from house arrest. he admitted in 2004 that he operated a network that spread nuclear weapons technology to iran, north korea and libya. today's ruling by the high court says that, quote, nobody can restrict the movement of a.q. kahn. and those are some of the latest headlines on c-span radio. .

the public is focused on torture and domestic eavesdropping. the agency's activities go back a long time. there have been other successes and failures. we need to know how the agency does what it does and baird is today and the danger that it poses. >host: people have certain ideas

above what the agency does. what is their role as far as intelligence and security? guest: it is our nation's eavesdropping agency. they collect signals intelligence, intercept radio transmissions, e-mail, faxes, you name it. they try to decode the communications and day intercept. its second mission is to protect the communications of the u.s. government, computer networks and our communications systems. that is just as important as the intelligence gathering, which is what most people most peoplensa -- what most people know about nsa. >> hohost: how far does it go?

guest: 60,000 military personnel all over the world. 60% of what goes into the president's daily brief, which is top-secret, that intelligence report read by the president every morning comes from nsa. host: this is a picture of the building. guest: it's on a 300-acre campus at fort george meade, md., which is halfway between washington and baltimore. >> the president gets a large amount of information from the agency. it has listening posts as well? guest: at the height of the cold war it had almost 100 listening posts deployed around two dozen countries. the number today is around

probably a dozen. the nature of communications has changed. we don't need all the listening posts overseas because people communicate by e-mail and cellphone now. and the internet. radovan by high-frequency radio. it has consolidated a number of its listening posts to about a dozen. host: throughout the history, there aren't three team spirit first, the amount of information that the agency takes in on a day-to-day basis. second, how it is processed or how it's consumed. for the folks will have not read your book, or the importance of those two? guest: the agency, you have violated the two main challenges of the agency. the first is that it collects massive amounts of information. it collects the equivalent of the entire collection of the library of congress several times a day. it is a massive amount.

it is beyond the capacity of any group of human beings to listen to every single message and the email and text message it collects. it depends on computers to screen through the vast amount of information looking for those few nuggets of intelligence. the problem is that the amount of communications out there, the number of teenagers text messaging, the number of people signing up for e-mail and internet service on a day-to-day basis increases exponentially every year, so it is becoming harder for nsa to stay on top of the amount of communications flowing through the airwaves. and at the same time finding a needle in a haystack. there's a joke over there that the amount of stuff going through the airwaves is increasing so fast that now you have to find a needle in a

constantly multiplying series of haystacks. that is the challenge the agency faces. it is going to get worse before it gets better. >host: there are several thousand people working there. it is a people problem? >> it's a combination of people and technology problems. they have the largest collection of supercomputers on the planet probably. even -- it does not matter if they have 50,000 or 75,000 people in the complex of buildings, the fact is it is too much for human beings to handle. there's no other agency in the world as large as nsa in terms of its ability to collect and process the intelligence. it's the nature of the beast we are facing right now. people are talking more on their funds, sending more e-mail messages.

nsa has defined a way to keep on top of that. host: our guest is talking about the national security agency. he is the author of "and untold history of the national security agency." she will take your calls this morning and he or e-mails. the numbers are on your screen. what do you currently do? guest: i'm writing my next book on intelligence issues, focusing on the bush administration, his eight years. >> what did you do previous people do you have experience at the national security agency? guest: i was a lowly russian translator for the u.s. air force 30 years ago. for the 25 years a subsequent, i was a financial investigator specializing in white-collar fraud and basically trying to

put people like michael milken behind bars. host: as far as the information you spoke about anti with process, what has been a payoff as far as national security? guest: i think intelligence provided by the national security agency has been essential. all of its faults and failings aside, you have to conclude that without the intelligence provided by the agency, taken into conjunction with everything else collected by the 16 other agencies, i think we would have been in worse shape during the cold war and in the time after the cold war than we are today. host: our first call for you comes from walt and the democratic line in indiana. caller: thank you. it concerns me with the

secretive government agencies and powers they have. maybe i am one of these conspirators. i believe the government does a lot of shady things. my question for your guest is with all the information the agency has, why aren't any of the agency's speaking to public radio or public television to confirm that mr. obama has eight czar that is a devout communist? why don't we see that government control is our biggest problem. they're breaking the constitution, breaking the laws of the land, we cannot secure our own borders and they're helping out car companies. host: do you get to those kind of comments bo? guest: all the time. the one comment i get the most is that this is an uncontrolled agency.

to use a phrase that was coined in 1970's to describe the head of the u.s. intelligence which was the cia, people have described it as a rogue elephant. i don't think that is a fair characterization. i think there are problems, take for example what happened during the bush administration. i think that congress failed adequately to oversee the activities of not just the national security agency but the entire intelligence community as all. the way the white house ran the super secret activities of nsa and the rest of the community was apple aabhorrent and illegally question -- and

legally questionable. we need to reassure the public and to put the rules of law back into the way the intelligence community is run. host: what types of changes? guest: what disturbs me most is the way the nsa's warrantless eavesdropping program was run was a lawyer by the name of john who wrote a series of legal opinions that said the president of the united states could order nsa to engage in domestic surveillance activities without having to go and get a warrant from the foreign intelligence surveillance court. that's been a lot of the land since 1978. the justification was the president's wartime powers

tromped the constitution. any first-year law student will tell you that has no basis in fact or american case law for that matter. this was done in secret. he wrote to the opinions and did not share them with the attorney general. it was sent to vice-president dick cheney personally. i think if any other lawyers had reviewed these legal texts, they would say we have big problems with the legality of these programs, based on this man's justification. this can no longer be done. i think running the intelligence community in secret, without recourse to congress or the normal process that's been put in place, the checks and balances to make sure these sorts of, these acts, never happen again so we don't revisit this. host:cora on the republican line

from virginia. caller: thank you for letting me be on c-span. i have one question. why do we tell so much security stuff on tv in front of the whole world? host: such as bo? caller: all the things you have been talking about this morning. today it seems like we tell too much stuff to the world. host: do we tell too much? guest: probably. i have traveled extensively. by far, the u.s., the public knowledge of intelligence issues is far superior to any other country, including the democracy is of -- the

democracies of western europe. that is a reflection of what has transpired since watergate in the early 1970's where the public's trust in government has dissipated and deteriorated over time and especially the intelligence abuses that occurred during the cold war. the public wanted to know, congress insisted the public had the right to know. frankly, the public media in this country have spent a fair amount of time talking about the activities of our intelligence agencies, both good and bad. i think it is healthy that in a democracy we can talk about intelligence issues. we lived in england four years. there is a lovely thing called the official secrets act, which means that, if i was to have this conversation with you and

england, i could be facing multiple criminal charges for violating the official secrets act. we are both democracies, but we have different standards in terms of what we can and should be discussing. i think it is healthy and the u.s. to talk about intelligence. i'm reluctant to talk about sources and methods. meaning how is it that we intercept calls and how is it we process them. but it is essential that the public know, we are putting $10 billion a year international security. are we getting our money's worth? it's a dollars and cents issue. host: on the independent line, fred, from new orleans. >caller: good morning. it boggles the mind to look at what we are looking at right now, to see how many intelligence agencies we have

and there's only one answer, from where i am looking at about 20 or more intelligence agencies. there's only one reason. you have a police state. we are a police state. we have accountability to these agencies, what they have done in operations we cannot get into. they have admitted crimes that have been exposed and no one is ever held accountable. it goes on and on. we can go to the wiretapping and all the way to murder. and torture. we are a police state. it's all there. my question is what will happen now with the advent of internet to the infrastructure? we are looking at an operation setting behalf to secure us and that the internet and the web are two different things and the military and intelligence work

off of two systems. they could strip us of all of our free speech over the internet. it will be like cable tv. there will only be a few thousand approved government decides to go into. the national security agency in this country will be a full- blown police state at this time in this country. host: we will leave it there. guest: the views of the kollar are incredibly widespread. fear is pervasive in this country. all we have to do is turn on the news at night or pick up the daily newspaper and there is a revelation a bout the water boarding or something else that has occurred in the recent past. i think the cure for what ails us for the sense of fear or

uncertainty about whether our intelligence and security agencies, the fbi and others, are they doing their job and are they not spying on us? are they opening are male and female? -- opening our mail. we have to have some sense of transparency where let's hold some public hearings and air out these issues. i know that there is reluctance on the part of the obama administration to look back on what transpired during the eight years in the bush administration. but i honestly think that at some point we're going to have to do it, whether it takes the congressional hearings or truth commissions. there's so much pent-up concern. even within -- i speak to retirees who formerly served in the intelligence industry. they are very concerned.

some of the behavior of the chiefs of the intelligence community suggest to them that these people are covering up. that they are not happy with these attitudes that basie and they are concerned that the intelligence agencies are running from things that they may have done in the name of national security during the bush administration. let's give the public some sense of what was done and why it was done, what with a cheap, and if mistakes were made and people spied upon. let's find out now. it will get worse as time goes by, but then the public will come back when we learn new revelations and we will demand even harsher responses. i think it's incumbent on the obama administration to be proactive and tell us what happened. host: what does it mean to you

that eric holder is interested in looking into some of the activities of the cia? guest: it does not matter whether you are democrat or republican, we are all americans. tortured is basically unacceptable in any shape or form. i have read legal opinions written by the justice department, justifying them. i find it obnoxious in the sense that the legal niceties were thrown to the wind and justification was found and interpreted. basically, i think that an investigation is necessary because we are a nation of law. prior to 2001, the previous administrations would never have allowed the use of torture or enhanced interrogation.

most of the people i spoke with you it was counterproductive at the least. i think that, if laws were broken, people should be held accountable. that is the way this nation is run. host: miriam on our democrats line from rochester, new york. >caller: it is pretty clear where your guest stance. i wonder what he would think about the legality of the way that people who are against our country have handled our people when they catch them. i also have another question. apparently, the president of the united states is giving inflow -- is given in full every morning -- given information every morning on what the intelligence community has discovered in the previous day or whatever.

i wondered if there is any kind of collective process as to what is presented to him, because it must be a lot. second, it would seem to me that the orientation of the leader of the country, whether it be obama or bush or clinton or whoever, is going to influence what he decides to pay attention to board feels is important. guest: that's true. i should make -- i should digress to explain that the president every morning gets a blue folder stamped with multiple top-secret classifications. he's the only person other than maybe the vice-president to read it. it is the best intelligence produced by the community on

that particular day. it is extremely sensitive. only a few copies have ever been declassified. it's called the president's daily brief. or pdf. each president is different about how -- how much value and importance they place on intelligence. lyndon johnson was a voracious reader of intelligence. he could not get enough. the cia pact is daily brief with all sorts of juicy and titillating information, because they knew the president likes it. jimmy carter liked precise, clean, short bredes. john kennedy liked oral briefings. he did not to read a lot of paper. george w. bush became -- it's

not clear how much importance he placed on intelligence, but the caller's message that the president makes policy decisions based on what he reads every morning ohrid shapes his view on the world and affects the u.s. is absolutely true. that's what intelligence is so important in how the nation is governed and run. host: erode in the book that president george bush -- guest: absolutely true. host: do all presidents find themselves in that position as far as the tides and quality of information? guest: eisenhower came into office fully versed in

intelligence matters. he was an army general, former army chief of staff. he knew about the ultra secret. he knew about breaking shermans codes. inouye about the importance of intelligence and codebreaking. then you have other presidents like jimmy carter, a former governor of georgia, and george w. bush, former governor of texas, they had no background or understanding of intelligence community stuff, so the intelligence community tries to educate them as quickly as possible about here is what you are going to be getting every morning. tell us if you like it. tell us if it meets your needs and requirements. i have to understand that as a nation, more and more of our presidents in the future will probably know nothing about intelligence upon entering the oval office. i think the intelligence community has to get much better in terms of bringing these

people up to speed as quickly as possible. and explaining what they do and how they do it. but when the days ago when the presidency used to spend decades in congress before coming into office, being briefed on intelligence matters, that may be a thing of the past. host: what about colin powell, he built a lot of the speech he would give to the u.n. on information he gained from the nsa, maybe he would have questioned the quality of it. guest: he did. he went before the u.n. security council in march 2003 and gave a presentation basically alleging that iraq had a big weapons of mass destruction program. there were three intercept tapes

that he said showed iraq was trying to hide its weapons of mass destruction. it turns out the entire presentation was wrong from beginning to end. there was no factual basis for any of the allegations made in his presentation. you could make the argument that, having been an army general, a former chairman of the joint chiefs of staff, former national security adviser, and then secretary of state, that he should have known better, he should have been able to spot that. as he was preparing the presentation, that the intelligence did not scored a lot of the we did not support a lot of the allegations that had been publicly aired. president bush went to ohio and gave the "axis of evil" speech, alleging iraq had weapons of mass destruction and at the united states. i don't think the intelligence

that was available at the times reported that allegation. there were indications and some data analysis, but, by and large, colin powell should have known better. >> bryon on the republican line. caller: a man called a minute ago to save our country was a police state. does that bother you as much as it did me? second, last night on the glenn backeeck show, there were talking about whether obama would want a mili-- that he woud want to establish an intelligence agency as well funded at the military is. one gentleman was very concerned. could you elaborate on that as well? guest: i apologize for not

having watched that show last night. i'm not sure exactly what was proposed. late senator pat moynihan proposed many years ago scrapping the intelligence community in its current form and bringing all the agencies into one house. basically creating one agency rather than the 16 major agencies and dozens of smaller intelligence organizations we have right now. as you can imagine, the senior officials of the 16 intelligence agencies we currently have resisted mightily this suggestion that to stop the warfare that was endemic in the u.s. intelligence community, that we should basically disband those agencies and create just one. it had to be controlled by a civilian, of course.

there is an undercurrent of concern on both sides of the aisle in congress that more and more you find general's controlling civilian intelligence agencies. general michael hayden was the director of the cia for much of his tenure, for much of the bush administration. it is getting harder and harder to find talented and qualified civilians. leon panetta has no prior intelligence experience before being named director of the cia. but it is getting harder to find intelligence veterans wanting the job of being a director of national intelligence, which may be that is what beck was talking about last night. host: why don't they want the job? guest: as it is a political

nightmare. you spend all day going from one meeting to another, talking intelligence politics rather than actually doing the job that intelligence professionals love to do, which is analyzing and reporting intelligence. most intelligent people i have met, that's all they want to do. they don't want to have to argue with the justice obama's about whether prosecuting or investigating former cia agents in the right thing to do. they just want to do their job. it's getting harder and harder at the top levels in the intelligence community to do that. host: you have written about several leaders. how important is leadership to bringing about the result of trying to gather and better analyze information? with leaders stand out in your mind? how does that influence the agency? guest: we have had -- national

security agency has had good directors. fair to middling as well. and the directors that fell below the acceptable definition of a good leader as well. good leadership is essential at the top. you talk to people like bobby, director of nsa in the 1970's and became the deputy director of the cia. you quickly come to the realization that the top man in these organizations -- organizations are so massive that basically, you spend your entire working day working on policy may be seven days a week. you have to have a good executive who does all the other work. i think our intelligence community is now 700,000 people strong. it is impossible for any one man

to adequately lead it, given the fact there are 16 agencies. i feel sorry for whoever is the director of national intelligence. because basically he spends much of his day holding meetings and trying to maintain integrity and ordination of effort within an ever growing intelligence community. host: one of the things is morale that you about. guest: you read in the papers that morale of intelligence agencies is being threatened by growing investigations that are being promised or are imminent. i'm not sure how much credence to put to the question of morale. how can you sticca a thermometer into an intelligence agency that is 60,000 people strong and make a judgment of what is ugly or good?

there will be some people thinking things are finance some people will think things have gone to hell and a handbaskin a. some people at the senior levels of intelligence community of or about congressional investigations and justice department investigations and trials commissions, and maybe with good reason. the morale of the agencies, these guys are professionals. they're not getting paid a lot of money. they're not in it for the money. they do it because they think it is important. all they want to do is do their job. i feel like we should let them do their job as long as they stick by the guidelines. host: we're talking with matthew aid. he's written "the secret sentry ." tampa, fla. on the independent

line with jerry. caller: that has been public knowledge since 1978. if i would greet my arab brothers in arabic, i know they would pick that up. how long would it take those agencies to find my conversations? guest: greetings to you as well. first of all, echelon is a code name that has been bandied about since at least 1998. echelon was an and as a computer system put into place in the 1970's to sort through intercepted communications to try to find a conversation that might have some intelligence value. that is basically all it was.

it was not a global intercept network, which is how it has become to be described since the late 1990's. the caller's question about how long it would take nsa to pick up your call? an essay, for those of you who use the internet extensively and pride themselves on their expertise with google, you'll know you can plug into google and alert if you want any articles appearing on for example c-span. you'll probably pick up hundreds upon thousands of articles every day. but you can't plug in and get an alert where the computer will tell you every day every article has ever appeared on the internet through a group message or a blog that mentions c-span. the nsa does exactly the same thing.

except it's a google alert system is much larger because it looks at maybe tens of thousands of names and phrases and names of countries. i always joke with my friends that every time i send them a copy of an article from newspapers about terrorist attacks, it will probably be forwarded immediately to some analysts at nsa. i guarantee that is one of the search terms nsa uses to determine whether some analysts ought to take a look at your communication. can you imagine how many "the new york times" article have buried in them somewhere the phrase "terrorist attack"? you have to feel sorry for the men and women at fort meade having to plow through all of this stuff. most of it is in name and

thomas. they're looking for that one phone call in arabic maybe that the caller referred to that says a terrorist attack is starting tomorrow. that kind of thing is difficult and backbreaking. here's an example. the nsa intercepted two phone calls 48 hours before the 9/11 attacks. and as they did not get around to translating the intercept until after the 9/11 attacks. a two-day time span between intercept and translation is extraordinarily good, by nsa standards. the problem is that it came a day late. do we hang but analysts at the nsa for not translating it quickly enough or do applaud them for moving quickly on it? host: 10 the same be said about

the attack on the uss cole that maybe this information was not translated or paid attention to by the leadership at the time? guest: yes. bar harbor--you are familiar with the idea that we were breaking all the japanese naval and diplomatic codes before the japanese attack on december 7, 1941 on pearl harbor. yet to the warning signs were appearing in the intercept never managed to reach the people who needed it in a timely and up-and with the kind of emphasis needed to say it, warning, a japanese attack is forthcoming. my book is full of examples of intelligence was available prior to many different world crises.

yet it was either ignored, given short--or in many cases the cia analysts said this is garbage. we have paid in blood for a lot of these mistakes. >> quint in maryland -- were talking dicarlo democrat line. caller: i'm talking about the nsa and other agencies, information -- i am referring to vice-president cheney going on national tv and bragging about torturing inmates at prisons and how important it was to the security of the united states. whether it was important or

not, the man was bragging about breaking the law and there's a back-and-forth argument about whether to prosecute him. is the vice-president immune to prosecution? if he leaves the country, can some nation who's been offended -- this man continues to go online on national programs who invite him and listen to him brag about breaking the law and are no consequences? guest: there's only been one vice-president in american history forced out of office. that was vice president spiro agnew tied up in the watergate scandal. the answer is, yes. whether you are the vice president or president you are still an american citizen beholden to the laws. if you violate the laws, you

will, hopefully, be prosecuted. as to vice-president janedick cheney, we could devote several hours to that subject alone. if you read the newspapers and books that have been written about the former vice president, you realize that he was the main driving force behind many of the intelligence programs. not just the nsa warrantless eavesdropping program, but many of the cia human intelligence programs and others. he really played an essential and critically important role in directing some of the super secret programs that we are now just beginning to fully appreciate and understand. yes, he has gone to great lengths to defend his leadership in those areas.

i am not sure. i'm not sure i agree with the vice-president assessment on the use of water boarding, whether it was legal, necessary, essential, or useful. but this is where reasonable people can disagree. what bothers me the most is that we still do not know many of the details as we need to know to make an informed judgment about this. my gut tells me we are not going to be happy as the details began to dribble out, we won't be happy about what transpired over the last eight years and what still may be transpiring today, for all i know. many intelligence -- i am an intelligence historian and i never cease to be amazed at how shocked i can be after so many years of study. host: rightabout house leaders use information from the nsa. you're right that when it's was

prior to the september 11 attacks -- guest: the nsa said that the chatter prior to 9/11 is in mr. clark's mind and in the mind of george tenet, indicated that something big was evolving and was coming soon. as you mentioned, most of the senior national security officials of the bush administration rejected the evidence turning up in intelligence. they said, look, we have faced many of these alerts before, it is the cry wolf syndrome taking place.

al qaeda had never attacked in the nine states before. so why would they believe something would happen soon. i would love to see the material they're collecting prior to 9/11 and see if an informed judgment can be made in retrospect. to see if we could have spotted an attack. it was so ambiguous, but so we could not. host: in iraq there was a fiber- optic networks. guest: one of the bands of the existence of nsa currently is the fact that more and more countries from the world are no longer it sending information by radio or by telephone but rather by fiber-optic cable, which basically it is a series of

cables buried underground. nsa can not intercept them because there is nothing coursing through the ether. there are no radio signals or electronic emissions for an essay eavesdroppers to get ahold of. in a case of iraq, starting in late 1990 posey say's sud,'s put of their intelligence on fiber- optic cable. nsa could only year low level traffic, guys saying, how are you and how do you hear me, i hear you ok. hundreds of thousands of hours of innocuous conversation. it is hard for nsa to do its job, to collect valuable and meaningful intelligence when that is all you can hear.

that explains why nsa intelligence contributing to the weapons of mass destruction was practically nonexistent. host: thelma on our republican line from tennessee. caller: i am wondering with all of the aclu and everybody against the latest torture they heard about with shooting a gun in the next room and such, has anyone ever said anything but but obama executing the two pilots in somalia? i guess it does not matter if you execute somebody, but just don't torture them. guest: the two pirates were somali pirates holding the american cargo ship captain

hostage in a lifeboat. two navy seal snipers killed them because they were holding a gun to the head of the ship captain, so there'll able to free captain. i'm not aware anyone was executed. it is regrettable that in this day n.h. we stilpeople are dyine globe. american soldiers are killing people. it happens every day in iraq and happens every day in afghanistan. it is just the nature of the world we live in. it was a hostage rescue situation that turned out very well, actually, in the sense that we managed to free the captives and bring them home alive and well. there have been other incidents

in the past where such efforts have not turned out particularly well. so i think our congratulations ought to go out to the navy seal team members who performed the mission. it would have been wonderful if every crisis could be resolved if we sat around a table and played poker and to the winner go the spoils, but that is not how the world works. host:beth on the independent line from schenectady. caller: linda "the new york times 15 years ago had some stories about their had been -- that the government had tested on orphans and people in mental institutions and prisons. radiation in oatmeal and things like that. -- 50 years ago.

that this was to protect us. are you familiar with it? guest: i am. caller: this stuff is completely unforgivable. one has to wonder what is going on today. we did not just do partnerships in america. we did them in canada with major colleges. one of the major colleges in canada worked with our government on that. guest: you are referring -- during the battle days of the cold war, the u.s. government conducted experiments with chemical and biological warfare agents. we tested on animals and we tested -- there's a famous instance where they took a pathogen, thomas pathogen, there were trying to figure out if a

biological warfare agent, how it would work on a subway system. would it to infect people if it were delivered properly? they put it into the air conditioning city -- system of the new york subway system without the knowledge of the passengers and tested them after they got off the car. they found it works perfectly fine. the passengers did not know the reason they were being asked to dust off their coats and shirts was because they had just been hit with a pathogen cloud. terrible things were done during the cold war. people forced to take lsd, military members were given all sorts of nasty stuff, volunteers. the radiation experiments were done. it's has come out, it takes 20

or 30 or maybe sometimes 50 years for the bad acts to become a matter of public record. that is the nature of the security system we live in. too many secrets protecting to many -- protecting too many. we don't like some of these documents when they are declassified. some of these documents the intelligence community does not want declassified. i feel sorry for the soldiers that were forced to participate in the nuclear weapons tests and to a massive doses of radiation. we only find out 40 years later that they are all dying of various forms of cancer because of their participation in these nuclear tests. host: you spoke about iraq and the problems the nsa would have been gathering intelligence. is about the taliban in

afghanistan also. host: is this traceable by the nsa? guest: yes. an essay does not operate along. their work closely with the british and australians and new zealand and canadian intelligence services. they do the same thing we do. we sometimes finance them. the taliban in afghanistan pose an interesting problem. they don't use radios. they don't use conventional -- there is no internet or fiber- optic cables, no telephones, except when they are living in pakistan. basically, 90% of what we collect about the taliban is from their use of walkie- talkies. nsa, as most people watching the

show will understand -- it is set up to intercept what we use here in the west, and the developed world, lots of radios, telephones, cellphone, instant messages. in the back woods or back hills of afghanistan there are no cell phone dollars or internet links. they don't use conventional radios. they use hand-held walkie- talkies on the battlefield. nsa was completely unprepared when we invaded afghanistan in october 2001. we had no preparation of this. an essay had no capacity against walky-talky traffic. what the military in afghanistan did, one of those ad hoc arrangements, every u.s. army and marine platoon in afghanistan has an afghan interpreter who speak the

language fluently. there are three major languages spoken in afghanistan and other printed dozens of dialects. this man spends his entire day with a radio scanner at his ear listening to taliban walky-talky translation. we pray that he is loyal and have the best interest of the american soldiers he is working with at heart. then he has to tell the american commander, there are some taliban guys watching you right now and they have in their sights. this has happened thousands of times over the last eight years. the interpreter's helping the u.s. troops in afghanistan have no security clearance, by the way. they are not american citizens. thousands of american soldiers in afghanistan and iraq placed their lives in their hands every day. i think it is incredible how these people have done the job they have done with minimal pay

knowing full well that they and their families stand a good chance of getting killed. host: technology becomes cheaper and more efficient. what does that mean for the nsa? guest: every time a new technology comes about like skype, which is a free telephone service through your computer, it's very popular. it's beginning to make some inroads in the united states. who wants to pay verizon and at&t big bills every month. if you have a computer, you can call your mom or dad or free even if you are in botswana. every time a new technology comes around, the nsa's job gets 100% more difficult. anything that increases the volume of communications around world and makes it harder for nsa to gain access to, make the agency's job that much more difficult. it poses a real threat to its

ability to produce intelligence. host: caller, go ahead. west virginia. caller: why haven't we seen anyone held accountable for all of the false prewar intelligence? i know there wert two phases of the senate's meetings on intelligence where the investigators were there, yet we have not seen any of those individuals held accountable. seymour hersh wrote an article in "to the new yorker." and others run about some of these incidents prior to the invasion, talking about the false intelligence and how you could not verify it. why haven't we seen anyone held accountable? guest: if i knew the answer to that, i think i would be living in las vegas right now, living

large. i think it iss sad that no one is going to go to prison for -- if you believe that america went to war based on false premises and lies, yes, you can imagine how angry you are if it seems everybody seems to skate and are not held accountable. but the fact is, i will give you an example, in 2004 we invaded iraq and the insurgency was raging full force. i went to oslo to an intelligence conference. there were some people from the cia there. including the chief historian of the cia. there were half a dozen guys sitting behind him. i stood up and made exactly the same comment