please proceed for 5 minutes. >> good afternoon, mr. chairman. i am the executive vice- president and chief operating officer of one health services corp. we do business with blue cross blue shield plans in illinois, new mexico, oklahoma, and texas. this is the largest customer- owned health insurance company in the nation. we are not investor-owned. we are customer-owned neutral. we have more than 16,000 employees serving 12.3 million members in those four states. our mission is to promote the health and wellness for the people in the communities we serve. it won't accessible, cost- effective, high-quality care. -- what we want to get

accessible, cost-effective, high-quality care. . f bluecross blueshield of minnesota. that stay's largest health insurer, and they are not for profit health plan. i have 28 years of experience in the blue cross system. the areas of accountable i have within hcsc is for management of our describer services division, which processes member claims and handles health care inqui inquiri inquiries. i'm also responsible for information technology, finance information technology, finance functions. we certainly recognize and share the public's concern with the current health care system, but fundamentally, we believe in the strength and the value of the american health care system. we believe that insurers, like hcsc, are uniquely positioned to help foster and inform improvements to the health care system. and we really welcome the opportunity to serve in that role.

hcsc has been an of advocate of health care reform. we support the proposition that health insurance companies are prior to to offer coverage to all applicants, regardless of their current health status, coupled with a personal responsibility for all americans to obtain and maintain coverage. second, we support subsidies for those americans who cannot afford health care coverage. third, we support health and wellness initiatives that focus on the prevention of chronic illness. and finally, we support initiatives that promote effective care and treatment and for information technologies that improve quality and provide value for every health care dollar. we're pleased to share with the subcommittee some examples of how hcsc has incorporated evidence-based approach into medical policy into two key tenets that underpin the core values of our company. and that of access and quality. my written statement outlines our approach in each of these areas in greater detail, but a

few items are just worth noting before the discussion today. first, our members need access to proven medical care. our belief is that the interest of our members are of primary importance to our company. the members we serve provide the reason for our existence and the rationale for the resources with which we operate. secondly, but equally important, is to continually improve the quality of care. another of our guidant principles is our belief that we as representatives of our members have an obligation to provide leadership in the health care field. we're promoting evidence based medicine around proven health care services. and we also work closely with a broad network of doctors and hospitals to invest in data sharing technology that works to improve clinical decision-making, and these efforts help improve quality and ensure that doctors and hospitals treat patients effectively and get paid

efficiently. hcsc is expanding access and i am brofg quality of care for all americans on behalf of the company and it's members, i thank the subcommittee for the opportunity to discuss these important issues today. >> thank you very much for your testimony. without objection, the chair in the ranking member will proceed for ten minutes each for questions, and afternoon that we have five minutes, we may have several rounds. we'll see how it goes. the only thing i want to share with the members of the panel here is this. members of congress generally like to get answers, and if you're able to give us a brief answer, and it's -- covers a territory, that's fine. if you start to go on and on on something, i don't to appear confrontational, but i may have

to encourage you to hurry up your answer, or, you know, may even have to cut you off. i don't want to do that, but i do want you to know that we are here to get answers, and we need your help. so without objection, i'll begin. i just want to add one other thing. we may be joined by other members of congress who are not members of this committee of many. that's not unusual. and without objection, if it other members of the -- choose to come here from either side of aisle, even though they're not on this committee, without objection, we'll permit them to sit in, to participate and to ask questions. so with that, i'd like to start the questioning with mr. sassi of wellpoint. sir, in your testimony, you state, quote, last year wellpoint received 380 million claims and processed 97% of them within 30 days. now, i'm looking at the arithmet arithmetic, and if the arithmetic is correct, it means you did not pay within 30 days over 11 million claims. would you tell the subcommittee

what is the value in it dollars to wellpoint of the 11 million claims that were not paid in that time period? >> i -- chairman, i don't know the value of that. >> can you provide the subcommittee with such information? there has to be a way to calculate it. >> i'm not sure, because that is at a point in time. the vast majority of those claims, most likely were paid at a future point, either on the 31st day, or if we had requested additional information that was provided and then subs kwoently paid. >> maybe then you could chart out, 30 days, 60, 90 -- businesses operate that way, of course, 120. and if you could provide us information with what was the average cost of each claim that you did not immediately pay. it would be helpful. you could look at it as a cost or a value. but -- yeah, and we'll follow up with written questions, so we can keep going. >> okay. thank you. >> we're not going to -- belabor

that. mr. sassi, on 2008 earnings conference call with wall street, your ceo said the following, quote, we will not sacrifice profitability for membership. as you know, wellpoint was forced to pay $15 million last year to settle claims or charges by the california department of insurance that you removed coverage from 2,330 members after they submitted claims for expensive medical care. now, i'm going to submit for the record the article from the settlement from the "los angeles times" from february of this year. wellpoint settled and paid a $10 million fine for removing coverage from 1,770 members of its hmos in california. mr. sassi, is dropping members just when they need health care what your ceo meant when she said that she wouldn't sacrifice profitability for membership?

>> absolutely not. >> what did she mean, then? >> i believe what was meant was that we would not reduce prices artificially to essentially buy membership in the open marketplace. >> and mr. sassi, what characteristics did those 2,330 individuals have in common that resulted in if wellpoint's decision to drop members just as their medical bills threatened to reduce wellpoint's profitability? >> that settlement pertained to a settlement agreement that we reached with the department of managed health care, and the department of insurance in california, relative to rekigss in the individual marketplace. i'm sure you're aware that companies agree to settle lawsuits or situations for a variety of reasons. and -- >> but, you know, you're in front of a congressional committee here. there is -- unless your counsel is advising you that you can't answer that question, you should

answer the question. >> i did answer the question, sir. >> well, you didn't really say what characteristics those individuals had in common. that resulted in in wellpoint's decision to drop members, just as their medical bills threatened to reduce wellpoint's propertiability. you did not answer the question. i would just ask you to answer the question. >> those members were rescinded in the individual market, because they materially misrepresented their medical history on their insurance application at the time that they applied for coverage. >> okay. now, how did wellpoint discipline the executives who committed the practices that led to the enforcement action against you? is it. >> well, we did not admit -- we did not agree with the findings of the department of managed health care. that's on public record. they did issue a report. we did append a report to that. the settlement, you know, we agreed to settle with the

department of managed health care -- >> okay, i understand. >> to put the issue behind us. >> mr. collins, in united health care group's social responsibility report in 2008, your ceo writes, quote, the businesses of united health group are fundamentally organized around advancing our mission of helping people live healthier lives, unquote. now, if your business is fundamentally organized around that mission, will you explain united health care's slm of charges last year that is specific-care subsidiary wrongfully denied claims in california, paid claims incorrectly, lost documents, failed to acknowledge claims in a timely manner, and hassle its members with multiple requests tore documentation that was previously provided. >> yes, sir. we are vigorously contesting the findings of the state.

i do not contest that there is room for improvement in our california operations. we've put a lot of resources into improving our operations, and we glad to have convenience to our membership. but i don't think our aspiration to provide products, services, and financing of the health care of americans, as inconsistent, now he, inconsistent with our behavior. >> okay. that's -- that's fine. i mean, you've -- you've answered that question. but in 2007, what was the compensation of the top executives at pacificcare? >> well, in 2007, sir, pacificcare was a wholly owned subsidiary of united health care, so would have been you wanted health group. >> was the compensation possibly millions? >> well, i don't have those numbers off the top of my head.

>> will you provide them to this committee? >> absolutely. they're public record in our 10k, sir. >> so other members may have this question, but i think it would be great if each of you could provide us that compensation information of officers. and also, information about bonuses and incentives received by pacificcare, executives and employees that would have rewarded the denial of claims in california in if 2006, 2007. we want to see if there is any connection there, and we need that information. if -- if you can cooperate and provide it. >> i'm confident, sir, that there was no bonuses awarded for denial of claims or other activity that was illegal. and as i said before, we are vigorously contesting the findings of the department and the characterization of the actions there as denial of claims. >> thank you, mr. collins. mr. richards of cigna, on page 8 of your written testimony, you state, we do not consider costs in establishing coverage policy

in our decisions to provide access to care. but we heard from a former senior executive with cigna yesterday who told us cigna has meetings every quarter which are called town hall meetings. internal town hall meetings in which executives go over the past quarter's financial statements and talk about how they can tighten utilization to lower the share of cigna's premium income spent on medical expenses. isn't it true that cigna has held internal town hall meetings in which those topics are discussed. >> it's absolutely true we communicate with our employees to reinforce our mission and talk about financial results. >> and those town hall meetings are videotaped, are they not, and audio taped? >> i do not believe they're videotaped. we certainly audiotape them so that individual employees who are not able to attend -- >> but there are audiotapes available. >> yes, there are. >> i would like you to provide this subcommittee with copies of those audiotapes and any videotapes that you have. our staff will work with you to

achieve the owe. >> again, what i would like to emphasize, mr. chairman, those internal meetings are to communicate to our employees. >> i understand. and we -- i understand that they are. and we're -- >> no. >> we'll be in touch with you regarding our request that we get those audiotapes. now i just would like to request with this question for each and every one of you. the premise of this hearing is that health insurers wield strong influence in the kind of care, whether there's care, for their policyholders who become very sick. the recent study found that 5% of non elderly adults with insurance that have been diagnosed of a chronic condition like cancer reported they went to the needed care in 2006. i want to give you a chance to express for the record what you think about this question.

with a simple yes or no answer. i would need into this question. do you believe that a health insurers refusal to pay for a patient's cancer treatment can it directly or indirectly cause harm or death to that patient? do you believe that a health insurers refusal to pay for a patient's cancer treatment can directly or indirectly cause harm or death to that person? i would like to go down the line. give me a simple answer. >> yes, sir. >> yes, sir. >> yes. >> yes. cut>> yes.

>> mr. richards? >> yes. but cigna only allows clinicicians to make coverage decisions, and those coverage decisions are only based on ex terrible, scientific evidence. >> the answer is yes, okay. miss reitan. >> yes, sir. >> okay. i want to thank each much you for your candor. the chair recognizes for ten minutes mr. jordan of ohio. you may proceed. >> thank you, mr. chairman. i appreciate the chairman's having this hearing. i appreciate the chairman's intensity and passion he brings to any debate. but i fundamentally disagree with sort of the underlying premise here, the idea that because there has been some -- as i stated in my opening statement, that there's been some problems with the way private insurance works, that somehow that should cause us to move to a government-run system. i fundamentally disagree with that. frankly, i think the majority of americans, as pointed out over

the last several months, and any poll you look the at here of recent date is -- would say the same thing. so i haven't really -- kind of two focuses here in the few minutes that i have with you. and, again, i appreciate you being here. one, i want to get the facts, and then i want to get at this idea that i think is fundamental to real reform and what needs to happen in this country. and that is a health care system that empowers the patient. there's a great -- i think a great article in this month's atlantic which talks about the idea that it's always somebody else who is paying. and when somebody else is paying, that's what -- i mean, i think miss farrell said it well. she said insurance premiums don't drive health care costs. health care costs drive insurance premiums. we've got to get a health care cost. and that only happens when the consumer, the patient, the family, the small business owner out there, has a better handle on what's happening, more transparency, so they can figure this out and make some real market, real market-type

decisions. so let me start with this. one of the things we heard yesterday, again, in an effort to get to the facts. one of the things we heard yesterday was from the panel we had, 57% of every dollar is all that goes towards health care -- of the premiums that you take in. and so we heard about the cartels, and i'm actually looking now at a piece the journal ran this monday, and they actually talk about an example in alabama where it was 92%, according to what's hpg in the state of alabama, where one insurer -- bluecross blueshield of alabama has 70% of the market share. so i would like to know, do you agree with that 57% figure, and if not, what it is in each of your companies' situation? we'll just go down the list. so mr. collins? >> thank you, congressman jordan. the statistics side to mr.

stassi's testimony come from a pricewaterhousecoopers study that cites 83 cents on a dollar, that's a credible study, a recent study. there is another study that just came out from sherlock and company just in the last few weeks, which core ran rates the price waterhouse study. >> what do you say? what do you pay? >> well, sir -- >> of every dollar you take in, how much goes for patient care? >> that's not a real simple answer to -- >> is it 57%? >> no, it's consistent with the findings in the sherlock and pricewaterhousecoopers -- >> have you done an internal investigation? do you know what -- do you have a good idea what united would be? >> sir, it's the -- the loss ratio for 2008 was approximately 83%. 83 1/2% for the company. but that's across a wide spectrum of businesses.

>> mr. sassi, wellpoint? >> same question? >> yeah. >> okay. the loss ratio for wellpoint plans overall is directionally similar to what i quoted as pricewaterhousecoopers. >> okay. >> but as i also stated, loss ratio is just the calculation of premium, less claims that are paid. and as i also indicated in my testimony, there are a number -- a fair amount of administrative costs that we pay to help manage chronic care, chronic continues conditions. we pay out of our administrative cost for disease management programs for asthma, heart disease, diabetes, copd, to help those 50% of americans that have chronic illness manage their cost, and that's typically not included in the lost ratio. that's included in administrative expense. so if you're looking for a wholistic, what do we spend -- >> numbers fire -- >> yeah, it's north of that

number. >> i understand. i understand. >> so congressman, at aetna, we spend 84 cents on the dollar directly on medical claims. we do spend a fire amount on administration, relative to innovations in the health care industry, making sure that we are providing our members and our problems with the most recent totals and technologies, and is information in order to, as you said, give them the tools to make them understand what positives they purchased, what's in those policies. >> good. >> so they can make better decisions on of behalf of themselves and their families. >> ranking member jordan, we pay between 83 and 85%. >> same here. >> for the last seven years. last year was the upper end of the range, around 84.. >> ranking member of jordan, first signal last year the

number was 89 cents, the number has gone up each of the last five years. >> good. >> our medical care ratio at hcsc is approximately 84%. >> okay. let me move to another one. according to the congressional research service, each year, 1 billion chambers are submitted to medicare, and 10% of those claims are denied. when you think about 10%, that's a lot. if i got the numbers right when you went through your testimony, i just oh jotted these down, united, you have 70 million. humana, two different dus thingses, but i told 16. cigna 46, and hcsc 12.3 million. so how does your denial rate compare to what the government currently does with the medicare program? >> congressman, i'm not prepared to answer that question today. i really just don't have those numbers available. i would like --

>> how many claims do you have a year? i understand medicaid -- older population will be significantly more claims, but 70 million claimed to 45 million in medicare, how many claims do you get a year? >> i don't know exactly. on our primary processing pla form where the vast majority are tested, as i stated in my testimony, 250 million claims. >> 250 million, okay. >> ranking member jordan, we processed -- we received 380 million claims. the number i read was the aamount we produced in 30 days. >> 97% in 30 days. i got that. we heard stories yesterday, so there have to be some that are denied. you do you know what percentage are denied? >> i don't have that number. >> is it more than 10%? >> i don't have that number. i'm sorry. >> miss farrell? >> we process approximately 407

million claims annually at aetna. and if you look at the reasons why clichls -- claims are denied, i think what you're trying to get at is the reason that something might be denied for medical necessity, and at aetna, less than one half of 1 percent of claims are denied, because of medical reasons. >> thank you. >> ranking member jordan, i cited the atheetha health study which i commentsed we ranked first in terms of the lowest denial rate. our denial rate in that survey was 5.7%. >> okay. >> the government -- medicare part program -- >> was fifth -- >> that had an 8.7% denial rate for fifth place. >> okay. >> ranking member jordan at cigna, we have about 91 million claims we processed last year, and again, 99.9% of those were

proved for the cover. so it of would have been .1% that we're not through to coverage. >> good. hcsc processes 560 -- 560,000 claims a day, and we deny for the medical necessity coverage 3/10 of a percent. >> wonderful. mr. bloem, in your testimony, you talked about some things you were doing to make it easier for the folks who you go business with, people you ensure, to deal with this -- and that's one thing you hear from folks. you know, in their own lives, you get the statement of benefits and try to figure out what the heck it says. i think if a lot of americans are like me, they look and it f it says it's not a bill, they kind of file it away and not worry about it too much. but you talked about some things you're doing. i would like for you to elaborate a bill bit on that, because one thing we hear from health care professionals, they don't like the reimbursement rate they get, but in some ways

it's not as cumbersome as some of the other things you have to deal with. so i'm curious as to what you're doing to make it easier for people to deal with and figure out what's going on. and, again, getting did i idea of powering the patient. >> i would just like to quickly summarize. first of all, when we talk about the problems that have existed between the various assistances, obviously we have three people involved. we hav we have us as the payer, we have the member and we have the provider. so to make things simpler and to make things easier, what we have done as -- in florida, but now throughout the country, is come up with a joint venture that we have with a number of companies that helps providers get instant adjudication, real-time adjudication in terms of what members responsibilities -- what ours are. trying to provide certainty for all our constituencies. the other thing -- >> so the providers are liking

it, and the patients are like it. >> because it's electronic and it basically tells people when they go to the doctor, this is what is going to be expected of you, this is what humana is going to pay, the provider is going to charge. we also have a document called a smart summary that we mail to 10 million of the 10.3 million members we have every quarter. and it basically tells all of the claims that they've had, what those claims are for, what doctors, what hospitals they went to. what pharmacy, what drugs their taking. it gives them sort of a quick summary of what their situation was for that quarter. much like you get with maybe investment accounts you have. i would be very happy to bring this. reich a quarterly statement. . >> yes. so that people understand that they can begin to have the knowledge that you're talking about in order to take effective control of their health status and is their insurance. thank you. >> ten minutes to go. goes fast, mr. chairman. thank you all. >> hi. i think my colleague from ohio. we have been joined by two other

members and before we go to mr. cummings, i'll introduce mr. shack from illinois, and also the distinguished chairman of judiciary, john conniers, who is the author of -- he's the author of hr 676, and i'm alwayshr-676 pleased to work with him on that. mr. conyers, we are honored by your presence here, and we are going to go to -- as well as mr. shock's presence, and we are going to go mr. cummings for your questions. >> thank you very much, mr. chairman i want to know which of you if any, and we will go down the line give bonuses for folks who are denied coverage, straight down the line. >> we don't issue bonuses for people that deny coverage, sir. >> is it a part of their evaluation? and i will ask each one of you

the same question, it is part of the evaluation, those -- is there any kind of incentives with regard to evaluations regarding denial of coverage? that is to claims. >> i'm >> i can tell you that we do not have been the policy in place to reward people for denying care. >> you do not do that? >> to my understanding, we do not. >> out of positions? >> there are no metrics surrounding denying. >> only physicians can deny a claim at aetna. we have no incentives tied to that decision making process. >> employees do not be there? >> positions are the only ones that can do that. >> do they ever?

>> physicians are the only one who can actually do that. >> did you ever had a policy of giving incentives for denying claims? >> issei cover, i cannot speak to ever. >> to your knowledge? >> i see your lawyers. you are welcome to talk to them. >> to my knowledge, no. >> to my knowledge, no. >> there are no incentives for them to deny coverage. >> there are no bonuses paid to denial of care. >> between today and is today apparently there must be some other insurance companies. the testimony with ideas to the wishes the offices. we will go forward. interestingly, when you are answering mr. darden's question

you were talking about this whole idea of claims. mr. richards, if you and your -- you were very proud. i think you should be. he said over 99% of the claims are covered. should be, i think, of when you said that over 99% of the claims are covered and people are receiving the services that the doctor recommended. is that correct? >> that is correct. >> now, mr. richards, when you say claim, what do you mean by that? >> when i refer to that i am talking about the determination of whether the particular procedure is covered. >> in other words, those are services that were already done, is that right? >> actually a lot of times a physician, the individual's physician would check with us prior to the procedure being done under what is called a prior authorization to see if the procedure would be covered. >> so you are including when you

look at this and giving thus figure, you are telling us that in those cases before services were rendered, you include those, and you include those after services were rendered that you paid quote claims. is that what you mean by claims? because i want to make sure that we, as, you know, going from the same page, because the testimony we got yesterday is that, you know, the industry has a definition for claims, and claims means some services that have already been rendered. and then you are talking about denial, but a lot of the problems that we heard yesterday were things leading up to that where the doctor calls. we had one doctor say yesterday that he had to literally double his number of employees sdwrous deal with getting authorizations to do procedures, so just answer my question, so when you say 99.9%, what do you mean? >> i mean of the claims that we get, 99.9% of those are approved

without any need for appeal. i think -- first of all, i appreciate congressman the chance to clarify this, because i don't think it is well understood by the public. cigna and i suspect other insurance companies get submitted a lot of claims that are duplicates or are that for people that are not insured by cigna. >> are those included in this definition? >> they are not included. >> so if for instance a doctor submitted a duplicate claim, we'd already received one. >> okay. goit the duplicate. see i want to make sure we have -- the definition has changed already. so -- >> well, i understand the committee is interested in both what insurance companies are doing relative to medical coverage which is how i was answering the question, but i also understand that you are very interested in the administrative procedures so i am trying to clarify that.

fraud and abuse would be another reason why a claim might be denied and for instance i know that is extremely important to medicare and the office of the inspector generals, so we for instance did not pay 215 million claims for fraud and abuse, and again, these are situations where the individual has already received the care, but that the doctor or provider is inappropriately billing for that. >> when you say duplicate, you mean somebody who has been denied and this they try again? >> no, due to a billing error we would have already for instance paid the claim and submitted again. sometimes things cross in the mail, congressman. >> is that the only other thing that may not be included in the denial rate? >> i think that those are the major categories, the only thing i might mention is in california, there's a fair number of doctors in california who operate under a prepayment

mechanism where we pay them a certain amount per month to cover the care for our customers, so that prepaid, the way that prepayment works is that we pay them whether the individuals seek care from that doctor that month or not. we occasionally do get claims from the doctors erroneously for care we have paid in the prepayment, and in that case those claims also would fot be paid. >> the gentleman's time has expired, and the chair recognizes the congressman from illinois, mr. shock, and you may proceed for five minutes. >> thank you, mr. chairman and thank you to the distinguished panel for being here and i have half of the time of the chair and the ranking members, so i will try to make it quick. it seems as we discuss health care and the rising costs of health care, the focus seems to be on, you know, who is paying for it, and to me, it does not matter whether you are a state government or federal government providing medicare or private

business or individual paying for it privately, the issue is the huge rising cost. my question to you in the private pay business, with your respective organizations, i am assuming when you negotiate rates to the provider, you ask for some justification of costs, and what there seems to be very little discussion about is the rise in costs, and some of that is true operating cost, in other words, new x-rays or new mris or new technologies, staff, and some of the rising cost is also a cost shift. in other words, the great debate this year is whether or not we should cut medicare rates by 16%, and we seem to pat ourselves on the back when we leave and say, well, we staved off cuts again this year. well, we may have staved off cuts, but we didn't adequately reimburse the providers for the true increase in their cost and thereby requiring them to shift

the cost into the private pay industry, so my question to each of you have any of you within your organization looked at the increase in reimbursement rates this you all are required to pay thus raising your premium rates, what percent of that is a true cost increase in terms of costs to the recipient and what percent of that cost increase is because of cost shifting as a result of the state and federal government not adequately paying for their patients. mr. collins? >> thank you for the question, congressman. the trend in unit costs so that the negotiated rates that we have with providers and doctors has been running in the range of 4.5 to 6% for many years now in excess of cpi. i didn't know the exact percentage of what the costs are due to cost shifting, but according to a recent millieman and roberts the accounting or

actuarial firm, $80 billion are cost shifted from medicare and medicaid programs to the private sector. the american hospital association and the ama have both published statistics that show that medicaid programs on average pay less than 90% of the costs and that medicare pays less than 100% of the costs. so there is a cost shifting that has been a constant pressure on unit costs in the private sector. and it is a, it is a ongoing and major driver of unit cost in inflation and health care on the private side >> you said that your premiums went up on the average of 4 to 6%? >> unit cost trend over time in the industry has been running around 4% to 6% over a long period of time with the annual -- just the unit cost.

other components of inflation are utilization increases, new technologies, those sorts of things, but straight unit cost has been running 4% to 6%. >> have you looked at what percent of that is the cost to do business and what percentage of it is a shift? >> i am sorry, sir, i cannot answer that precise question, but $80 billion over the private sector is a significant amount of money. >> yes. >> congressman, i would agree with mr. collins' comments. milliman did publish that study and estimated that $88 billion is being cost shifted to the private sector from medicare and medicaid which is an overall increase for commercial customers of 10% or the study says $1,600 per covered member. it would be very difficult for us to identify on a facility by facility, doctor by doctor, understanding their entire cost structure what goes into that to identify at that level, but i

believe that the millieman study is correct. >> because i am tight on time, i want to know if -- i understand provider by provider, it is not possible, but have you looked and done independent study on a sampling pool of providers on what their justification and increase in cost is? >> congressman, first of all, i do agree with the underpayment by medicare and medicaid is absolutely huge problem for hospitals and doctors and it has definitely increasing medical inflation. cigna has done some analysis of the disparity in the rates between medicare and medicaid and commercial rates, and i don't have it with me, but we would be happy to provide that analysis of the average rates to the committee. >> i only have a couple, and yellow is what? two minutes or one minute? okay. one other question, because i am going to be cut off here. i wish i had more time. it seems to me again as we talk

about controlling costs, i found it very interesting that i met with the consulate general of canada, and he's very much supportive of their canadian health care system, but one thing that i thought was interesting in the discussion is that he said, you know, congressman schock, he said it is too easy in your country to sue doctors. i sat back and said, what? he said our health care system in canada would not continue to function if comprehensive tort reform were not a part of the health care plan when we passed it in our country. my question, obviously my view on this is that we shouldn't wait for a single-payer system in our country to have comprehensive tort reform as a part of reducing not only the premiums that the health care community pays, but more importantly the unnecessary medicine that is ordered as a result. my question to you, again, is whether or not within your

respective companies that you have looked at the amount of reimbursed care that you give through the insurers folks, what percentage of that is done through defensive medicine as a result of the fear of these physicians being sued. >> i actually don't have the data with me, but i know that the blue cross blue shield association has done work on this exact issue, so we would be happy to submit that in follow-up. >> could you provide us a copy of that? >> yes, w shgyes, we would be h this. >> anyone else? >> tort reform would be helpful, because the absence of tort refort increases the intensity of procedures that doctors perform which is one key aspect of utilization which is what you talked about before. if i may, i would like to go back to the question about cost shifting with government programs. one of the things that happens with medicare and medicaid is

that they lower reimbursement rates in an effort to get more efficiency out of the health care system. that in part, does happen. but when it doesn't fully pay for the reimbursements, then what happens is that there is a cost shift, and the commercial segment, the commercial products pay for the shortfall that is not made up by efficiency that is made by those reimbursement cuts which is estimated to be $1,500 for a familyf four who has private health insurance and if you look at the total cost of private health insurance, that is a major component of it. thank you. >> thank you. and thank you, chairman, for your generosity. >> we are glad that you are on this committee and we appreciate your participation. the chair, i will recognize, the distinguished member of the judicial committee mr. conyers, and you may proceed. >> thank you for this

permission, chairman kucinich, and i want to thank you for the hearing. these are distinguished, experienced members of the health insurance industry, and i'm sure that their testimony has been very important as we work toward a reform of health care, and i also want to commend the ranking republican member aaron schock who is carving out quite a record of distinction for himself, and i am glad he is what is your feeling about the public option and how deep think it fit into health care reform as you see it? >> my view of the public option

is a i think we need to focus our efforts on the understanding what the problems we are trying to solve our round access and quality and affordability and then ask ourselves whether or not a public plan would actually progress us further down the path than some of the bills that have already been put in place. i do believe -- >> could you pull the microphone closer, please? >> one of the things that is concerning about a public plan is the cost shifting. it a public clamor to reimburse medicare or medicaid rates, there would be a cost shift to the commercial segment, which would in turn result in increased costs in the commercial sector and increase premiums. that is what they are trying to achieve in healthcare reform.

>> mr. richards, it was my impression that the public option would be designed to save money and not cost more money and that it would provide a choice between citizens as to whether they wanted a private insurance plan of which there are literally hundreds or quit they want the public plan. insurance plan of which there are literally hundreds or would they want a public plan? is that your impression? >> well, congressman, cigna supports many of the reforms being debated in the debate in both the senate and in the house, including personal coverage requirements, guaranteed coverage, the elimination of pre-existing

conditions, and the reform of payment mechanisms. we believe that if those reforms are enacted, then a government-run plan is not necessary. >> so -- so, mr. sassy, if you agree with that last comment, then you don't want any competition in the insurance, health insurance field, right? >> well, i think that it is our position that there is a lot of competition today in the health insurance industry. there are over 1,300 health insurers in the country that compete for business. the challenge is that when the government could come in and have the ability to set reimbursement rates that it creates an unlevel playing field between private industry and the government, and that certainly it has the potential to exacerbate the cost shift that already occurs between medicare and medicaid and the private sector.

we also fear that as a result of that, since we don't have, and we would not have a level playing field since the insurers are subject to taxes and other types of expenses, that lower reimbursements coupled with taxes would create a level playing field. >> well, with this unanimity against the public option, we are putting in a provision that everybody's got to get insurance, and if you cannot afford it, guess who will pay for it? the government. and you are talking about the public option will cost, someone is talk about it, not you, but

how could one public option destabilize 1,300 private insurance companies? >> our company agrees with the statement that was made earlier that when you implement some of the reforms that are being discussed, that require insurers to offer insurance to all individuals regardless of the health status, as long as they have a requirement to carry, to access and carry coverage, but -- >> could you pull your mike up a little closer. >> we do agree there are people who are lower income, and often working low income individuals who will need some subsidy in order to be able to afford health care coverage. so, we believe that if you pass reform with all of those elements, we actually will have a more well functioning health care system today, and have the ability to put in the market plans that can be affordable over time. >> well, couldn't have a public

option accomplish that? >> we don't think that it is needed in order to accomplish that. >> why not? there are a lot of people advocating it? >> because those reforms that i have described have never been in existence in the united states, and so, by passing them, we think that can significantly improve the health insurance system, and make coverage both more accessible and more affordabl affordable. >> well sh-- >> may i have a second? >> well, we have a public option in the v.a. the veterans administration is essentially a public option, so we do have one here in this country. >> well, what about medicare? who do you think runs that? >> exactly. >> well, let me -- i am not

doing too well on these questions, mr. chairman. nobody seems to -- >> i would suggest that the chair is -- mr. conniers is doing very well with the questions and i think that the answers that we may be having difficulty dealing with here, but your questions are just fine. >> well, let me try -- well, let me try mr. collins. have you ever heard of a universal single payer health care system? >> yes, sir, i have heard of the concept. >> and have you feelings about it? >> yes, sir. i clearly am a partisan for the having a private health care, a robust private health care sector. i believe that the private health care sector brings a lot of value to the overall system

that we have here, and of course, we have a robust public system with medicare and medicaid and the v.a. system, and tricare and those are all components of the public system. i believe that the private system is important, because it brings innovation, and it brings energy, and it brings change and it brings ideas that are often used in the public sector system as well. i think that we can have both a private and public system. we can build on what is good in the public system. and the private system, and use those things to improve the private system as well, sir. >> well, that is encouraging then. then why not -- let's try the single-payer system. hr-676, and that is mostly public system. what is wrong with it? >> i'm not actually familiar with that bill, if it is a single-payer system, it would be the end of the private system as we know it i believe.

>> is that true, mr. bleum? couldn't -- does that mean the private system goes out if you have a single payer system? >> i think that the primary concern, congressman s the fact that we mentioned before with respect to the cost shift. the medicare and the government programs, the v.a., all of those programs have lower rates of reimbursement so that in the entire system not all of the costs are being covered by not the proportional costs of the care that those programs, that those programs give are being borne by the government, and so there is a shift as i mentioned to congressman schock of $1,500 of a family of four every year. so one valid concern would be that if all of, there was a single payer and all of the

costs were borne by the government, then there would be none of the innovations that any of the others have discussed. it would be the end of the commercial, but then the government would then have to absorb all of that other costs in that would make it more expensive for everyone. there is also, i want to remind everybody what was said to, was said about the value what the private sector provides. >> but what about the cost increases that the health industries are imposing upon people with health care? not only in their premiums, but also in the pharmacy prescriptions that are being raised -- i mean, you talk about cost shifting. do you, ladies and gentlemen, are representing companies that keep raising the cost of

premiums every single year. and yet, you are worried about somebody else shifting cost. >> mr. conyers the time has expired, but, you know, each one of you that wishes to respond to his question, please do so and i would urge any or all of you to do it. someone care to respond? >> could we start, ms. farrell, could you help me understand how i can increase my sympathy for health insurance companies? >> ms. farrell? >> the way we look at premium increases every year and the way they are calculated is based on the underlying increase in medical costs. and so -- >> so you have to do it? >> but the profits are greater -- and the only people i can think of that make more

profits than the industry that you six represent is oil and pharmacy. >> the gentleman's time has expired. >> oh, i'm sorry. okay. >> we are grateful that you are here. >> thank you very much. >> and the chair recognizes mr. kennedy. we are grateful that you are here, mr. kennedy, and we are grateful for your family's lifelong commitment to health care for all americans. thank you. thank you, mr. chairman. to the panel, as my former colleague was just talking about, the public option, and given the environment right now in congress with respect to the political viability of a public option, i wanted to get to how we are going to implement savings in the event that a

public option is not passed. i am in strong favor of public option and i want that on the record, but i understand that the political reality of what is going on right now this congress shows that may or may not happen, and if that doesn't happen, i want to hear today what the insurance companies are going to do to step up to the plate to be sure that we don't waste a lot of time before we put into place what will be the alternative to a public option, and that is perhaps a trigger of the public option which means that we are going to have to wait for us to show that insurance companies aren't doing their job before a public option then gets kicked into place. of course, that is, you know, an ugly kind of scenario, because it is basically saying, okay, we are going to wait until things go wrong before we fix them.

and that presupposes that things are going to go wrong, so obviously we don't want things to go wrong. what i would like to hear from you is, you know, we hear a lot of talk about different tools in health care that will save money and improve quality and efficiency, and we are all familiar with the inefficiencies in the current system that lead not only to wasted dollars and poor health outcomes for the patients, but also huge administrative headaches and red tape for patients. health care information technology as i know is one of the tools we talk about in achieving efficiencies, but another area where we could generate savings and quality improvements is through a process called improvement tools such as value stream mapping and flat mapping. we talk about how to make a

clinical improvements to improve efficiency so to save money, but what do you see for these as potential to save money through the process of administrative improvements, and wh can -- what can be done to incentivize the use of these tools in not only making clinical improvements, but also making improvements in the whole process of administ could you tell us how we incentivize the government a way for you to do the right thing? >> i think there are many things that the private sector can work with government on. i think you brought up an important element my company is

very interested in implementing in terms of technology. examples include e-prescribing and doctors have a pda to prescribe to check for drug to drug interactions and a personal hel. >> how to make sure that it is a system that is working to the maximum affect? we all know they can work. it is not in a lot of good. -- it does not do a lot of good. it is not going to do well if you do not have a way of monitoring whether the system is actually running efficiently and

the doctor says go out to these referrals and they go out and the clerk only gets them. for the day who picks up that it was only three of the five -- who picks up that it was only three of the five? who measures and tests to make sure that you are doing the job in terms of getting the most efficiency out of here system? testing to make sure that you are doing the job in terms of getting the most efficiency out of your i.t. system? >> well, i think that each company owns that for their own i.t. areas, but it is a shared responsibility. >> you see, that is the problem. that is a problem. because you can't have all of these proprietary systems out, there and everybody thinks they have a new-age i.t. thing going, and then, you know, they have all got different systems for, oh, we are going to try to do this process more efficiently here and this process here, when we don't have standards.

we have basic metrics for clinical care, but where are the metrics for making sure that you are going to do the best administratively. we can do all of the protocols in the world when you come into the e.r. and say, wash your hands, get this glove, get that glove and cooperate this way and which want this person to be treated so they don't get an infection, but what i want to know, is what are you doing to standardize so that no matter what i.t. system or health system, we know that you all are doing, you know, not your own proprietary thing, but whatever proprietary thing is doing, it is good housekeeping seal of approval proprietary system that is squeezing out every bit of waste and duplication and redundancy that is out there. how do we know that it is really going to be working to the best effect that it is supposed to be? >> the gentleman's time has expired, but one of the witnesses may respond, if they care to.

anyone? i think that mr. kennedy raised some important points and the follow-up discussion that staff has with the panel, we will explore that. thank you, mr. kennedy. we are now going to go to round two of questions. just a little bit of housekeeping here. in the last round of questions, i'd asked mr. richards for information about his town hall meetings. you know about all of our town hall meetings, and we want to know about yours, and so you have internal town hall meetings and the audiotapes as well as copies of all the meetings and memoranda of the meetings and actions decided on the meetings and you will hear from us in a for mamal way, but we want you know that we will be looking for that information announced from chair here. >> will the chairman yield? >> the chair will yield. >> one quick question, we don't

know if these others have the types of materials and i am wondering if the chairman is planning to inquire? >> we will at mr. cummings' request that we will ask so we are not singling you out mr. richards, we will ask everybody to produce the same information. you may not call them town hall meetings, but we will try to find out what it is to try to organize the troops on the issue of cost reduction. thank you, mr. chairman. >> i thank the gentleman. and now -- >> mr. kennedy? >> in response to the questions that i asked if all of them could get back to me on actual tangible recommendations as i pointed out to what we can do to standardize incentives for them to have widespread standard of adoption of i.t. to incentivize these standards. >> mr. kennedy, this is not solely an investigative committee, and we also look for recommendations as to how the existing system can be improved.

so, along as we this system, i would imagine that you, ladies and gentlemen, have some good ideas, so thank you, mr. kennedy. mrs. farrell, let's talk about aetna. neat is the third largest for profit insurer according to "fortune" magazine, but the current management returned your company to profitability by shedding members. you made bigger profits with fewer premium payers, isn't that true? >> are you referring to back in the late 1990s and early 2000s? >> that you have made, and there is a point at which you shed some members, and the profits started to go up? >> there was a point in our history where we were as an enterprise not profitable, and one of the reasons, the big reason why we were not profitable is that we had underestimated medical costs.

>> oh, i'm sure. >> that is exactly the point. so how much customers did you have to lose in order to return to profitability? >> i don't recall, it was not looked at in terms of how many members we had to lose, but looked at in terms of what is the underlying rate of medical cost and how do we price appropriately there? >> "forbes" magazine said about $8 million and we will put na in the record. does that have an estimate of how much medical expenses the company avoided by shedding those policy holders? >> i don't believe it was looked at that way, but relative to the underlying medical costs. >> well, can you determine for us, and look at the internal memoranda at your actuarials and you should be able to figure out how much money you saved by shedding 8 million policy holders. >> i can look at that and

provide that information to you. >> i would appreciate it, because almost all of those 8 million people received their health insurance through employers and they lost their aetna health insurance when aetna raised the prices of the group plan beyond what the employers could pay. isn't that true? >> i would say if they left us, it was beyond that which they thought it was a reasonable premium, yes. >> and your ceo has spoken publicly about the significant investment in sophisticated technology and he started at the start of his leadership that the i.t. investments helped aetna identify employers for repricing. so i'm wondering, could you tell the subcommittee if aetna picks employers to shed by for example the type of occupation workers performed? >> no, that is not the way that we would do that? >> the age in the plan, the age of the workers? >> so, you are asking about the underwriting practices?

>> and do you -- does your i.t. system identify people by age, and do you pick employers to shed by the age of the workers in the plan? >> our i.t. system does not identify people by age. the way it works is that an employer will provide us with a list of their employees, and along with that list would be other requirements in order to understand write each one of those. >> can it identify how long someone has been in the system? >> it would identify how long they have been a member at aetna, yes. >> okay. do you pick employers to shed by claims' histories of the workers in the plants such as frequency of emergency room visits or clusters of disease like cancer. >> could you repeat the question? >> i'm trying to explore how employers get shed. do you look at claims histories

of workers in a plan? for example, if someone visits an emergency room frequently or is there a number of people with cancers or do you make decisions based on some of those principles? are any of those programmed into the information technology? >> no. we never drop a member, because of an increase in their medical costs. >> so, do you have -- like some will be a report that will be just spit out that says, uh-huh, cluster of diseases here, cancer, high cost, out. >> no. >> that does not happen. >> it does not happen. >> and you don't screen by location or zip codes for whether there might be -- or do you? do you screen by locations or zip code? >> one of the ways we price our business is to look at geography, because there are significant cost variations by geography across the united states today. >> are those cost variations determined by among other things

epidemiological factors? >> they are determined by looking at the underlying costs by geography and there can be significant variations just towns away from one another, and that is one of the things that we look at. >> my time has expired on this round, but what i would like to do, ms. farrell, so we can better understand the relationship between your information technology and how it serves as a tool for decision-making, if you could provide this subcommittee with a narrative so that we can come to an understanding of the relationship between the data that you gather and the way it is used as a tool for your decision-making with respect to your customers and whether they will continue to have policies. this would do shedding,

recisions, and even -- and any use of information technology that would be used to shed any of those 8 million customers. and you know, since we are trying to be fair to each and every one of you, this subcommittee is going to ask each and every one of you by letter to provide that information. the information technology that you have, and how does it help, you know, does it help you to decide which customers to shed, and how does it do that? okay. my time has expired. we are going to go to mr. schock and you have five minutes. you may proceed. >> thank you, mr. chairman, and i guess in response to some of the concerns raised i would only say that, you know, i think that most of us agree or at least i agree with the comments that were made earlier that health care premium costs are a

function of reimbursement rates, and so, it is disingenuous to compare a government plan to private plan when a private plan cannot control for costs and a government plan can. in other words, in a truly static system where all reimbursement rates are set at a medicare or medicaid reimbursement level, the system then would be forced to control their costs either by reducing quality or reducing options. i think that for those of us who share the concern of the movement towards a single-payer system, it is clearly focused on the quality of the care that the patient will receive and continuing the progress that this country and this health care system has made over those countries with a different plan in in terms of the innovation and

technology here in the country. ki only speak to my experience prior to being in the congress which is the state legislature in illinois and i witnessed firsthand what happened in illinois under then rob blagojevich's health care proposal which was all kids, which did similar to what the majority wants to do here, which is basically offer health care, a government plan for all kids in the state of illinois regardless of income. i saw firsthand in my legislative office individuals who had children insured, individuals who were dually employed by an employer who offered a private health care plan and who opted for savings of anywhere from $50 to $70 a month to take their child out of the private plan and enroll them in the all kids medicaid reimbursement level health care plan. now, it did two things. number one, i had a very poor legislative district, 40,000 voters and 20,000 of them on

food stamps. the people living in poverty who otherwise had access to their care, their access dried up and went away. today, there is not a dentist in the city of peoria, illinois, that will take an all kids' patient. second, it ballooned the deficit within the state of illinois' medicaid program, all kids program, a wnld renow nine months late in the reimbursement levels and i throw this out as a case in point example and mic microcosm in the country where we have tried competition against private insured, and second, and to that point, i don't buy the concept that the solution to greater quality, greater access and lower costs is the government. to that point though, i think we need to do a better job of

providing if we understand that we are trying to control costs, and if everyone accepts the fact that health care premiums rising are making it more difficult for businesses to provide health @@

the connection doesn't seem to be in the mind of the patient as he or she accesses the health care system. so what tools can you in the insurance industry give to consumers? how can we look at maybe reforming the way in which people buy their health care, not the premium, but rather that actual service how the buy it. i understand you can't do it with emergency care, but if i go in, and i live in a relatively large city of 150,000 people, and a lot of places offer mris and each one of those locations charges a different rate. yet, that information is not readily available to me as a consumer, and i think that is a part and parcel to us doing a better job of controlling the costs that go and drive up health care premiums, so if you could answer that question, i'd

appreciate it. what are you doing now and what could we be doing to give those tools better to consumers? >> the gentleman's time has expired, but the witnesses can answer the question. go ahead. >> congressman, i can answer that for my company wellpointe, several years we embarked on a journey to increase the transparency so that consumers more easily compare the prices of commonly-used services within their geographic area, because you are right. there is a large disparity between an mri in one part of the city and another part of the city and a cost for commonly knee replacements in one part of the city versus others, so we created anthem care compare which is a website to analyze the top 40 elective type procedures and a member can go into the website and type in the zip code and it will identify

different providers in the area and the costs associated that would be charged by the different facilities for those areas, plus we try and tie in as much quality, public quality available information available to the members so that if you are considering having your knee replaced at a certain facility, and how often do they do that procedure and what are the success race and the readmission rate for that. we have rold have rolled it outf the markets across the country and now providing that service to many blue cross blue shield plans across the country. that is one example of how to increase the transparency. >> congressman, you mentioned mris which is a great example because in some geographies the cost of an mri can vary by 100% or more. at cigna we have provided the cost of mris on the website so individuals can go to look it up. the vast majority of a health care providers who work with us

allows us to do that and there are some who did not allows to show the transparency, but the vast majority do. it does help. the other thing i would say, and along the lines of tools, that you need to provide the incentives to individuals and i think that one of the cigna's customers is safeway and they are a marvelous example of a company that has worked with cigna both to increase the cost and quality transparency, because it is not just cost, but quality varies as well among their employees so they can get the right care, get it at the most efficient price. they also send people for appropriate behaviors whether it is not using tobacco or exercising, because at the end of the day, for safeway, if you have a healthier employer, it is also going to be a lower cost employer. -- lower cost employee. >> i thank mr. schock for his

presence here. if you is followf -up questions make sure you put them in writing and we will support them. you brought up that issue and i want to, as chair, point out that when you brought up the issue of car insurance, and compared to health insurance, i mean, that is like one of the debates right now. and just what occurs to me is that if you wrecked your car, you can get a new car. if you wreck your health, you're dead. you know, unless you believe in reincarnation. mr. schock, thank you. the chair recognizes mr. cummings. >> you know, as i was sitting here listening to you all, i was saying to myself. boy, they sound real nice. i mean, it sounds like

everything rosy and it is amazing the people who sat here yesterday. made us -- said some things that i thought were very damaging to the what you all do everyday. i am not talking about you all individually, of course. and the thing i guess that i'm just sort of wondering about and they made a big deal of this whole denial of claims. i specifically asked them the question about whether they felt that things were worse or better since the clintons tried to get through health care reform, and they said that they were far worse. we are guard to denial of

claims. and so, mrs. farrell, i am going to go to you, because for one reason, because you have said something that interested me. you had talked a little bit earlier about claims that there were no, there was no one, that only -- well, maybe it was several of you said that only doctors deny claims. is that right? so you all are telling me that there are no other non-medical people who make decisions that a person cannot get a certain treatment paid for. is that what you are telling many e >> just to clarify. what i said is that there are no medical decisions or no medical denials that are made by somebody who is not a physician. you can deny a claim for a non-medical reason, and that decision can be made obviously by a nonclinician. >> and so i take it that those kinds of decisions made everyday

by nonmedical people? >> nonmedical decisions, yes, can be made by nonmedical people. but if it is medical-related, it is made by a physician. >> and so, a claim, and a claim is for service, and i want to make sure that the definitions are right again, this is for services already rendered. a claim is for -- i see you shaking your head, mr. bloems that right? >> we are as a group struggling with the definition of denial of a claim is. to me, when i cited what the survey said on about us, a claim -- there are basically three kinds of claims. and the first kind has been really enunciated here which is when you get a duplicate claim and rendered service, as you said and then get a claim and then another claim comes in and you have probably paid the first one. in the denial rate in the numbers of the 5.4 and the 8.7

that medicare part b has, in those claims the biggest cause is duplicate claims, and the next kind of claim is for experimental or investigational which there was no preauthorization which was discussed earlier. and the last kind is where the employer has through the policy terms decided we are not going to cover that kind of a claim, that kind of process. that kind of a procedure. now, the other thing that we are struggling when you are asking questions, i believe you are also talking about coverage determination whether people have coverage in advance of when services are covered. >> okay. i got to ask you this. i understand that a person can have the treatment preauthorized and get a preauthorization number and get treatment and still, the payment for that same procedure may be denied. is that true? >> in a coverage determination, there is an initial decision

made about whether this procedure is covered. that in our company like in the case of ms. farrell's case, that is done on a denial of coverage for medical reasons is only done by a licensed board certified medical director. >> and so, none of you all then nobody up here has anyone who denies a person treatment? in other words, that is -- in other words, how many of you all deny folks any of you do, have people who you give bonuses to or give financial incentive for denial of treatment? nobody. >> right. i answered before, neither, none. >> none. okay. i just think that -- i think that the based upon the testimony that we got yesterday, the testimony was clear that there are many, many instances

that where insurance companies are basically intentionally and maybe coverage, if you want to call it coverage or claims or whatever holding back decisions and literally waiting for certain things to happen and sadly in some instances, death, and then, and the person is denied one way or another. so, as the chairman says, here, the difference of an automobile, the person dies. that's sad, sad situation. >> the chair recognizes mr. conyers and you may proceed for five more minutes. >> thank you for your generosity, mr. kucinich. ms. farrell, are you aware of the report from health care for america now on july 15th, that

reported that profits at the ten largest publicly traded insurance companies rose 428% from 2000-2007? >> i am not aware of this specific report that you are referencing, but aetna's profits for every dollar we take in, we pay about and make about five cents in profit and pay about 84 cents in medical claims. >> well, what about you, mr. richards, are you aware of this report? >> i'm not aware of that report, but i do know that if you look at cigna's total profits globally we make about $1.66 per customer per month. >> i see. mr. sassi, have you ever heard of this statement? >> i am not aware of that report either. >> okay.

>> and ms. reiten, have you heard of this? >> we wouldn't be in there because we are a noninvestor company. >> i know mr. collins has. >> well, i have seen that report in the newspaper,+++[véüh?pl2#÷0

>> i don't want you to comment on your company. you're not familiar with the statements. >> i'm not familiar with the study or the statements. >> okay. >> well, how long have you been in the business? >> i have been with my company since 2001. >> okay. have you ever heard of health care for america now? >> no, i have not. >> okay, well let me ask you this question. are you familiar with a recent study of the american medical association that 94% of the insurance markets in the united states are highly concentrated? >> i'm not -- i would -- >> you're not familiar? >> not with those statistics.

it's not an unfamiliar statistic in terms some markets don't have a lot of competition. >> well, do you@@@@@@@@)@ $@

never contested that the ten largest companies in health insurance, the ceos compensations totalled $118.6 million. an average of $11.9 million per ceo. let's save some time. anybody ever heard of that before? nobody. well. you want a citation for it? not particularly. okay. all right. let me ask you this, miss farrell, what is your annual compensation per year? >> my annual compensation is

something that is very private to me and something that i would be happy to submit -- >> wait a minute. you don't want to tell me? is that what you are saying? >> i consider my compensation to be very private. i would be happy to submit it to the committee in writing. >> but you don't want to say it publicly? >> no, because i consider it to be private. >> before you came, we asked the witnesses to submit information about their compensation in writing. it's a choose not to answer at this committee meeting, but they will present it to us in writing. >> okay. >> we can still get that information. >> that's fair. does anybody here -- i've never had a hearing where six executives of health insurance were all on the same panel. this is a new experience for me.

do any of you want to tell me what your annual compensation is for the record without having to submit it in write iing? >> if the witnesses care to respond, you can do that. if you don't, we certainly want you to submit it in writing. >> what do you want to tell me. >> i make $728,000 in salary. >> okay, i appreciate that. what do you want to tell me mr. bloom. >> mine is $545,000 a year. it's a matter of public record. >> sure. i thank you for that. what do you want to tell me mr. sassi? >> i'd be happy to provide it in writing, but i consider it a privacy issue and i would be happy to submit it in writing. >> okay. >> if -- before we go to mr.

kennedy, i just want it understood that you have agreed to submit this information to the committee as long as we have that agreement, that's fine. you can choose to answer the question now or in writing. it's really your choice. >> i just, to yield just to be happy, john was bringing up a point, i think folks hereofiously working as -- in a field that's perfectly legal and set up by our society to earn what they are doing. nothing wrong with that. i think what is wrong is the gentleman is trying to point out is last year, the head of cigna earned $11 million. now, if you are going to talk about where that money is coming from, it's coming from denied claims. the head of the united health

group earned $9.4 million. these are public records. you don't have to ask anybody here. they are nice -- i'm sure they love to be called senior executives. frankly, i think they hope to be senior executives with those kind of pay scales. they are not, i'm sure, at that level yet. the point is the industry is allowing for these kinds of exorbitant pay at the very top that beg the question, it's an allowable industry in your country. we need to know, kind of what is this a matter of where the dollars are coming from when people are paying the premiums and getting rejected for health care. i'd appreciate the questions you are asking, i also understood the fact these individuals here have every right to say and do what they are doing --

>> mr. kennedy, if i may. his time is expired. however, we will now go to you mr. kennedy, if you want to yield anytime back to him. you can proceed for five minutes and we're going to go one more round after that, then be done. >> okay. i'd like to go back to the whole idea of how -- if insurance has thus far not gotten around to figuring out ways to help the government or society change reimbursement reform. if we had known for years our system is upsidedown, all we pay for is sick care rather than health care, if there are simple ways for us to keep people from being frequent fliers in our

emergency rooms, if we just did x, y and z and that would lessen the pressure on you to charge your customers exorbitant premiums, then why haven't you, in your industry, taken upon yourself to be the biggest advocates for insurance reform over the last 20 years? furthermore, what i don't get is back home, like most of my businesses for the most part are passive when it comes to their insurance premiums. they let their insurance carriers dictate to them, here is your premium this year. it's the insurance companies that work for the company they are subscribing for. they have been hired to do their policies for. so, i just don't, for the life

of me understand why if it's in the interest of their clients to reduce premium costs why insurers in this country haven't been at the forefront of the health care debate saying listen, here are the ways we can restructure the health care market based upon a capitalistic system where by it pays to have better care at reduced costs. that's what i can't figure out, mr. chairman. if it's really about making money, we know there's plenty of money to be made. why can't they build a better mouse trap to make money and also save money? and give us the answers? you know, we're just trying to do what i think is consistent with what they are trying to do. that's lower cost and build quality. they are the experts. they are in the private sector. why aren't they giving it to us?

why do i have to sit up here and ask about things that i am not that educated about because my staff person puts it in front of me and they are going to promise to put it to me on value based streamlining and engineering. it can't apply to health care. all of these kind of thing that is we are going to have to put in law to enforce insurance companys to bring their costs down. what do we have to put that into law? i'm sure they don't want to be regulated more than they are. tell us why. we are being pressured to bring the deficit down. we have an enormous deficit that's going to swallow up our money. taxpayers are going crazy. they are getting on our tail for having a big deficit. health care is one of the biggest nuts we have going forward. help us.

one way or another money is going to have to be streamlined. it's going to be done at the expense of our consumers, which we don't want or efficiently with quality in mind so people don't get their health care cut because we haven't been on the forefront of making the right decisions that help their continue in a more sufficient way. maybe you could comment on why you don't think you have ahead of the game in terms of getting better reinforcement. why does the government have to do all the incentivizing for health. why haven't you been out there for years doing this stuff? >> congressman, i would love to respond to your question. first of all, there are things we can do personally. at cigna, we do things to improve the health of our custome customers.

for instance, we have a gaps and care program. we monitor to see if they are getting the care they need. somebody who had a heart attack, we outreach the individual's doctor and the individual and say shouldn't this person be on a beta-blocker because for most people, it's appropriate. if they don't take the drug, they are likely to have another heart attack. we are actually increasing pharmaceutical claims for the better health of the individual. it's something we can do and do do today. relative to the payment reform question, again, cigna is working with a variety of health care professionals. i referenced hitchcock in new hampshire. we are working with five other entities in the country for payment reform.

we have a patient center where primary doctor coordinates the care. it's a complex system. if somebody is sick, they have a lot of different doctors. having a primary care person look at the care is very important. a lot of primary care doctors can't afford to do that because of the rates medicare pays them. it's tough to do that. the medical home is a promising pilot we are trying where we are paying extra money to allow them the time to coordinate the care. i think there are things we can do individually and in partnership with health care professionals and things it government needs to help on as well. cigna and the industry have supported reforms for a variety of things we have mentioned at the committee today. we need government to work with us to help reform as well. we look forward to working with you.

>> my point is it works. why are we piloting it? we are doing it because we are slow walking something that works. it's been demonstrated again and again. it makes so much common sense. it's like the trigger thing. we are doing what's inevitable, but it's going to take an extra four or five years before we take it to scale because there's too many financial interests we are going to have to tiptoe around to get it implemented. if you stood up and said hey, we know medical homes are about making more efficient, giving the dock and gate keeper more time. 80% of the dollars spent on 20% of the people. they are the highest users of health care. it's where we get the most money. let's do it. boom. let's go. the reason we slow down is because of inertia.

everyone is trying to protect their turf. at the end of the day, we are going to hit the wall. when we do, everyone else who is well off is going to be fine. people in the middle and the bottom are going to be hurt. >> the gentleman's time expired awhile ago, but everyone in this room and everyone watching knows how important what you just said is. we're wondering if there's a response? does the industry care to respond to what mr. kennedy said and what he's providing as a wake up call here? does anyone care to respond? >> we're going to have another round, then wrap it up. anyone want to respond to mr. kennedy. >> chairman kucinich. for the record, we'll submit proposals with the

administration of $500 billion of potential savings -- >> over what period of time? >> over a period of time from@@

many of those people had insurance. so, today, we are talking about this business model. but, we also have to understand, we have great respect for you being here. we also have a great understanding of your position and your political power. let me give you an example. the insurance companies are so powerful that you are able to take hr-676, medicare for all off the table. right at the beginning of the discussion. for either party. both parties, took it off the table. 85 members of congress that signed on to it.

we drafted it. 86, thank you. but, the point is, that you are able to exert your opinion. it lashes with your business model. we understand that you are very influential here. based on your influence, we are seeing the so-called public option that would provide competition. we understand you feel it wouldn't be productive. based on your influence, the public option looks like it's going to be very difficult to get into a final bill. of course, the industry has had an influence on shaping triggers and co-ops. what mr. kennedy had to say is so important. where his comments lead to is that you should be thinking

about the fact that the business model you have could end up being -- could end up killing the goose that laid your golden egg. you may be reaching an end point as to how much medical loss ratio you can go before people start to say what's going on he here. how far can your executives go making millions of dollars a year while people's claims are being denied. you say there's no connection, but the public make as connection. look at where we are headed towards. this is where your presence here is not a small matter. we could very well be headed toward a condition where health care reform in america is really

more of a continuation of insurance care where by the 30 million people would be covered by hr-3200. without a public option, 30 million people would be pushing private plans. they have to choose among private plans. if they don't do that, they could be penalized. it's extraordinary. but, with that kind of power, i would hope you start to think about a different model of business as social responsibility. i'm not lecturing you here, i'm just sharing some thoughts. the insurance industry, because of changes in the global climate is due to take an enormous hit, coastal areas over the next 40 years, there are areas we should be working together.

but, on health care, you may eventually want to think about what it's going to be like when you wind down your health care products. i think, sooner or later, whether it's this decade or another decade, you are moving toward a position where people are under insured, deductibles are going to be out of the reach of more and more americans and they are going to put it on you. you know that. so, you know, i didn't call you in front of the committee to embarrass you, it's not my intention at all. we need information about how your business model works. we understand, you are not charitable organizations. it's not why you were formed. you're responsible to shareholders. if your ratio changes, wall street punishes you, too. is this business model

sufficient to provide health care to the american people? there's a collision here. you happen to be at a time and place where the collision is happening. i'm going to ask a final question as i wrap up my time here. yesterday, we received testimony from aaron ackley of montana. aaron's father, william, his obituary is part of the record. he had a request for a bone marrow transplant. it was denied coverage on four occasions. it caused a delay in cancer treatment. he ended up die frg the cancer. aaron told this committee he had been enrolled in medicare. had he been enrolled in medicare, he would have received his bone marrow transplant right away.

government run medicare provides health to senior citizens, standardized forms, a minimum cost. a fraction of yours. i'd like to go down the line and answer this question. isn't it true that your reason for not adopting the medicare standards as your own is that you could not deny payment for expensive treatments like the one i referred to. mr. collins? >> i can't answer that. i'm not familiar with the medicare guidelines. >> like him, i am not familiar -- >> miss farrell. >> i'm not familiar, either. >> nor myself. >> our chief medical officer

used to be the chief medical officer of cms. had he been here, i'm sure he could have answered it. >> i'm glad you are here because i got a chance to ask about your town hall meetings and i'm really interest ed in that. >> i have the same problem everyone else mentioned, one of our chief medical officers could have answered that question. >> see, i mean, you know -- you may not be as familiar with the medicare standards, i'll accept that answer. but i think you understand why i asked the question. we are trying to get to the genesis of the business model here. how do you make money? many americans believe insurance companies make money not providing health care. your first obligation is to the stockholders, shareholders, then you have an obligation down the

ro road. you have to have an obligation. you pay. you have a good batting average. mr. conyers, do you have five more minutes for questions? >> i'm so nearly exhausted, i hardly have anything else to say. but to thank you for this meeting and to thank our witnesses for holding up. but, you know, it's been made public that the american medical association sort of come out for the obama approach. you all have heard about that? have you? no? yes, no? okay. you don't know if ama is with obama or not. what about your companies? have your companies said

anything one way or the other about obama's strategy of health reform? anybody? you don't know. >> congressman, cigna came out as others in the industry and supported many aspects of the president's plan. >> okay. let me put it more delicately. are there parts of the obama hr-3200 approach that you are -- that your company is for and other parts you may not be in full accord with? is that fair enough? everybody shakes their head. there are parts you can go along with and some parts, obviously public option is not one of your favorite parts of the bill, where ever it may appear. there may be other things.

but there are things you like. >> there are many things we like, yes. >> pardon? >> there are many things we like. >> well, thank you. let me ask you about the baucus bill. you got a reaction. did he make a little impression on you or somewhat favorable? how does that resinate with your company -- >> congressman, from csigma's standpoint, we are still reviewing the details of that bill. >> yeah, but, so am i. we all got the news at the same time. it's been on television, newspapers, commentators, doctors. come on. i mean, how long do you have

to -- how much study do you -- >> there's no legislative language that's been shared yet. we are studying what's been released. >> really? >> that's my understanding, yes. >> but, he's been preaching about his bill and copying headlines all over the place. you say there's been nothing specif specific. there's a bill out. it's got the chairman of the finance committee in the senate. well, i tell you what, could you -- i know you have a lot of assignments coming here today. could you let me know when you -- when your companies have examined it sufficiently to let me know what you think of it? okay. all right. thank you very much.

now, finally, we had testimony in the judiciary committee under subcommittee chairwoman linda sanchez from doctors that there were 1 million medical bankruptcies in the united states. that is personal bankruptcies caused by medical bills. ever hear of that? nobody has heard of that? okay. well, i can't ask you to comment on that. hypothetically, if you heard and learned about that, would that cast some concern on you about the problems that individuals

are going through when the largest cause of individual bankruptcies in the united states are due to medical bill that is people couldn't afford? you'd be concerned? may i send you some things? you're sending us a lot of things. can i send you more information about that subject? okay. thank you mr. chairman for your generosity. >> i want to thank the gentleman. finally, congressman kennedy, you may proceed for five minutes. >> thank you mr. chairman. thank you for holding this. thank you all for your patience there afternoon. i would ask all of you, if you would just give me an affirmative in working with my office and closing a loophole that appeared in last year's

well stone mental health act bill. we imply it's all insurers for mental health@@@@@@rr applies to all of

you is insurers, the kids who need it the most, get that coverage as mandated under the well stone parody bill. >> cigna supported the bill and would be happy to work with you to close the loophole. >> that would be great. william gardner and my office, if you would be in touch with him. we want to make sure it's facilitated in the bill so the kids don't get disrupted in their health insurance coverage. obviously, i had a lot of other things. i wanted to make sure you tidy

that up. thank you, mr. chairman. >> thank you very much mr. kennedy and mr. conniers for remaining. this has been a hearing of the domestic policies subcommittee of the oversight and government reform committee. we have gone over three hours now and the witnesses have been much appreciated in your presence there. the title of today's hearing, between you and your doctor, the private health insurance beaurocracy. i feel as mr. kennedy implied, we barely scratched the surface here. i hope the witnesses understand and hope you feel that this committee treated you fairly. there's no browbeating here or trick questions, no attempt to try to force you to give an

answer over something that you are not ready to do at this moment. that's the way we are going to continue to proceed. we are fact finding investigative and going to try to get information from the industry so we can understand your business model better. while i try to conduct the hearings in an impartial way, away from the hearings, i'm a strong advocate with the bill i wrote with john conniers. i don't let it interfere with the conduct of the meeting. i want you to put your point on the record. while you are treat ed fairly here, we are hopeful that you are going to treat the american people fairly. i think as we move forward, this issue of awareness, we're going to send you information. it's a time we can become more aware of the business model and

why we have great concerns and why there's a national movement to move away from the model you spent your life building. so, it's a great time for this debate in the country. health care ends up being a flash point. you know this. people losing their jobs, homes, retirement security, investments and you are right at the point where it's a flash point. so, let's see if there is a way we can find to best serve the american people. it's why we are in congress and i hope it's what you will conclude as a good purpose to be in business. i'm congressman dennis kucinich. this committee stands adjourned. pwpwpwpwpwpwpwpwpwpwpwpwpwpwpwpo oooooooooooooooooooooooooooooooó ñññññññññññññññññññññññññññññpgg lllllllllllllllt ;;;;;;;;;;;;;;;;;;;;;;;p;;p;;;;;

colleagues, there is a consensus that we have to do something. keeping the american people healthy is not a republican or democratic objective. there is a conference that they are sponsoring across town on the early education of young people.

one focus of that is ensuring that kids are healthy when they are in their youngest years and come to school ready to learn. their educational outcomes will be more successful as time goes on. at the other end of the chronological spectrum, vermont is the second coldest day in the nation in terms of age. as we get older, we have to -- oldest state in the nation in terms of age. we have common interests across the political spectrum. we have to make sure that congress is it right. i mentioned the economy. over the past year, the state has been faced with some real economic stress. even before the current recession, i talked about the affordability agenda. one key element of that agenda is the cost of health care. it is squeezing the budgets of

families, small businesses, and governments as well. and she noted a few minutes ago, i work with republicans and democrats in our legislature to pass comprehensive health reforms and really make a difference for people in our state. the successes that we realized in vermont have not come easily. they required more compromise, and willingness to address the tough issues are around health care. i think they can be a model for reform across the country. as we come out of this global recession, the longest and deepest since the great depression, we need to make sure that we are ready to grow as a nation in terms of economic health and the health and well- being of the people who live here. we are going to have to find some common ground. i have decided to make health care reform the focus of my yearlong initiatives as chairman of the national governors' association.

after 6.5 years of working, i welcome the current discussion in washington. in order for the state reforms to be successful, the state government should be a full partner. reforming one sixth of our national economy is no small task. it is a tough job for the congress. i certainly respect that. whenever they're talking about health care, and they are not discussing a single system, but a complex web of political, economic, and social issues that have a profound impact on the american people. it is understandable that americans have the right to worry about how they will affect the quality and affordability of the care that they receive. they have the right to worry about the inaction of how a quantity, not quality driven system will help. and there is nothing wrong with the lively and spirited debate on an issue like this one.

citizens of march have an obligation to speak openly and honestly about the costs and consequences of all of the reform proposals being advanced. the debate seems to have a way of veering off track, away from our common goals. my greatest concern about the current political discussion in washington is that it is to focus on the wrong end of the health-care debate, mainly the payment structure we have in place now. with so much time and energy focus on where the money comes from, no matter who pays, health care costs are on track to bankrupt our families if we do not act boldly in order to reform our system. the nation spends almost $7,500 per person for health services every year. that is more than double the national average for the other industrialized countries are brown world. the outcomes for america are no

better. it promotes duplication and waste. it too often does not encourage disease prevention, instead opting for expensive care after people are already sick. rather than oversimplifying the debate about how we pay, we need to put our heads together and talk about how we make health care more affordable and accountable across america. states like vermont that have demonstrated how innovative reforms can increase access to care can be a guiding light for the nation as we continue this debate in our capital. if there is one thing that i have learned about reform, it is that coverage is not enough coverage without significant improvements will eventually cause further strain on an unsustainable system. true reform needs to have cost

drivers. we need to have changes in how we deliver care, how we realize health and wellness to realize the population. these are things that will truly reform health care and contain spending that is out of control. we have to drive value in the system. it will take a lot of effort. in vermont we have displayed a reputation for having comprehensive reforms and incorporate aspects of high quality care along with expanded coverage. it is a simple reality that when americans are healthier, they spend fewer dollars on health-care services. by combining health care and information technology and how we pay for its, we can eliminate duplicative services. the blueprint in vermont and what we have in place six years

ago, we utilize that helps teams to provide coordinated services for primary care practices. medicaid and private insurance companies along with employers are participating in this effort. >> yesterday's announcement will now be able to participate in this kind of exciting and state led reform. these are not just theories about what will happen sometime in the far future. these reforms are having a real impact on the lives of people today. vermont is not the only place where reforms have been undertaken. there are programs in minnesota and washington and in other states that are removing care and removing excess spending in the system. they can all serve as models for the state government and other states. coverage efforts really need to go hand in hand. many governors have expanded

coverage through private and public programs to make sure that folks have access to republic insurance. and needs to be more than insurance in name only. they need coverage that helps them stay healthy and prevent disease. we focus on improving the delivery spending -- a system it will improve health outcomes. and is not just important for the health of families, it is critical for state government. that has to be done right. my colleagues are watching the debate in washington closely. the impact on their state budgets could be enormous. health care reform that doesn't respect the fiscal realities of state for government will not only failed to improve the system, it will sap resources from other efforts such as improving education, protecting the apartment, and helping our economies. states cannot print money. we have to balance our books at the end of every fiscal year. doing so is not getting easier.

states are facing a projected budget shortfalls of over $200 billion in the coming years. democratic and republican governors are forced to make painful decisions. 28 governors proposed spending cuts to higher education. 20% recommended cuts in k-12 education. some governors recommended tax and fee increases, totaling nearly $24 billion. vermont is no different. we learned last month that our state revenue projections are down 2.5% right after our budget was passed last year over my objections. to give you a sense of the to give you a sense of the gravity of the situation even under its most optimistic projections, state revenues will not have recovered to pre- recession even by 2014.

states are going to have to make even more tough decisions to balance our budgets and avoid increasing taxes to a level that will stifle growth and innovation. federal mandates that are not fully funded, at health reforms will bust budgets and ultimately failed to achieve their objectives. health care reform of the federal loveland its respect the fact that implication the state level is not the up-one-size- fits-all. governors have it critical role. it will take a lot of potential restructuring of state governments to move this forward. states will be where the rubber meets the road. leadership and experience will be crucial to succeed with transitioning to a reform system. they will insure that they have the flexibility to implement those reforms. my colleagues are working hard to ensure that policymakers in washington hear that message. flexibility is the key to the

innovation critical to the success of their reforms. we realize that there will be adapting in the state capitals to whatever passes here. a key component is to help governors understand what national reform means for them and their programs. we will need to get up to speed so governors can make decisions on the timing and process of implementation. they need to approach its strategically. if health-care reform becomes law, many will be left to federal agencies. we will need to work with the agencies to ensure the concerns are noted. i want to offer some personal views on the current congressional discussions. a lot of work has gone into developing the house reform proposals. they have been listening to state concerns and made some changes in their proposals to address them.

of all governors believe that improvements are needed in the system. their initial reactions differ. some are opposed to any unfunded mandates to states all others signaled their strong support for the proposals. all governors need more details. they are all concerned about the impacts to our states. i wanted to mention three areas very briefly. on insurance reform, the finance committee lays out new federal standards. it appears to give states flexibility to make changes and others that states believe will supermarkets. the amount of state insurance pre-emption is limited and the day-to-day insurance is deaf to the states. these are not changes we can make with the flick of a switch. that is what it does occur -- is critical to phase in any new rules. we need to make sure they about the experts in the state's to put them with existing structures and regulations that

we already have. the finance committee seems to recognize the value of the help the exchange concept. a complex array of court commission issues cannot be dictated from the federal level. but it is critical that states run the six changes brit several pioneering states have already demonstrated that they can make it successful for consumers. we know that states need to thoughtfully develop the relationship between the exchange and state medicaid programs so that low-income individuals can get the appropriate care. they also need to provide food stamps and welfare systems. finance committees, entrance reforms still need work. i think they're heading down a path that seems workable for the states. governors remain most concerned

about the medicaid expansion and tremendous liability for states. the original house committee bill are recognized our precarious fiscal condition by permanently funding in medicaid expansion. governors have discussed the expansion at great length. the chairman's proposal has moved far going from 0 to an average of almost 90% federal funding over the long term. there is still enormous risks of four states. many states are concerned that medicaid expansion will create upward pressure that is unsustainable. unsustainable. this is a reasonable trend to when you bring more people into the system on medicaid, it is reasonable to expect this trend. there are others who are eligible but not enrolled. by some estimates there will be 6 million of these individuals coming in through the woodwork.

they should be treated as part of the expansion population, and i believe that they should receive an increased amount of money. as congress is moving forward, we hope that they will work with the governors to craft a successful reform. but they need to understand that these can only be accomplished with a partnership. the prescription for health reform will make certain that we are successful and accountable and that we have the opportunity to fulfill the role as leaders, and the cost drivers to improve the quality of the system and provide more insurance coverage. this is an important issue on the minds of all of the governors. i am pleased that through the national governors' association, we have worked to communicate with the congress to articulate the concerns, and before all of this is said and done, those in the congress will

find a way to reach across the aisle to find bipartisan solutions that will improve the health outcomes for the people of the country. thank you all very much indeed. [applause] >> we have a lot of questions here. what lesson should washington take away from your experience in passing health reform in vermont? >> the key to what we have accomplished is a comprehensive approach. it is not just adding more people to medicaid or other publicly supported programs. it is changing how we actually deliver care. let me give you a specific example. we have community health teams. we have three communities across the state that comprise

10% of our population where we have a primary care delivery model that is exciting and successful. we have a medical home for vermonters so that their affiliated with the practice brit a dietitian, whatever is necessary to fulfil the needs of the individual patient. at the white house health form that i was privileged to host in march, a young woman from the northeastern part of our stay parked about her experience. this is a young woman that suffered from the chronic disease that was not making much progress that was out of work and expensive to our system. when she got into a practice that constitutes a medical home with her community health team, her life began to turnaround.

she has a team of professionals they're really care about her and provide the ongoing care that is necessary to get her on the road to recovery. she is managing her illness. it really can make a difference. the message is that there needs to be a comprehensive approach. it is well thus, prevention, management of chronic illness, providing an incentive to providers to provide a good quality of care. we pay an incremental bonus to our primary care providers in this program based on their adherence to standards of the national council on quality insurance. they get paid more for delivering better care. in medicaid alone we have seen an 11% decline in the number of admissions to our hospitals and

a 6% decline in the emergency room usage. i think that we have a model that works. we have saved nearly a quarter billion dollars in medicaid over the last few years. for vermont, that is a lot of money. >> what is the one aspect of vermont reform that you have not seen represented in the national health care bills? >> to be honest, we have not seen the bill from the senate finance committee. i am not sure i could answer that specifically. i do appreciate the chairman of reaching out to governors. we have had a number of meetings and teleconferences. he has reflected some of the concerns we have raised. he has moved in the right direction. most governors want to see what

it means to their individual states. until we have the language of the legislation, i am not sure i know what the impact is in vermont. there were some numbers floating around. i want my medicaid director to a put in the number from my state. we have been so focused on medicaid expansion that we have not had detailed conversations about reform. to the extent that it does not incorporate what i described to you as a model for a delivery system reform, that needs to be added. >> is there a health care reform that vermont tried it that was a mistake and that you think that federal lawmakers should avoid? >> probably the ones that the legislature passed that i vetoed a few years ago. namely tax increases. the reason i say that is that

you have to get costs under control. i have often said to the people of vermont that whether you are for publicly funded health care options or private options, it does not matter what pocket we pay for it out of, all of their pockets are going to be empty unless we get the cost of health care under control. unsr no carrierringconnect 1200 for health in 2003. after six years, we have been able to achieve some of the results i have described. it takes time and dedication and commitment on the part of

insurers and providers and everybody in vermont to turn the proverbial battleship and put things in a different direction. we have demonstrated that it can work. adding more money to the system i do not believe economically or fiscally is the way to go. >> what was your political strategy in vermont that help you avoid some of the political pain that is going on now like the tea party movements? >> there was a little pain. after we passed a bill and they passed a bill in 2005 that i reject it, we came back in next year and work together and accommodate the different points of view and got a bill passed that was not everything i wanted, it was not everything the legislature wanted, but it was something we could agree to. i was pleased when a senator

from the other party said, echoing through the first round with the veto really resulted in a better bill. it was not a better bill entirely, but there is a level of mutual respect. vermonters are ruggedly independent. we care about the people we represent. despite our differences, we are able to come together. >> what is the status of the health and information exchange in vermont? >> we began a program a few years ago, the vermont information technology leader said that has public and private participation in establishing an exchange for our state. i believe strongly that the information technology is one key to cost containment and

improvement of care. we are seeing real evidence of that as well. there was a recent report in a publication. did you write that question? this highlighted this in a couple of places, notably in the city where we have the regional medical center. there was a medication history pilot project. if we go into the emergency room and you are part of that community of care, your history is on mine for the emergency room doctors to see the soon as you come in the door. there was a case reported where a woman came in and had stomach pains of some kind. without this capacity to get the information immediately online, who knows what would have happened?

in fact, the doctor pulled the history up on the screen, talked to the patient, found that she had not taken her medication for for a problem. the care was delivered quickly, expansively, and correctly. i believe that technology is key to get providers the information that they need to make real time decisions. it is vital to this program we have launched with our providers. we have a program where we are getting laptops to providers. we have a website that we have been working with to facilitate this. we are going to make sure that the entire state has the capacity.

>> speaking of the emergency rooms, this question asks, a physician just call me that the emergency rooms are becoming dumping grounds of the nation's health-care system. how do you fix that in any health care reform? >> we are making progress on that front. we have seen a 6% decline in the emergency room usage by our medicare population because of our blueprint strategy of focusing on preventive care and early care and screening and making sure the people get their russet-regular physical exams and putting community health-care teams in place. it really does work. i think most americans would rather spend their time somewhere other than the emergency room. if we could give them the tools, the care team, the self- confidence to do what is necessary to take better care of themselves, then we can achieve those results. we have seen some progress in

vermont. it is a model that can work elsewhere. >> how does your program to increase access for uninsured or underinsured people? what evidence do you have that they are getting access? >> as you noted in your introduction, we have reduced the uninsured rate from 9.8% to 7.6% in the couple of years since we launched our efforts. the majority of those uninsured are eligible for medicaid, they just do not sign up for it. we have extensive average programs. i guess we will have to make them better. we have provided affordable coverage as a result of our reforms. what i have done i think is a good model. it is a seamless system of access based on family affordability.

we have the basic medicaid program that requires no outlay on the part of the participants. the vermont access program is a program that requires a premium based on income to participate. we have a partnership with some private providers where participants pay a premium based on their ability to pay. eventually, people are able to afford insurance on their own. that is what we need to do. the problem we have in america is the benefit cliff where you are either on a public program for you are not. there is no incentive to better the yourself or improve the economic condition of your family. that is not right. we have to find a way to make a grudge with its system of

access. that has been the philosophy we have used in their state. we have thousands of people covered. we will keep at it. >> i want to know who the person is with bad handwriting and good questions. given the costs in vermont have gone up more than the national average according to the health care administration, what evidence do you have that the medical home pilots will save money overall? >> in medicaid, we are saving money. according to our medicaid office, in the four chairs of the global commitment waiver we have in place since 2005, our expenditures are $245 million less than they would have been under the traditional program. i mentioned the drop in utilization in hospitals. i am very proud of that. we have work to do. we have an infrastructure in

vermont that is probably not as efficient as it might be in some other places because of our small population. the rural nature of vermont, e@@@@@@@@ @ @ @ @ )@ @ @ @ @ @ d expenditures are nearly the highest in the nation, and it is the highest in correction because we have -- corrections because we have the facilities spread across the state, and we have hospitals in other parts of the state. i do not believe that this is something we have completely overcome, but we have had real progress with the medicaid costs, and i believe that the strategy will be successful for the entire population. >> i have two questions about commuting, i will start with, do

you see many canadians coming to your state, for medical procedures that are better in your health-care system, something that they would have to wait for in canada? >> we see canadians coming to vermont for a variety of reasons. to ski, to shop. i think nearly 40% of the passenger traffic is from north of the border. it is a lot smaller and more convenient than the bigger airports in montreal. a lot of folks come self for that purpose. . come south for that purpose. we regard our quebec neighbors as not foreigners, but friends prayed that this has gotten us off topic. we have villages by the international border. we have a manufacturing plant

that the split. we have an opera house and a library that is split by the border. these are our friends and neighbors. there is a lot of interaction. there is commuting for work across the border. i can tell you about one conversation i have had with the canadian woman in the not too distant past. despite the challenges,÷v most care)9 system and want to presee it. pñioif the supreme court ofmú cv earlier in this decade said in0÷ waiuog list is not access to there is some movement to a public, private blend in canada. this woman told me about her son who was almost at the two-

year anniversary when i asked for an appointment for somebody to see him. the lesson i take from general conversations with canadians is that their quality of care is good. their emergency care is good. if it is not an emergency, they are made to wait. i do not want a mother to know the two-year anniversary of a request for an appointment to see a practitioner. >> this is the converse. don't lots of vermonters go to canada for care? does this not mean that we could learn something from their insurance company-free system? >> i anecdotally do not know of vermonters to do. we have seen some access to prescription drugs from north

of the border. they are often less expensive. in terms of actual care and the convenience of somebody that is closer to a community on the border, i have not seen that. >> moving on to the federal situation, how much consultation is going on between congress and the governors? do you feel like the governors have been a part of the process? >> i discussed that in my remarks. i do appreciate that, especially the reaching out we have seen from the gang of six. even beyond that, i have met with and talk on the phone with speaker pelosi a number of times. we talked about this and other topics. there has been some interaction. the bulk of it has been very recently when the chairman and his colleagues spent a lot of time with the governors. we have a variety of different

formats and which we do that. we have a health care reform task force that i appointed that has 14 governors, seven in each party. it is tough on short notice to get everybody on the phone. we get the vast majority of them when there is an opportunity to talk with the senators present there are four leaders of the association that will be available to meet with them. we do it almost always on a bipartisan basis as i suggested earlier, that is the way we are going to succeed in these health care reform efforts. i thought the senator made a good point in the comment that heights are reported a couple of weeks ago. he said that the senate could pass a bill that is not a bipartisan. they marshalled and the necessary votes to push them through. in the long run, i hope congress will want the reform effort that the american people

can feel good about, that the american people will buy into. if that is something that the force of the people and our country or force on the states and it is unworkable or unsustainable, then it is not sustainable. >> how important do you think the recent discussion on medical malpractice reform is to the health care reform debate? >> it is an element that is worth pursuing. the president mentioned it in his speech. the chairman has included it in the bill he is presenting this week. some states have made some real progress on medical malpractice reform. california has some innovations that are often cited as quite strong. mississippi has put in place

some reforms as well. we have tried in vermont with less than complete success. i think it makes sense the way the senate finance committee is approaching it. there would be grants for states to put in place some kind of reform efforts. whether it be some kind of mediation process as or malpractice courts. whenever states would like to do with a little bit of federal support to facilitate that, i think it is a good idea. i know there is a lot of debate about the significant cost of care. some judgments and settlements are no more than 1% of the total cost. there is a defense of medicine. you will hear that from physicians and hospital ceos. i had a chat with one ceo that is no wonder in his position. we were chatting about this a few years back.

he said that i will be honest with you. if you, jim douglas, come off the ski slope with a fracture and come into this hospital, we will give you the best care that we can and you will be just fine and you will be good to go as soon as possible, but if it is somebody from washington that is not in the local area but has a license plate from far away, we are probably going to run some more tests. that is the way we do business. it is a factor that we need to consider. i was pleased that the chairman was included in this. >> do you see any alternative to expanding medicaid or is the answer to have full funding of any expansion? >> frankly, there should be full federal funding if there is an

expansion. mandates are not acceptable. i suggested a few weeks ago that the new committee draft has moved in the direction of more federal support and we are grateful for that. some of my colleagues pointed out that even at 5% of state funding, 5% is still a lot of money. to put this in context, i mentioned the fact that we're now going to be to our pre recession revenues of 47 or eight years. look at what states have done during that time. we have cut education, which is the big public expenditure that most states have. states have underfunded pension systems that have borrowed more in some cases. they have laid off more workers.

we can expect states, just one the revenue recovers, to put every incremental dollar into an expanded health care system. there are other competing demands. the feds have to own up to whenever they require the states to do. some say the medicaid expansion is not the way to go. it is a program that is big, unsustainable, inflexible, and we ought to think of something new and different and a more creative way to expand coverage. our approach in vermont has been a public, private partnership. i think it has been pretty successful. i am sorry that we have to beg the federal government for permission for the waiver process to implement some of the reforms that we have. i have to tell you a little story about that. when i came down here several times to request the waiver to

put in place the reforms that i described. i came in with the secretary in number of times. somebody said, now you have to go over to omv. i did not know that. they sign off on all of these financial own arrangements. i made an appointment to go meet with the folks over there. i went into the old executive office building. the then governor of texas was coming out of a similar meeting asking for a medicaid waiver from the folks there. i said, jeb, how did it go? he said that i do not think it got too well. he said that if you cannot get a waiver from this administration, i do not know about me.

>> do you think the reform proposals do enough to address long-term care and the strains on medicaid? >> i am glad that you brought that up. here is another area where vermont has innovated. i really feel good about the progress we have made. we have something called choices for care. medicaid participants, that makes old or disabled vermonters' or americans. there is a bias towards nursing-home sprint what we have done is get equal access to care at home and institutional settings. we are the second oldest state. despite that, we have delicensed several nursing home beds over the last few years. we are caring for people at home.

my in-laws are in their middle nineties. they are not well. they are still at home with a lot of care. they are not on medicaid. i cannot imagine if we have a choice, not keeping them there in the home where they have lived for 65 years. i think most americans feel that way. we got a waiver to use our medicaid dollars to keep more people at home. we have saved millions of dollars over the last couple of years through that effort. i think that long-term care has to be a part of it. it is not the biggest piece of the program, especially as the population ages. >> considering that vermont is the second coldest day, what was the public response to the so-called death panels. >> i mentioned earlier that vermonters are independent.

it is fair to say that we are quite simple in our public discourse. one of our senators it serves on the health committee. he had several well attended forums as other members of congress did around the country during the august recess. there were no disruptions similar to what we saw in other places. people had opinions. and they express them. sometimes strongly, but in a very respectful and civilized way. the range of public opinion in vermont is across the spectrum in terms of their views of these reform efforts. the level of debate has been at a higher level than we have seen before. >> what do you make of the party movement, and what this says about the plan for health care, nationwide?

>> i have said it is perfectly appropriate for people to have strong views, to ask some serious questions. to try to understand what it means when a proposal is looking to reduce medicare expenditures, does this mean a cut in benefits? does this mean reimbursement, to the providers is going to be reduced, with less access to the care that people need. these are fair questions, but they need to be debated on the merits, and not with the inflammatory performances that we have seen in some areas. they suggested that these were organized by the republican party. i do not think that we are that organized.

i think americans are concerned about this and showed up at these events to express the concern. i hope if we can refocus the debates on the real merits of the issues that need to be discussed, we can do something positive. >> you have been asked to solve a mystery. it looks like the public auction is dead. who or what killed it? >> i think it was the professor in the library. with the candlestick. [laughter] i am not a fan of the public option to be honest. let me give you a reason from our own experience. about 20 years ago, vt. started a program called doctor dinosaur.

that is a medicaid-supported program for children. we have virtually full universal coverage for our kids. the percentages are quite low. it is the transition to the population. it is virtually universal. it has been affordable because insuring children is a lot less expensive than it is for people in their older years. here is what happened. the program went into effect and a lot of employers said to their employees, take your kids off of the company planned and put them on that new state program. that has happened to a lot of folks. what we're trying to do in our reform effort is to provide subsidies to people to get coverage through their employers as well as the catamounts plans.

that is a mascot for a university. it is a panther that is now extinct. the last one was shot in 1836. through their employer, if it is at least as comprehensive of a plan as we have offered, since we saw this migration away from plans to employers, my fear is that the public auction will see the same kind of migration and not provide the robustness of the market that we need. >> we arguably have the best health care technology in the world. new technologies are always expensive. how can we ration the use of these technologies across the

population. >> that is a good question. i am not sure if we can figure that out in vermont. we have a certificate process. we can determine when a capital expenditure is necessary for a health-care institution. it is difficult to say no when a community comes to a state regulator and says that we have got to have that dialysis program and our community. with gas prices as high as they are and no public transportation, you cannot expect us to drive 25 miles to some other community to get dialysis, and do you? that replicates itself throughout our state many times. i'm sure it is true in other places as well. we are seeing a significant

expense for an infrastructure. that relates to a question that she asked earlier about the relatively high costs in vermont. we do not have the economy of scale that other places do. that is an area that continues to challenge us. i am sure that is true in other parts of the country as well. >> we have a wild card question for you. how do you feel about your video of the same-sex marriage built? what impact do you think same- sex marriage will have in vermont? >> that is a matter of great debate. earlier this year, it is a matter of intense personal opinion. i see it quite differently from other issues that we confront. it is not something that deals with the economic well-being of our state, the fiscal integrity of vermont, job creation, or affordability.

it is a personal opinion that people have. everybody will cast his or her vote as he or she deems appropriate. i cast my vote in the legislature decided to go another way. i certainly accept that. >> we are just about out of time. before i ask the last question, i have a couple of important matters to take care of. let me remind our members of the future speakers we have the president and ceo of the mayo clinic. we will have another health-care chat tomorrow. on september 28, ken burns, the documentary filmmaker will be joining us to discuss his new program on national park sprint on october 8, the postmaster general of the united states postal service will give us the state of the postal service. i would like to present our

guest with the traditional and much coveted national press club mug. >> thank you. [applause] . . what will you do after a new governor is inaugurated in vermont? >> i will be jumping for joy. >it feels like the right time fr me to move on. i have been in public office for most of my adult life. i graduated from college. we have term limits -- we do not have term limits that we have to run for reelection every two years. i want to make certain that i

am energized in office. people ask, why am i going so soon, rather than in the future, where they will ask, why did she stay for so long? ocus on my position as chairman to help improve the outcomes for american people to improve our delivery system and control the costs. another answer to your question is i have to remember how to drive a car. [laughter] thank you all very much. [applause] >> other like to thank you all for coming today. i also want to thank the national press club staff members. thank you for organizing today's lunch. i would like to thank the npc

library for its research. the video archive of today's luncheon is provided by one center. our information is available for free on itunes. you can purchase transcribes and audiotapes by calling 1 #. [unintelligible] please go to our web site for more information. more information. [applause]

>> coming up today on c-span, president obama will announce a change to the missile defense policy and republicans in congress criticized the white house plan. this is followed by "washington journal." and then there will be a health care town hall meeting, hosted by the family research council. and then, sec chair mary schapiro. >> congressman ron paul is wanting to hold the federal reserve accountable for the economic crisis and he is wanting to end the fed. he will talk about this on bo ook tv. >> obama announced changes to the missile defense program yesterday, scrapping the plans to build a system in the czech

republic and in poland. he said that this was because of developments in iran. he spoke about this to reporters from the white house. >> good morning. as the commander-in-chief i have to defend the country, and this includes protecting our friends and allies around the world. one threat is the danger posed by ballistic missiles. as i said during the campaign, president bush was right that the missile program of iran poses a significant threat. that is why i am committed to a missile system that is adaptable to the threats of the 21st century. the best way to advance the security of the allies and ourselves is to employ a missile defense system that will best

respond to the threats that we face, and utilize the technology that is proven and cost- effective. in keeping with that commitment and a congressional review, i have ordered a comprehensive assessment of the missile defense program in europe. after an extensive process, i have approved the recommendations of the secretary of defense, and the joint chiefs of staff to strengthen the american defense against ballistic missiles. this will offer greater defenses against the threat of missile attacks than the 2007 program. this was divided by two principal factors. we have the missile threats posed by the short range and medium-range missiles, which can

reach europe. there is no substitute for them complying with the international obligations. we and the partners will continue to make certain we have a strong diplomacy so that they will live up to the obligations. but this ballistic missile defense program will help to stop the threat of the ongoing missile defense program. we have made many advances in the missile technology, with regard to the interceptors, and the support. we will deploy the technology that is proven and cost- effective, to counter the current threat. the approach will be phased and adapted, and we will maintain the flexibility to enhance our capabilities as the threats continue to evolve.

to put it simply, the new architecture in europe will provide stronger and swifter defense of the american forces and the allies. this is more comprehensive than the previous program. this is proven and cost- effective, and this builds upon the commitment to protect the homeland against the long-range ballistic missile threats. and this is enhancing the protection of all of the allies. and this is consistent with the missile defense efforts of nato, providing for enhanced collaboration between the nation's going forward. we will continue to work with the czech republic and poland, who have agreed to host elements of the previous programs. i spoke to the prime minister's about this decision, and i have reaffirmed the close ties.

we are committed to a broad range of efforts to strengthen the collective defense, and we are bound by the idea that attack on one of us is an attack on all of us. we have made it clear to russia that the concerns about the previous missile defense programs are unfounded. the focus has been the threat of iran and their ballistic missile programs. this continues to be the focus and the basis of the program. in confronting this threat, we welcome their cooperation to bring the missile defense to the strategic interests, even as we continue the efforts to end their nuclear program. going forward, we will continue to consult with congress and the allies as we deploy this system and we will die with the threat by ballistic missiles and the

technology that we are developing to stop this. with the steps that we have taken today we have strengthened the national security of america, and the 21st century threat. thank you. >> secretary robert gates provided more details about the changes in the u.s. missile defense programs. that is at this pentagon briefing. >> good morning. first, before we are starting on the announcement, i would like to talk about the loss of six italian soldiers. condolences go out to the families of those killed, and

this week the president, on the advice of his national security team and the senior leadership, changed the architecture of the ballistic missile defense system. i believe that this will enhance the ability to respond to the threats now and in the future. i advised the bush said ministration to place missile defense in europe. this was a way to defend the united states and the allies against iran and their nuclear missiles. there has been a reassessment of the approach in europe. a change in the 2006 view of the air raid -- the threat from iran. the threat from the short and

medium-range missiles, is developing more rapidly than previously projected. this poses a more immediate threat to the forces on the european continent and the allies. on the other hand, the intelligence assessment says that the threat of intercontinental ballistic missile capabilities has been slower to develop than was estimated in 2006. the second development relates to technology. we have made great strides with the missile defense, particularly in the ability to counter short and medium-range missiles. we have the proven capability to stop this with the land interceptors, and these capabilities offer a variety of options, to detect and shoot down enemy missiles.

this allows us more than just a fixed site, giving us more of adaptability. and we have improved the standard missile, which has had several successful flight tests since 2007. this has demonstrated -- demonstrated a great capability, and give us more confidence in the future. we now have the opportunity to deploy new sensors and interceptors in europe, that can provide missile defense coverage against the more immediate threats. in the initial stage we will -- we will deploy ships that provide the flexibility to move the interceptors as needed. the second phase is about 2015. this will involve the upgraded the land-based -- and the

consultations have begun, starting with: and the czech republic, about a land version of this and other components of the system. basing some of these on land will provide additional coverage and this will save the costs. over time the architecture is designed to incorporate more effective technology, as well as more interceptors. we will be able to take down multiple targets and increase -- increase the survivability of the system. this provides us with greater flexibility for the developing threats and the evolving technology. although the long-range missile threat of iran is not as immediate as we thought, this system will allow us to incorporate the future flexibility against this threat as it develops. most importantly, we can see the

initial elements of the system, to protect the allies, and we can do this six or seven years earlier than the previous plan. this is affected by the delay in the time line. i will also say that the plans to cover most of europe and add to the defense of the homeland will continue on the same schedule as before. as the president has and very -- has been saying very quickly, as long as the threat continues, we will look for cost effective missile defense. we have spoken to the congress and the allies about this plan. one guiding principle is the support of the allies and partners. we will continue to rely on them and work with them to develop a system that will defend against very real and growing threats. those who say that we are

scrapping missile defense in europe are either misinformed, or misrepresenting the reality of what we are doing. the security of europe has been a vital interest of the united states for my entire career. the threats may change, but the commitment continues. i believe that this new approach gives a better capability for the forces in europe, for the european allies, and eventually for the homeland, then what i recommended a few years ago. this takes a advantage of the new technical capabilities that are available today. let me now turn to the general who has been involved in the development of this proposal for a more detailed presentation. >> thank you. i would like to go through the elements of the capability and the architecture and give you a

feeling about how we are thinking about this. most of this is coming from the missile defense review that as part of the analysis. one thing that has not changed is the threat of priorities -- the set of priorities, the defense of the homeland, and then our forces and then the allies. this is connected to the budget decisions as we move forward with the capabilities that we wanted to have. some of these decisions began in the bush administration, when we began to move the effort to be deployed forces, after we feel that the last interceptors in california. the review and the analysis has been moving us, based on the threat, and the opportunities that technology has given us, to

enhance the architecture. this is not moving away from the defense of the homeland, but what this is is an acknowledgement that there are capabilities that are able to address the threat that has emerged, against the threat that we postulated would be the most dangerous, the threat to the united states. the people of iran, and the north koreans, have the capabilities associated with the medium-range and short-range ballistic missiles, in numbers that are larger than could be addressed by 10 of the interceptors. the ability to go after this was one of the driving factors, that had to be addressed. both for the forces that are deployed and those that are threatened. and the enhanced architecture was put together, and this is an architecture that is globally

deployable, the same architecture that you would see in japan or south korea, facing the north the agreement -- north korean threat. we are also looking at the architecture with the deployment that happened earlier this year, with a ground-based radar in israel. we will focus today on the european aspect of this architecture. this is adaptable. one of the realities of life is that the enemy gets a vote, and if they do not get -- if they do not do -- if they do not act the way that you planned for, they are ahead. this gives us the capability to deal with the threat as it emerges, rather than how we would like for this to happen. we have the command and the control, which is the most

leveraging capability that we have, with the least notoriety. the ability to networked systems together, that makes this substantially greater than any of the elements. i will talk more about this as we talk more about this. one of the major activities that is here, is the rapid advancement of the sensing technologies. when we use the ground-based interceptor, we are focused on the large radar that was left over from the cold war, based in the northern part of the world. if you look at the world from on top, things are flying directly across the polls. if these radars were there in the cold war to defend us -- we have modified their radar and updated the process. they are still part of the system. the we have added the other radar, the radar in japan, the

radar that we currently have in israel. another one that will be deployed in europe, this system has proven to be very effective. and very capable. and there is the mobile radar, the organic radar to the patriot system, and also what we currently have deployed in the pacific ocean. these are mobile systems that can move to where ever the threat is emanating from, and where we have to defend ourselves. the one part that we have not had is airborne. part of the program is to bring in a layer of sensors that is going to add to the survivability and the efficiency of the overall system. this work is ongoing right now. this was part of the 2009 budget and it will likely start to show itself in real capability, and this is

promising technology. and then we have the space system. this will give us the capability that we need to have. everyone knows the capabilities of the patriot system. this is globally deployed, and many countries have been using this for their defense. you can put this at a critical infrastructure, to defend this area. we are now fielding this in larger numbers. this is a larger area that is more aligned with a general area, like the area from philadelphia down to washington, for an analogy. this has started to finish the

testing, and this is the first operational deployment that will begin this year, into the european theater. they will start this deployment to make certain that we bring the system out. this is successful in the testing and we are getting ready to move onto the deployment of the system. and then the ground-based interceptor. we will defend against the interco -- intercontinental ballistic missiles. all of those make up the capabilities that we have in the system today. this is what the secretary introduced that we will be working our way through, and that will allow us to deal with the systems when they are needed, and where they are needed, rather than a laid down that will lock us into any particular capability that will change over time. i believe