>> secretary of state hillary clinton said today that the instability and yemen is a threat to regional and global security. her remarks are next on c-span. after that, political analyst talk about the 2010 elections. then, a panel from the university of virginia on the potential changes to the u.s. health-care system. and later, remarks from the british comfort -- conservative party leader david cameron. .

>> secretary of state hillary clinton talked about the security situation in yemen. these comments came after the meeting with the prime minister of qatar. this is about 25 minutes. [captioning performed by

national captioning institute] [captions copyright national cable satellite corp. 2010] >> good morning everyone, and happy new year. it is good to see you here and i am especially pleased that i get to walk on his excellency the prime minister back to the state department -- i get to welcome his excellency the prime minister back to the state department. i hope you all had the chance to enjoy the holidays and i know there is a big agenda and front of us which his excellency and i have been discussing. it is important that this meeting be held at the beginning of this new year so we couldn't immediately get to work on the many matters -- we could immediately get to work on the many matters that concern us. qatar is a friend and ally to united states and the partnership between our countries is -- a new beginning, based on mutual respect and

mutual interest that the president called for in cairo. we will discuss how to deepen and broaden our partnership. among the matters that we consulted on -- the situation in yemen is a top concern. how can we work together and with others to stabilize yemen? assist in securing its borders and providing for its people in combating al qaeda? the instability in yemen is a threat to regional and global stability. and we are working with qatar and others to think of the best way forward to duck -- to try to deal with the security concerns. certainly, we know that this is a difficult set of challenges but they have to be addressed.

i also thank the prime minister for their efforts to facilitate an end to the crisis in darfur and to promote security and stability in the broader middle east as well as africa. we both have a shared, mutual interest in moving towards a comprehensive peace between israelis and palestinians. we share the goal of an amendment -- an independent and viable palestinian state. we are committed to doing what we can to help re-launch peach ande negotiations that will lead to a two-state solution. we believe that president abbas is a partner for peace. the prime minister and i discussed the future of iraq. it is important that iraq be reintegrated back into the larger region and that it go

through this next select for cycle and create greater stability among the various constituents within the country. we discussed the importance of international solidarity and dealing with iran, -- lee with respect to its nuclear program and its compliance to its various obligations under the u.n. security council, the ieea, the npt, etc. finally, let me express my appreciation to his excellency and the easier for their actions in combating hunger and poverty and disease in the region across the land -- and across the world. we have a lot of work ahead of us. i thank you for your friendship, for your candid thoughts on so

many important matters and i look forward to continuing our dialogue in the year ahead. >> thank you very much, madame secretary. happy new year. i am very glad to be here with the madam secretary per. as she mentioned, we discussed all of the issues which is important for both countries. and i just want to highlight about two of the issues. one of them is yemen. this stability and unity of yemen it is important. there is only one solution to be solved through a peaceful manner by trying to find a way to solve this problem in a peaceful way. the second thing is about the middle east and the palestinian-israeli peace process. we are hoping that this peace process could start again.

and it has to start an agenda . we are looking to see where is the endgame. i really thank president obama and madame secretary and the administration for their efforts which bring hope again to us to continue this process. it would beat -- there will be difficulties and there will be up and down in this process, but the most important thing is how we can do a unity government between the palestinians so they can concentrate on how to deal and the peace process. and also the palestinians have to know that this solution to solve this problem is by a dialog. and the dialogue is very important. there it -- it is important there are no games in this dialogue. we know the settlements, there is a problem with the water. land for peace.

that aren't -- those are the main elements, and all the countries agreed in the madrid process. i doubt -- i hope that both sides realize they have to work together. we are ready to help. the united states -- we rely on their help and involvement in this process. i think that is very important for the region. the other problem, if we are talking about a ron, we hope that this problem could be solved through diplomatic means -- with iran. we need stability in the region and this will not come unless we realize we have to comply with international law and comply also in how to solve the problem by dialogue. thank you very much, madame

secretary. >> thank you so much, your excellency. >> happy new year, madam secretary, your excellency. on yemen, what can you say about the latest -- the latest you can say about the terrorist threat to the u.s. embassy. given the concerns they have had about yemen, what is the u.s. prepared to do to help yemen combat their growing terrorist problem? given the embassies in discussions with the terrorist's father, how much blame do you think the state department has for not highlighting the fact that this man had a visa or pulling a visa? mr. -- your excellency, i would ask that you follow up on your comments. you said there is only one solution to yemen. and that is to help in a peaceful way. could you expand on what that means? and what you think the u.s. can do to cut -- to help yemen?

>> those are a lot of questions. let me start with yemen. as you know, the u.s. embassy closed january 3. it remains closed today. that is in response to ongoing threats by al qaeda in the caribbean peninsula, so-called -- in the or arabian peninsula. they have been ongoing. they predate this holiday season. they're aimed at american interests in yemen. december 31, we sent a warning message to american citizens in yemen to remind them of continuing threats against american citizens and interests. as always, we remind u.s. citizens to maintain a high level of vigilance and to practice enhanced security awareness.

the united states commands -- commendas yemen for the recent activities it has taken it to disrupt the network. and we are reiterating our commitment to assist in those efforts. we reviewed our security conditions constantly. and we will make a decision on reopening the embassy when the security conditions permit. with respect to what happens with the terrorist on the plane coming into detroit, we are not satisfied. we are conducting internal review. the president has called for a whole of government review. based on what we know now, the state department fully complied with the requirements set forth in the inter-agency process as to what should be done when a

threat, or when information about a potential threat is known. but we are looking to see whether those procedures need to be changed, upgraded. and that is michael, as secretary, -- that is my goal as secretary to do everything to make sure that not only american citizens of all people travelling on air lines of any nationality can all arrive at their destination safely. so we will be meeting with the president tomorrow to go over our internal reviews, to hear what others in our government have concluded, and to take what ever additional steps are necessary. >> thank you. as you know, this is the fifth or sixth war in yemen. for that reason, we know this problem has to be solved through dialogue. as you know, doha held a

dialogue between -- the yemeni government and there is an agreement to be signed. we hope we go back and find a way to solve this problem through meaningful dialogue. and dialog which can give the lead for the state of yemen, because we support the unity of yemen. and that is very important role. it is very important also not to spread our power or our efforts to these kinds of things. and we have to concentrate on how we can fight the terrorism in our region and others so we do not export it somewhere else. >> thank you so much. happy new year. madam secretary, can i start by asking about yemen. what do you hope to get out of

the meeting in london at the end of the month? and what can bthe dcc countries play? your excellency, regarding the middle east peace talks, are there any conditions on the ground now they give you for their hope that there can be successful talks and and and game. end game? >> thank you very much and happy new year. i think the meeting at the end of the month in london it is an opportunity for nations that can play our role in helping to stabilize yemen, to come together and discussed steps that each of us can take individually and collectively. qatar has played an ongoing role as other gcc nations have. the spill over effect from instability directly impact the

neighbors. obviously, we see it global implications from war in yemen and the ongoing efforts by al qaeda in niemen it to use it as a base -- in yet minute to use it as a base for terrorist attacks -- in yemen to use it as a base for terrorist attacks. we are going to consult with those who have long experience in yemen, such as qatar, and work together to encourage the government to take steps that will lead to a more lasting period of peace and stability. as his excellency said, there have been numerous conflicts in yemen. they seem to just get worse and worse with more players involved now. it is time for the international community to make it clear to yemen it that their expectations and conditions and

our continued support for the government so that they can take actions which will have a better chance to provide that peace and stability to the people of yemen and the region. >> happy new year. kindly remind me again about your question. >> it is regarding peace talks and middle east. are there conditions on the ground now for successful talks? >> there always will be difficulty in the peace process. we have a long history in the peace process. and this history should not lead us down, not less -- not let our morale to be down. i think we need to continue to push. there is no magic solution. all of us want a solution for these conflicts. now the parties have to take a decision to move to that, especially the government of israel, in my opinion. they have to move and comply

with the united nations resolution and the madrid agreement. very important for them to know that this cannot be continued. it is an opportunity with this administration to bring us together to a long lasting peace. >> secretary clinton, on iran, president obama said last year that she would have a pretty good sense by the end of the year whether or ron is seriously interested in pursuing dialog about its nuclear program. there are a lot of signs that they are and there are no signs that they are still carrying out the agreement on a enriched -- and rich uranium that was reached in geneva. is that deal dead? two, even if the door to talking about the lu deal is still open,

are we closer to imposing targeted sanctions, particularly on companies or individuals who have ties to the revolutionary guard corps? do not perceive the danger that additional sanctions could play into the hands of the hard- liners who often make the argument that they are engaged in a struggle with foreign forces and tried to rally people all around them that way, and they have made that argument even as they have been crashing protest recently. >> we remain committed to working with our international partners on addressing the serious concerns we have regarding piraniran's nuclear program. we have an engagement track and a pressure track. as i have said, the results of our efforts to engage or run it directly and have not been

encouraging. -- engage iran directly have not an encouraging. we are disappointed. the iranian government announced a deadline to receive a positive response to their unacceptable counter offer. so, yes we have concerns about their behavior. we have concerns about their intentions. we are deeply disturbed by the mounting signs of ruthless repression it that they are exercising against those who assemble and express viewpoints that are at variance with what the leadership of iran wants to hear. we have avoided using the term at the deadline ourselves. that is not a term that we have used, because we want to keep the door to dialogue open. but we have also made it clear

we cannot continue to wait and we cannot continue to stand by when the iranians themselves talk about increasing their production of high-and it enriched uranium in additional facilities for nuclear power that very likely can be put to dual-use. we have already begun discussions with our partners and with like-minded nations about pressure and sanctions. i cannot comment on the details of those discussions now, except to say that our goal is to pressure the iranian government, for surely the revolutionary guard elements, without contributing to the suffering of the ordinary iranians who deserved a better than what they currently are receiving. they are going through a very turbulent period in their history. there are many troubling signs of the actions that they are taking.

we want to reiterate that we stand with those iranians who are peacefully demonstrating. we mourn the loss of innocent life. we condemn the detention and imprisonment, torture and abuse of people, which seems to be accelerating. and we hope that there will be an opportunity for you run it to reverse course -- iran to reverse course, to begin engaging in a positive way with the international community. respecting the rights of their own citizens. but we will continue on our dual-track approach. >> happy new year. happy new year to both of you. i would like to ask you, both of you, madam secretary and your excellency, whether there have been any progress or anything

new on regarding middle east peace process guarantees? and also, have you discussed aid to the palestinian authority? i mean it u.s. aid to the palestinian authority. >> thank you very much. we have discussed aid to the palestinian authority. we have continued to provide significant aid to the palestinian authority. we also discussed the commitment that the united states and qatar share towards a relaunch of the peace process and negotiations between israel and the palestinians. we are going to do all that we can to bring that about. there are many complexities of this extremely difficult situation, but we reaffirmed our commitment to keep working at this.

we know that the palestinians deserve a state to fulfill their aspirations. the israelis deserves security to live peacefully, side by side with their to palestinian neighbors. the arab nations have made a very positive contribution in the peace initiative of the arab league and others. so we are going to be even more committed this year. we are starting this new year with that level of commitment, and we are going to fall through. hopefully we can see this as a positive year in this long process. >> well -- >> if you could please answer in arabic, your excellency. >> that is easier for me. difficult for madame secretary. [speaking foreign language]

arabic] [speaking arabic]

>> madam secretary, with regards to the letter of guarantees that was asked of the arab countries, as you know qatar chairs the current arab committee for another round. we have given all letter to that affect to the yassar administration right after the un meetings. we are still awaiting a response from the u.s. administration. this response will be very and pour in to us, as it will give us a clear identia of how the u. sees the end game. with regards to the issue of assistance, qatar has always given assistance to the palestinians and will continue to give similar assistance to the palestinians. >> thank you, all, very much. >> thank you very much.

>> here on c-span 2, tomorrow morning, a forum on long-term care services. there will discuss whether or not congress will include long term insurance and their final health care bill. that is live at 8:30 eastern. later in the morning, a form are energy efficiency. panelist from government, industry and academia will discuss clean energy resources and smart great technology. press club at 10:00 a.m. eastern. -- on c-sapn. >> now conversation on elections and politics in the coming year. this is from sunday's "washington journal". >> we want to look ahead for the

next hour. rothenberg political report and charlie cook of the cook political report. thanks to you both for being with us. what are you looking at in 2010? guest: i think when you look at a national election you look and say what's the historical average. then you say what may deviate from that. we know from history in a first term midterm election the average result is the president's party losing about 16 seats in the house. breaking even in the senate and losing about five governorships. you look at the current situation and say, well we're in a recession and a situation where president's job approval rating is on the lower end of the scale. point of bv where ron reagan was at this point december of his first year in office but four points behind where bill clinton was.

both of them lost a lot of seats. you're looking at - you know basically all the factors argue this should be as big or larger than for a normal midterm election except one thing the republican brand is not where the republican brand was going into the 94 election or where the democratic brand going into the 2006 election. the last two big turnover mid elections. that's sort of the one offsetting factor. all the indicators look like this is going to be. democrats will probably have tough losses this time. guest: i never disagree with charlie so i'm not going to start now. i'm less see time about the environment next year than charlie so i'm a little more cautious. obviously in terms of the overall landscape it's going to be a difficult environment for democrats and good opportunitiess for republicans and certainly we're looking at the president's numbers but also

looking at the economy. lots of challenges out there for democrats as well as technical things. democratic turn out. republican enthusiasm. frankly, the republican years ago used to talk about. viewing the parties almost as stocks and republicans we might say are over sold. charlie has used that term in the years. but republicans have a ways to come back. there's lots of opportunities for republicans and lots of reasons for democrats to be nervous but i'm willing to see what the president's performance and publics evaluation of that. host: you charlie are calling it toss up space. harry read. colorado in appointed democratic incumbent. in pennsylvania and then you have basically four seats currently held by republicans

open seats. as you look at the toss up raises which ones peek your interest the most? guest: when i look at the republican missouri, new hampshire, ohio, i could see republicans very plus bli holding on to three out of four. maybe even all four. i think the real battle will be more in the five democratic toss i think the real battle could be more and the five democratic tossups seats. w3fábdelaware, illinois. harry reid and maybe through when blanche lincoln in arkansas. this is totally opposite from what we would set a uriko, one way but is said the story is republican open seats. now i think this story will be more in the democratic seats.

>> a year ago or so, i get kentucky leaning democratic, missouri, new hampshire, ohio. i assumed the democrats would win most or all of them. now the focus has shifted entirely. you have to be fascinated by two republican opportunities in delaware and illinois. we talked about the demise of republican moderates. sitting president of the united states where republicans have a chance of winning both of those in addition to some of the democratic incumbents and chris dodd and senator lincoln in serious trouble. i think the focus is definitely on the democratic seat. >> first of all you wrote about the illinois primary. mark kirk is expected to win. what's happening in illinois? guest: conservatives don't like him. those that see him as too soft. not a reliable conservative

vote. there are a number of candidates against him. there's one in particular who thinks he has traction but we don't really see it. i expect mark kirk to win it and win the nomination reasonably comfortably. what's his margin going to be and the democrats get close or not? ho host democratic primary in virginia? guest: this is party switchers. they have to worry about are they going to get primaried in their know party. i think specter is in that situation to were about whether he can hold on. it's not just, here is a former republican coming in and for the first time competing in a democratic primary, but i think that - but he has to combat the

age issue. is he too old? that he's been sort of part of the washington scene in an kind of outsider year. is he seen too much as an insider. it's a compounding effect of the problems. frankly if this were a year or two ago. i would have said regardless of who wins the democratic primary. i think they would have an advantage in general election over pat tomby who i think is awfully conservative but in this climate either democrat would be no better than an even money shot against him in this climate. host: headline from the miami herald. charlie crisp final year of governor begins with perilous pole numbers and his shell of political teflon deeply scratched. guest: biggest problem for him is in republican primary.

i speak to a number of groups, i'm sure charlie encountered the same situation. republican groups in florida. republican voters. i can't find many that are enthusiastic about charlie chris. they don't see him as a real republican. they remember he embraced the president, supported the president's stimulus package. i think there's a lot of conservative opposition to him. many republicans who were loyal to support jeb bush have not been happy with charlie chris feeling where jeb bush stood his ground against the state legislature governor chris has been more willing to be accommodating and have strong principals not and this is offset by establishment of republicans particularly here in washington d.c. that believes a popular governor can easily win the senate seat and while they think mark rubio can win they

think it's not quite as easy. being more of a cluttered process. i think when they start off these - i thought mark rubio was an interesting kind of confusing case of, why did you do this? why not run for attorney general and move up over the years? but increasingly, it looks as charlie chris will have difficulty in this republican raise. it's still a question of fund raising and a very expensive state. chris can dominate the news and unfortunately he's not always dominated in a way to help him win a republican nomination in florida. host: former senator leaving office and george le mu appointed by charlie chris. does that impact florida politics? guest: i think what's truly extraordinary to me is generally speaking, a government. sitting governor is the leader of the party and idea that a

sitting governor would have problems within his own party is rather extraordinary but in this particular case, the leader of the republican party in florida is effectively jeb bush. his predecessor and blood between the two would not seem to be that good and chris is still sort of in bush's shadow and that sort of carried over into this situation. host: this is from bob, saying tea partyers love rubio. guest: right. i think they're enthusiastic about him. look. if you read and listen to mark rubio he has articulateing a consistently conservative line. taking on the governor as being too supportive of presidential initiatives so there's a clear split. let's make this clear steve,

this is a conservative version of this. pennsylvania remember the primary six years ago. this is another case of that and it's hoffman and new york. 23rd special election. this is the test case for conservatives and the club of growth for antitax. conservative group, call them what you like. they're going to likely make this their next test case. host: our two guests will get to your phone calls and tell us what's happening in your state. raise for government or state or senate that your keeping a close eye on. one other question. charlie cook from your lean republican raises you include louisiana your home state and connecticut. chris dodd facing a tough re-election bid. the chair of the banking

committee. guest: i would be surprised if david lost re-election even with the scandal he had. i personally don't think you'll see many republican house, senate or governor lose in 2010. maybe not lose any. in the kind of political environment we're seeing now, you typically don't see many, many at all of the side that's sort of more dominant having some of their own incumbents lose and i don't think there will be a lot of republican incumbents in the deep south loseing any. guest: there's a number of states that are bad for president barack obama. kentucky, louisiana. arkansas and that gives republican advantages. ho host what about senator chris

dodd. guest: charlie is a degree save on that one. what got into you charlie? guest: democrats have lots of problems but not in connect cut. chris dodd has a problem. i think there's sort of a point, when the electorate has basically lost confidence in an incumbent that doesn't have a lot to do with the party but sort of the personal relationship and my sense is that voters in connecticut have hit the mute button on chris dodd that it's all self inflicted and he has nobody to blame but himself. i have a hard. even with, i put it this way. if chris dodd set aside the state general, i wouldn't have any doubt at all that he would hold on but with chris dodd i would put them as an underdog. guest: no.

i don't know who's in worse shape. chris dodd or harry reed. their numbers are both terrible. they're both up in the upper 30's. lower 40's. these are political figures that have been around a long time. as charlie knows the voters no these people and it's hard to change them once the opinions of them are solidified so i don't know if he's in worse shape than harry reed. i think they're both going to have difficult raises. i'm just pleased to see charlie being aggressive. guest: if i had a choice to be one of them i would be harry reed. he's more likely to be able to effect his own outcome than dodd dodd is. host: texas there's a primary governor perry that succeeded governor george bush who became with senator kay bailey hutch

ins and democrats have not won in almost 20 years. guest: democrats are looking at this raise seeing a great opportunity because of the republicans and there's considerable ill will between the two republican candidates. senator hutchison has been mentioned to runing for govern nor ship but there's always some doubt. is she really going to run against him and the talk was that she was going to have to prove how serious she was by re-assigning from the senate to run for governor and she decided not to do that. she's the senate and has committed running for governor. she's that raise now. she started off with terrific pole numbers doing well in the head-to-head and now her numbers have softened and i think most people think rick perry is a degree save campaigner and he's trying run as more conservative

candidate. most people think he has a fight nej the raise for renomination and maybe this explained by hutchison has changed her strategy. the democrats hope there's enough of a republican blood bath they'll have a chance in this raise. and they they think they have a good candidate former mayor white from houston. host: jim on the republican line from north carolina. good morning, jim. caller: good morning. as your guests aware. spratt is running here in south carolina and i know of a lot of republicans that are planning sending donations down there because we've got a train wreck up here for the own state. i was just curious what they thought the tea party movement will, if it will generate even more participants after they

pass this healthcare bill, and also if the um... obama administration will try and push the immigration amnesty aspect to create higher voters for the democrats in 2010? host: thanks jim. guest: think he has a real raise this time. the last few cycles he hasn't had a serious challenge. you know this is one of the raises where the republicans are broadening the playing field. the last two or three cycles the democrats looking for districts they haven't competed in. suddenly threatening republicans and i think we see the reverses an a good example and the senator came in to see me and i thought he was a credible candidate. the question is, how deep this antiobama feeling is. concern about the economy.

can republicans blame spratt. i think this is definitely a raise to wash. it's not on the radar screen. in terms of immigration i know the democrats have talking about bringing immigration up. i can't imagine it. it seems to me they have enough on their plate in healthcare and then cap and trade and climate change and war in afghanistan. i can't imagine it but conservatives and tea party folks are part of the republican coalition and they're not the coalition but their part of it. guest: betty. democrats line. senate and governors raise this year. guest: yes, i was just wondering what the two gentlemen thought about the senate raise. either jennifer bruner or fischer against ralph important man. also remember important man was part of the bush administration that september so many of our job as way and really hurt the state of ohio.

host: i think democrat does have a messy primary in ohio and i tend to think that fischer will come out on top@@@@k@ @ >> while rob portman it does, as a former budget director of the bush administration, that gives democrats some ammunition, but then the democrats now have ownership. by november, 2010, they will let ownership for the economy. in ohio. there will have the presidency and the governorship. and the economy in ohio is still suffering. a lot of that culpability will have translated over to the democratic side and i think p ortmmaan -- it will be a

formidable ticket for republicans. it is been awhile since republicans have had a good year in ohio. if i could touch on the previous point, to me, the tea party could be a force if it is channeled appropriately. it could be a force of strength for the republican party. on the other hand, at the kind of goes off another direction, it could be terribly destructive. nnel the ross perot movement from 1992 into an an outsider antipolitician and work within the republican party to help republicans win back control of the house for the first time in 40 years. if the tea party basic movement brings people into the republican diseffected people into the republican party and they stay in the republican party it could be a powerful force for the republican party. on the other hand if it starts splitting off creating tea party candidates in siphoning support

away from the republican party, then that could minimize the republican opportunities for gains in the general elections so there's going to be a fork in the road for the tee party movement and that's important in what happens in this election. ho host ohio a toss up according to charlie and close eye on delaware. there will be abide energy and mike castle. guest: we're waiting on bo biden. he hasn't officially announced. they say, no he's decided he's going to run and i have no reason to dispute that but i do note he has not entered raise and until he does, he's not in the raise. michael castle, former governor. statewide elected official for many years. republican because delaware only has one at house large official.

he's well liked and well positions in the moderates. fits the state pretty well. this is to fill the remainder i believe of vice president's by this term four more years until bo biden gets in the raise the republicans have a strong candidate and democrats have a probable candidate. i'm caution and i think in ahead to head against biden i think he has a slight advantage in a republican year. in an overall republican year where voters are dissatisfied worried about the economy. even if your dad is the, even if your dad is the vice president. there's things he has to do to demonstrate he would deserve this office on his own. guest: if this were 2006 i would rather have the name biden than castle in a statewide raise in delaware but in 2010 i agree

with stew. michael cast sal known quantity and much better known quantity than biden. to paint him as some reaction right winger would be pretty hard to do in delaware because they sort of know him. the thing is i'm still a little skeptical on whether or not biden gets in. i think there's open seats in the future, first of all i think don't even if castle won i don't think he would run in four years given his age if i were biden i would sit out assuming there would be at least one or two senate seats opening up. guest: i agree. i can't imagine why he would run except that he'll come under heavy pressure from the democratic party to save the seat and hold for it his dad. wouldn't it be embarrassing if

the biden seat was lost. otherwise it makes sense for him to wait four years and run and start his own senate career. host: our conversation with charlie cook and rothenberg. bill is joining us from houston. good morning. republican line. caller: good morning. my question is, one, we all remember how the democrats ran against tom delay. if i'm a republican from the south that's running, i'm going to say, you know my opponent first vote is for nancy pelosi. this lady represents san francisco. is that the leader that you want me you're a point to have? someone who believes in abortion that just wants to print money and spend it? is that representing your views?

guest: i think that um... and tom delay wasn't even the speaker of the house. i think though that - if i were nancy pelosi, i think she is an enormously effective as an insider legislator leader that if i were pelosi i think i would keep a somewhat lower profile. the thing is if your say john spratt in south carolina. i think john spratt should be the face of the democratic party in south carolina. not nancy pelosi. you know, hispanic or theica th political figures in terms of household names. i think if she did fewer press-conferences and stuck to where her strengths were, i think there her party would be

better off. just as republican party was not helped by having a tom delay as most visible member of the house even if he was at no time speaker, i think that was true. democrats are better off if speaker pelosi is not quite as visible as she is. so i think the caller is not all wrong. host: last fall you talked about a primary in new york and match up with rudy guiliani. what's happening in that raise in new york? guest: well looks like senator is in good shape to me. the democrats problem is on the govern nor ship there's a lot of turmoil there. will governor patterson seek re-election. the two senate seats run but we don't see these as high priorities for the republicans. they have lots of opportunities and new york is still a difficult state. there's democrats who are not

wildly enthused about senator jillbran but we have all the names of the people that will primary her and there's some that bagged off. this is not a huge democratic vulnerability. host: who do you think the republican nominee will be. guest: boxer is not strong. her numbers are not. got four or five million in the bank which in most states is not a lot of money but in california is not so much money. i think carly will be the republican nominee. there's three or two other republicans at least one other in the raise. two others looking at it. but i um... i think this is more about boxer. it's about two things. number one can barbara solidify herself out there where she's

never been as strong as senator feinstein under the other is as a first time candidate will carly turn out to be assure footed candidate? she has a rather incomplete voting record, political history. these people that sort of have not taken a major public role and parachute into politics. sometimes they do okay and sometimes not. there's a lot of big question marks. i don't consider this is the first tear raise. it's certainly a second tear raise. but whenever you have a challenger that could have a potentially unlimited amount of money in a soft incumbent then that's problem and california it's a state that with a lot. the economy is terrible and it's a pretty volatile place right now. guest: if barbara boxer loses the senate raise. democrats will have a very bad

night. the republican party at one point where looking for schwarzenegger to revive the party and that's not happened. there's as much opposition toward him and his agenda as anywhere. i think the republicans in california are still in very bad shape. the question is of course, can republicans make it about barbara boxer. the republican brand nationally continues to be in bad shape but they have significant opportunities but in midterm elections it's often at least significantly about the sitting president. in this case president barack obama's numbers have fallen and democrats don't bear that number in california. while senator boxers numbers have never been great and i guess i can imagine a scenario where a republican candidate could beat her it would be a quite good republican year if that were to happen. host: and house seats on average for the first year, the first midterm election for the

party in power. between 20 and 25 house seat? guest: no. 16. in first terms for elected presidents post world war two it's 16. the way you get in the 20's if you say all midterm elections including the second term, midterm election tends to be more volatile. but i think to that point though, i think once it's important to consider that 2006 and 2008 were fabulous for democrats. kind of like a greenhouse. growing orchids and tropical plants where the temperature, soil, water, sunshine perfect growing conditions for democrats and they picked up 54 seats. now as stew said earlier on. i think democrats are at the high water mark for this period of long-term time and republicans are probably usually low. i think the odds of this going over 16 are very, very high.

more than average. host: aid in deer born michigan, good morning. caller: it's really cold out here and i appreciate your show. host: it's cold here as well. welcome. caller: thank you very much. what i wanted to mention for the both gentlemen you have on t.v. offer there is we, the tea parties has lost faith in the democrats and republicans and i myself come from a democratic background who voted for president barack obama and expected change and we're still waiting for change. my question is, for 2010, will the candidates do what they promise to do? we do hear a lot of promises that we're going to change healthcare, whether it becoming out of wars and now we're

hearing we may be going into yemen. we want to fight terrorism but we need to look at the national front and our jobs are going overseas. >> thanks able. a response. guest: his comment was we're still waiting for change. but if you talk to most republicans they'll say there's been way too much change. we don't like the kind of change. when people use the word change they really mean they don't like the people in and they want to be in or change the people in. change is still the message of the day steve. i think it's remarkable. we see now this is the third election cycle where it is change. change, change. economy and unemployment numbers. foreign policy. but it's now - it's flipped the other party now that wants change. change become as montre for, we don't like the direction of the

country so let's bring in different people and get new policies. the problem is there's not widespread agreement. >> he's calling for a state where the unemployment, "washington post"- >> republicans have a chance to win the governorship in michigan. i think voters there are just are open to almost anything now and that includes republicans. guest: to pick up on what stew said. people are unhappy with the republican v:>> in 2006, they threw them o. in 2008, the republicans out of the white house. at the same time, while the democratic brand is being damaged, the republican brand is not correspondingly improving. that is what makes it so

volatile, is that the voters are growing disillusioned with democrats, but they still have not reconciled themselves to the republican party. and so we are creating an environment that would be perfect for a strong, independent candidate. but independent candidates tend to be french, they tend to be eccentric. they tend to not be able to catch on -- they tend to be fringe. it is highly flammable but unlikely that many ranches are likely to be struck. -- many matches are likely to be struck. host: both of these web sites are linked to our site, if you want to check it out. ken on the democrats' line. good morning, ken. . .

all the time. my question is dealing with some of the african-american civil rights leaders and some of the people in congress coming out calling the president out about you know, he's not doing enough to help african-americans and i just want to ask, is this like a form of you know, voter suppression when you know they come out and speak like that - in other words, pumping up the conservatives and really suppressing the african-americans from even coming out to vote. you know, does it have like the jesse jackson, al sharp on the effect pumping up conservatives because african-americans really don't. guest: my response is this is simple interest group politics. this is some significant high

profile african-american political leaders that want to pressure the president's agenda so i don't think it's an attempt to suppress the american or african-american vote it's an effort to push the president down the road these leaders want. guest: i think the pressure is on the first african-american president to not just do but to go much further than any president has ever gone for causes sort of aligned with the african-american community. i think the pressure is awfully high and potent for disappointment is great, but i think you know president barack obama is trying approach it like he's the first president who is an african-american rather than an african-american president and that's obviously going to leave some in the african-american community disappointed but at the same time the job approval ratings

among african-americans, hang on it's 89 percent. actually 91% in the gallop pole for the week of december 21'st of 27th. i tell you what. that's about as close to 100 you'll ever see in a pole so i would not say there's any widespread dissatisfaction with president obama. maybe some highly visible people making lot of noise but 91% is a heck of a job approval rating. guest: and rothenberg there's a special election to fill the seat by the late senator edward kennedy. raise between scott brown republican in massachusetts and the state attorney martha cokely. massachusetts has not elected a republican for many years. mitt romney is the most recent example. guest: voters in the state are willing to vote for the minority

party for governor and statewide offices but usually not for senate seats which are regarded as more ideological and to some extent more partisan. if you look at republicans elected governors in massachusetts. rhode island. hawaii and vermont. very democratic states and they have governors in places like wyoming and a number of conservative and for senate seats we don't see it often and increasingly we don't see that at all when we live in the polarized washington politics i think we're all watching because we remember there was a house special election in massachusetts not long ago where now congressman won but it was a surprising raise. we're all looking here to see is there going to be some message of dissatisfaction even in a democratic state but it's

difficult to imagine republicans winning. if they do that will send chills. host: snapshot on january 19th? guest: i would be astonished if republicans didn't win but it's astonishing how many republicans we've had in new england and i think it's voters own way to have a check and balance. if you have on other when he will ming democratic legislation then they like a republican to balance it out. caller: good morning. steve, good morning gentleman, speaking from the people's republic of california. stew you made a very interesting point saying governors from new england, republican governors have been winning elections. what's interesting to me is that, i think that what you

haven't put your finger on is that the independent i think in this country will determine the 2010 election across the country. the nature of legislation democrats are bringing into the spotlight after the recess of course is healthcare, then we're faced with the carbon tax and the war going on in afghanistan. i think that if i were to give any kind of a hint of successful elections across the country for republicans, is be the loyal opposition and let the democrats hang themselves the independents are going to be tired of unemployment and big spending. what do you think charlie?

guest: no, i was just looking among independent voters. let's see the gallop pole. the president has been a job running around i think at about 46 percent among independents and this is a group that gosh they went for democrats by 18 point margin in 2006. went for president barack obama by 8 points in the last presidential election and president's head is a little below water among in de pen at the present voters and in terms of ballot democrats are further behind. i think this caller is right. independent voters is - that's - they are the swing group and the thing is while independents tend to vote in somewhat lower numbers in midterm elections than presidential. you know, do these independent voters swing against democrats because they're unhappy with the

democratic congress or are they so disaffected it's a vote on houses and do they not show up at all having turned on republicans in two elections and then democrats turning on them and saying to hell with all of you. there's some degree possibility of that that you could see an unuse wally low turn out among independents that are mad at both sides. host: midterm elections. michael bennett appointed in that seat to replace senator sal czar at interior why is this raise so much up in the air? guest: he has a primary against democratic legislator that has some establishment support, but mostly establishment is with senator bennett. there's no doubt but romn o f is an in surf get and insiders say

he's personally ambitious but bennett doesn't have deep roots in democratic party. hasn't been active in part son politics surprise to us by the governor. you have a democratic primary to take some resources to be spent winning the nomination. and while the republican raise is a bit confused and hasn't quite developed although jane norton appears to be the front runner. i have not yet met her. i try to read the candidates to get a sense of who they are you can read about them but until you sit town with them for an hour. i don't want somebody else's evaluation. guest: you know her brother-in-law. charlie black. guest: that's true but i want to sit down with her. this is a good example like in

2006-2008 the democrats have a good opportunity to make it about the republicans. but now it's going to be much more about the democrats and the oil opposition was right. the republicans need to make this about democrats and democratic problems so the democrats will say these are republican problems that and off to us. it's harder to sell that. in a case like colorado if norton turns out to be the candidate she may well be in this environment those independent voters will swing and there's the other element. is democratic turn outgoing to turn out like it was in 2008. younger voters probably not. will republicans turn out higher because they're more energized and want to send a message. it's the combination of the changes in the state like economy. host: bryan for dallas.

independent line. good morning.. caller: good morning. you're talking about independence and i'm independent. not one that swings back and forth. think the two parties failed and i hear no conversation and as far as i'm cancered there must not be any independent parties. i did hear ralph nader would run for a senate seat. have you guys heard of any strong independents? guest: well he's from connecticut and rumor there's some discussion of him running in connecticut for the chris dodd seat, but you know, for residency requirements for federal office are minimal and you basically have to be there by election day for all intensive purposes but the thing is, the fact is, yes, there are a lot of voters that are

disillusions with both parties and increasing numbers that call themselves independents but the fact is, independent, there are rarely are there credible candidates running as independents and even more rarely do they actually win. it's just that way. the kinds of candidates that typically runs a independents are sort of fringe candidates that don't have lots of contacts and don't have no organizational ability and you know, you tend to be somewhat eccentric. it's rare that you see a strong viable independent candidate so that's why we talk about independent candidates are strong on potential but the reality usually falls short. host: democrat line. good morning.. caller: i wanted to know, i

know you have a lot of statistics in poling and what i consider the nonpartisanship fill buster party. i wanted to know how the republicans rated, just the republicans and in the congress on both the senate and house of representatives. just their rateing a loan as compared to just the democrats rateing both house? guest: well the only party that's got a worst favorable rating is the republican party. when you look at job approval ratings for democratic leaders in congress verses republican leaders in congress, the democratic party leaders have a lousy rating and republicans are even worse and the favorable unfavorable, i don't have the numbers. you have the "wall street journal" pole there. but the republican party

favorable ratings are extremely low. that's one fly in the ointment for why republicans may not be able to make enormous gains in the election is that their brand is damaged. i think i made the point earlier that in 2006 when democrats made such huge gains the democratic brand was not damaged. when the republican party made great gains the brand wasn't damaged. that could put a ceiling on how great a rear this could be. host: calling from missouri. a state this which the two likely candidates. the former governor of that state and mr. blunt who's son is now vying for an open senate seat right now. guest: extremely competitive interesting raise. this would be or could be one of the closest raises of the cycle.

statewide elected official. good name, democrats, enthusiastic. united behind@@@@@@@ d a)@ b here many years ago, son was a governor here, a significant figure here. we have the race as a tossup. this is one of the races i think is a tossup except here is a little kicker. it depends what the national environment is like, how bad it is, how difficult it is for democrats. missouri is likely to be a state where the democrats start off with having some problems. very close race in the presidential election, as you will recall. there aba considerable age because it would be about president bush but now it's going to be about president barack obama so i think that changes the mix.

we look for a very close raise here. charlie's point. host: did we fill i buster enough? guest: yeah. the republican party. this is not republican in congress and democrats. when you put the word congress in a sentence numbers drop significantly. positive 28, negative 43. the democrats is better. 35 positive and negative 45 but not a lot there. host: mark from ohio. republican line. good w morning. caller: wanted to bring up the election here in ohio has gotten to be where there's so many job losses and so many people haven't insurance i think the republican party will have a tough time here.

look. even republicans realize we ain't got insurance. and all we see is just push back and lives distorted. i think the election will bring out we missed an opportunity for like even me as a republican, not being able to get insurance. i'll hang up and listen to your phone call. host: either one of you? guest: i'm not sure what specific insurance the caller is talking about, but the thing is republicans party had everything. they had virtually all the offices in ohio for a long time and obviously the presidency control of congress and they paid a price for scandals in columbus. miss steps in columbus and national problems for the republican party and paid a horrible price. now democrats have almost everything in ohio. presidency.

congress. good governorship. both houses of legislature and at one point. they just have one split? okay. host: we'll get calls if i'm wrong. i think they're split. guest: the point is, at some point, ownership conveys. ownership of the economy conveys from the republican side to the democratic side and generally in two years that ownership pretty much goes over and the question is, is there a shelf, how long will sort of the bush hang other last verses obama and democrats having responsibility for the economy and i think in two years that ownership conveys. guest: i think this is one of the most fascinating states. if you look at statewide ballots. up and down they recruited one strong candidate.

marry taylor the state auditor. the republicans took a bath this the state the last couple of elections. i think the representative reason republicans are over sold. the last couple of years you get a misinterpretation. the state in a bad economic environment. the key thing is rob important man. somebody mentioned. former congressman and former u.s. trade representative under bush. easy to tag him, bring back george bush. representative r - well that scares democrats but not scary to independent voters or squishy republicans because now the focus is on president obama and i think they'll try to mike it about george bush. with each day of the calendar it gets harder. while there's still animosity among democrats independents are

much more about mood if they were strong ideology they would be republicans or democrats but they're independent so the mood right now is for change. . that gal could win in that heavily democratic, heavily african-american district. i think probably if i had to say realistically, that's the other end of the state where i'm from, the only realistic chance he has is if there are effectively two democrats in the general election. you know, one democratic nominee and another running as an independent. but as disorganized, con have a looted, byzantine as the

democratic party typically is in orleans parish and where it's driven more by factions than by anything else, you know, it's entirely possible that that seat could stay in republican hands only because there are a couple of democrats that would be in the race. but, you know, we're not there yet. we have a long way to go but it's certainly a heavily, heavily democratic district and the odds are it will probably go back to democratics. host: lee joining us early morning in fresno, california. good morning. caller: good morning. happy new year. i guess i am a squishy and moody and not sure and fringe because i'm an independent. guest: i did not say that the voters were fringe, but the candidates were. host: senator feinstein --

caller: senator feinstein is going to lose. host: senator boxer is up for reelection this year, but senator feinstein. caller: all of them are tied together, so who ever is, for re-election is going to lose. but charlie and stu, please stop trying -- tying teabaggers the republican party. independents are going to be independents, democrats are going to democrats, republicans are going to be republicans. guest: first of all, we are not tying -- guest: i think most of the key backe -- teabaggers are

republicans. i do not think a lot of them are pure independents are not more aligned with republicans and democrats. guest: i don't think it is something new. i don't think we are creating that. there is a lot of discussion about where these people come from, and they are generally anti-big government, anti-obama, anti-tax, certainly. might there be some libertarians or, sometimes when you talk about the political spectrum, he get very far right or left, and there are some people like that who are rather anti- establishment and might be attracted to the protests. sure. but generally the tea party movement has been characterized as more conservative and more republican. and charlie is right. it is an important part of the republican coalition. to the extent that it defines the republican party, that would be a problem.

host: an open seat, senator judd gregg not seeking reelection. what is going to happen? guest: the key action is on the republican side. to the republicans nominate a true blue, traditional hard-core conservative, or do they go with the state attorney general, who is certainly moving to the right position herself as more conservative, but stylistically despite considered -- stylistically is considered less of a movement conservative. i think that is one case where what happens in the republican primary really will be very important in terms of what happens in the general election. host: we will look at some other races to watch in the 2010 midterm election.

francis from indiana. good morning, on the democrats' line. caller: good morning. i'm almost 73, and i'm a political junkie. i would like to know what our -- the story of eses and diebold -- is a little housewife is exposing this on her website. host: turn this into a question for our guests. caller: why did we privatize or vote? -- oru -- our vote? all the votes in ohio in 2004 were shifted and the tallies were changed. host: the 2000 election is fresh

anthony peoples mines. -- fresh in many people's min ds. guest: i don't believe a 99.9% of these election fraud stories. believe that ohio and 2004 -- i don't believe that ohio in 2004 was not entirely straight up. i do not think i've seen a legitimate case of election fraud in federal case in my entire career. i think you are more likely to have a sheriff's race someplace benningha than to have a house f tora waste. people get off on conspiracy theories. there are those who convince themselves that there is a great conspiracy out there. but you will find very few people who are professionals who

watch elections for a living to put any stock in any of this stuff. host: eugene, oregon. there is a senate race out there. ron wyden seeking reelection. republicans waline. caller: i hear a lot of political talk about one party or another, and you are reading numbers about the disenfranchised. i'm a working guy, have been laid off, and what everyone of us is talking about, what everyone is saying, what does not seem to be getting hurt on the political level is that there is no real change. the change we're talking what is jobs coming back, seeing the people here are actually having their lifestyles getting better, not worse, with health care that is affordable, not just an option, but something real and affordable so that we are now

trapped in ones we don't like. guest: this is a problem the president has. the congress has been doing a lot of different things, but the results have not been there. people do not see the results. if the economy were improving, even if the president had not done anything, he would get credit for it. and that is the change, the change for how people feel, that they're happy with the way their lives are improving. this is the problems of the democrats' base. it is not enough for president -- this is the problem that the democrats face. it is not enough for the president to another speech about change. it is results. as long as the news is that when people open the newspaper or turn on the tv, whether it is afghanistan or the economy or to have personal instances of running into health care problems, insurance problems, they will not feel there is change, who was up there. -- no matter who is up there. host: there is always something

under the radar screen. i want to ask you about what you think is an under-the-radar race. louisville, kentucky. caller: i have a comet that and a question to go with it. i'm one of those people who has paid off the mortgage and i'm not entitled to any of the handouts that the governor is making to those people who did not bother to pay mortgage payments or credit cards. so i feel like an idiot. my question really is, i'm watching what is going on in this country, and i have a sense of history, and i understand cats the definition of communism is a redistribution of wealth, control all facets of our lives, and i see that coming down the pike with medical care and loan modifications that amount to 900,000-plus per modification that the federal government has made, and spend

$47 billion to do it. that is a redistribution of wealth. i don't know who it is going to br. contracts are now going based on race. you guys are supposed to know what is up. i am connecting the dots, and i am seeing redistribution happened right before my very eyes. but i've seen what this party has promised basically for a century, which was never worked anywhere and couple why we would want to try it is gone needed -- and why we would want to try it is beyond me. . the national workers socialist party. what are the other. i'm not sure which. guest: well, the thing is, i am not sure i ever met -- bernie sanders used to call themselves socialists, but i'm not sure i ever met a candidate -- used to call himself a socialist, but i'm not sure i have met and who

calls himself pick communist or socialist. the government has taken a reach into the private sector and more than we have seen in most of our lifetimes. it was in response to the fall of lehman brothers and the credit markets using ups and the stock market crashing -- its credit market seizing up and the stock market crashing in 2008. extraordinary steps were taken by a republican president and republican-appointed chairman of the federal reserve and it continued in a democratic administration with an extraordinary economic catastrophe. i think there's a lot to fault president bush on, but his acting -- his backing -- it was probably one of his finest hours.

they can have their own opinion. but i don't think -- i think calling this stuff communism and marxism is a little strong. host: you were talking about new york state. it's the trieffecta because you have two senate races and then the governor's race. does that have any impact on governor patterson as he seeks a full term? guest: i think the key is governor patterson, i have to

give my associate name gonzalez credit on the governor's races because he follows them more closely than i do. he continues to tell me that he wonders whether the governor's going to stay in that race. his poll numbers are so bad, he's under a significant amount of pressure not to run for election. you know, if he runs the democrats could lose the governorship. if he doesn't run and quomeow, who is the attorney general of the state, then walks into the nomination, the democrats would certainly hold the state. again, until a politician announces what he or she is doing, i'm cautious and sometimes after they announce it they change their mind anyway but it's wise to be cautious. let's wait for the governer to make a decision but he's under considerable pressure to find a way to bow out gracefully. it will be a difficult race for him. but i don't think the senate races are effective at all. host: under the radar screen-is

that the case. guest: we do our ratings of the time. i do not believe in least in the senate races, we have done that in our senate races. i do not really have one. with so much pulling taking place, particularly in these senate races, it is kind of harder to have those surprises than it used to be. host: you get the final word.

guest: you have to look at some of these house races that are in the early stages that may be a surprise. i would not pick a senate race. i think most people out, many reporters and journalists, it is incomprehensible for some to take on the senate race. people have mischaracterized him. i remember when he was running for the u.s. health he was much more comfortable at

>> on tomorrow morning's "washington journal," evan paris of the "wall street journal" on national security issues facing the obama administration. after that, jane oates from the labor department discusses shortages in unemployment funds in the states and then richard fontaine will talk about al qaeda operations in yemen. "washington journal" begins each morning at 7:00 eastern with your calls. and later in the morning the car neglecty endowment for international peace hosts a forum on the world economy in 2010. panelists include representatives from the world bank, the international monetary fund and other groups. that's live at 10:00 a.m. eastern.

up next on c-span, a conversation from the university of virginia on health care. after that, remarks from british conservative party leader david cameron. and later, secretary of state hillary clinton talks about yemen and iran. >> now available, c-span's book, abraham lincoln, great american historians on our sixth president the. a great read for any history buff. a unique and temporary perspective on lincoln. from lincoln's early years to his life in the white house and his relevance today. abraham lincoln, in hard cover at your favorite book seller and now in digital audio to listen to any time, available where digital audio downloads are sold. learn more at c-span.org/lincolnbook.

>> former capitol hill staffers joined academics to compare views. this is about an hour, 24 >> good morning, everybody. welcome to the university of virginia's miller center. this year's conference is devoted to the message of debt and deficits. we learned about global imbalances, exchange rates and the global dimensions of u.s. debt. today we turn our attention inward and explore policies and associated attempts to handle health care expenditures and the possibility of designing legislation to deal with debt and deficits. we will continue our wide ranging discussion and i want to remind the audience and the participants of a few ground rules. fist our presentations are intentionally designed to be

hort, -- short, to facilitate discussion both among panelists and with the audience. when our moderator decides that it is time to open the floor to question and answer, those of who you have questions, please go to the back of the room where ashley will be holding a mike opportunity to ask your questions. the second reminder is that if you have cell phones, blackberries, iphones, anything electronic other than a pacemaker, please turn it off, all right? the signals from those interfere with our tv, our mikes, etc. and i will pause for a moment while that happens. i feel like we're getting ready to board a flight and take off. our first session for this morning is entitled writing a prescription for reform and it features three panelists, we lost one unfortunately to family complications. our panelists include thomas rice who is the vice chancellor of academic personnel at the

university of california-los angeles and he's a professor in the department of health services at the ucla school of public health. the professor of economics at dart moth and he also serves as a professor at the institute of health policy and clinical practice. our third panelist is eric, he's a professor of politics and public policy and is the associate dean of u.v.a.'s school of leadership and public affairs. our moderator for this panel and the next is allen murray who is the deputy managing editor and executive editor online of "the wall street journal." >> thank you. so, each of these gentlemen is going to make a presentation of no longer than nine minutes. if they do go longer than nine minutes i urge you to start fidgeeting our russell your newspapers. two of you are reading "the wall street journal," the it's the write one to russell. i saw a "the new york times" back there, we can live with

that. we're going to have a discussion among us and then we'll open the floor to all of you. and tom is going first. >> thank you very much. i'm delighted to be here and i'm glad that we're talking about health care costs now because that's certainly an important part about debt which is the focus of the conversation. i'll be focusing on what factors are in my opinion responsible for the high and the quickly growing health care costs in the united states and then i'll just end briefly with some thoughts about how this fits in with health care reform and i have only two slides. the first slide shows you how much of an outliar the united states is with regard to health care costs. now, you might think that we spend a lot because we're rich but that's not the case at all. what we have here on the vertical axe sis how much the country spends per person on health care and on the horizontal axis we have how rich the country is and if you put a line between the two, what you find is this is one variable,

how rich a country, is pretty much explains how much every country spends on health care with one exception, the united states. when we talk about the u.s. being an outliar, i think this is what we're talking about. the u.s. spends about twice as much per person as other countries do on health care and if you look at number two, switzerland, we're 56% higher than the swiss. so why are costs higher here? this i'll be focusing on and there are many factors, there's an economic, political, historical ones, it's hard to come up with a short list. but at the risk of doing so i've come up with a list of four reasons why i think health care costs are higher in the united states than elsewhere. and their lack of consolidation, purchasing power, medical technology and specialization, paying for unnecessary care and fee for service medicine and i'm only going to talk about the first one of these although i'll leave the others at the very end because john skinner will be

talking about the other three, i believe he will be in his talk. i understand lack of consolidation, purchasing power, take a counterexample which would be canada. canada has a single payer system. there's only one buyer of care in canada, that's the provinces. so they're what we called a monopoly on the buying side. so they have tremendous power in their negotiations with hospitals and doctors and pharmaceutical companies. and they didn't always have this, in the 1960's they were like the united states, they relied on private insurance. they spent more than we did on hospital and physician care. since that time, since they consolidated, had the government get involved in the purchasing of services, their growth rates and their costs have been much lower than the u.s. costs. but that's probably not a good model for the u.s., i don't think the insurance companies are going anywhere. so what we need to do is look at a model that involves insurers and there are many models out there that are much more

effective at controlling health care costs. one example, for example, would be france. france has multiple insurers but the government does the negotiating and the coordinating of the prices that they pay to hospitals, doctors and pharmaceutical companies. germany doesn't even use government. it has a consortium of insurers that do their own bargaining and then they pay common rates to providers. so to me the key is not to have one buyer as in canada but if you have multiple buyers you want two things to be true, you want payments to be coordinated between the insurance companies that are doing the purchasing and you want the insurance companies to be nonprofit. that's obviously something that we don't have in the united states and are unlikely to have so it's going to be tough for us to control costs here. i should mention a safety valve, other countries allow people to buy supplemental coverage, to

get greater benefits or jump the queue and that's probably necessary for political stability although obviously it takes away from the equity of some of these systems. there's some other advantages for this coordinating of buying. one is that providers don't have an incentive to choose one patient over another. right now medicaid patients aren't worth much so doctors don't want to treat them in their offices. that's not true under a system like this. also there's no opportunity to cost shift. everybody's paying the right amount for their patient so one pair isn't taking advantage of another payer. we do have one example in the united states at least where we take advantage of the power of the buyer and that's the v.a. system. in some recent research indicates that v.a. pays about half as much as private insurance plans pay under part d of medicare for prescription drugs. they are taking advantage of their purchasing power. and we're relying on private insurers committee are'

competition in part d of medicare, it isn't as effective as the v.a. which does take advantage of its market power. let me just talk for a moment on a private insurance. we rely on private insurance here. it's for-profit insurance. i think it leads to much higher health care costs. private insurers, obviously by definition, they have to make a profit. in addition to that they engage in marketing, they also engage in what we call medical understood writing, they have to hire a lot of actuaries to make sure that they're not taking on people who are too expensive. these are all very costly things. so that raises the price of private insurance. in addition, as i said, they don't have as much bargaining power so they also can't keep their prices low by taking advantage of the consolidated power that i'm talking about. so you might ask, why do we allow private insurance to have quasi-monopoly and the answer is that there's no reason to think that those savings would be transferred to the public. what you really need, i believe,

playing this middle man would be nonprivate insurers. we don't have that in the u.s. and i do think that that's one of the key reasons that we're more expensive than other countries. so let me just end with a few thoughts about health care reform. as you know the current proposal for congress really do very little to control health care costs and i'm going to argue that that's probably a reasonable short-term strategy and i know people will be disagreeing with that. if you look at my slide here, the proposals do nothing to consolidate purchasing power, the caveat is the public option and i'll talk about that in a moment. they do very little to deal with, the pro live ration of medical technology, they do very little to try to get doctors to be in primary care. in terms of paying for unnecessary care and fee for service medicine, john will be talking about this, there are

some nice things in the bills that talk about movement toward accountable care organizations moving away from fee for service medicine by bundling payments, not paying for unnecessary care, giving incentives to provide better care, but these are going to probably start with pilot studies and it's going to be a very rocky road to get from the research evidence to whole sale changes in the u.s. health care system. so in the short-term i really don't think we're going to be doing very much to control costs. but as i said, i don't think that this is -- one more thing i wanted to mention is that one thing that we're interested in doing is having more research on what we call comparative effectiveness. what things work and what things don't work as well. and eric is going to be talking some about that. when congress gave about $1 billion for comparative effectiveness research it said that we couldn't look at the costs, we could only look at the benefits of this. this is something that my colleagues in britain and australia who look at both say is nonsensical. how can we choose the most cost effective things if we can't be looking at the cost? but it was a political decision

congress made and it's really going to stymie us as we go forward. so anyway, putting -- why do i think that putting costs aside now might be a good idea? i think it's to build a political constituency. you really can't talk too much about cost control. cost control is not a mom and apple pie thing. every dollar of cost you save is a dollar of income that you're taking away from someone. if you're trying to put together a political constituency that's not the way to do it. i think probably what we should do is what medicare did in 1965. it basically was a christmas tree in the very beginning. that's how they got the legislation passed and after legislation was passed then they started putting on restrictions and in fact we must be doing a pretty good job because now everybody's so scared that medicare pays so little that we can't be using that as a model because it's too stingy in its payment. so we did put in cost controls later although as you'll be hearing medicare certainly has its financial problems. so let me just end by saying, i

think the public option would have had the potential to control costs because it could sell insurance less than private insurers do, it would garner market share, that could allow for the son col dated purchasing power i -- consolidated purchasing power i talked about which would bring more buyers there. reading the newspapers it doesn't luke like we're going to have much of a public option as part of the political compromise but that would be the one way i could have seen health care reform having potential for controlling costs. if we could end on a positive note, not about costs or debt, i think as we move toward universal coverage we're going to be creating a system that will be able -- more malable to the changes we want to see with regard to cost containment. if we can get everybody under the same umbrella we would have one system that would make it much more possible to control costs. thank you. >> tom, thanks. before we move onto john, let me ask you one question.

when you talk about consolidating purchasing power or monopoly buyers, you're talking about a system of price controls or something very close to price controls. i guess the question is, we know that can lower costs, but what would the effect be on innovation, on quality of care, etc.? >> sure. so, we have a nice natural experiment because almost all of the countries do exactly what you're saying. and let's take the case of germany. germany's a system that sends far -- spends far less than we do. their medical outcomes appear to be better than ours and they don't have to wait for services. actually waiting time for services in germany is a little bit lower than the united states. other countries that i've talked about, france, also have excellent outcomes, so i don't think that you'll necessarily be sacking -- sack fiesing quality. a commonwealth fund has done a

survey of six countries, a combination of surveying the population and surveying physicians in the countries. and they've ranked each of the countries in regard to six different elements. the u.s. comes in last altogether and comes in last in most of the six elements in terms of quality. canada interestingly came in fifth. it's the other european countries that it tend to do better. so there are examples of what i'm calling no monopoly power where it appears that they can pull it off with a system that still provides high quality care at a lower cost. >> john? >> thank you. i'm going to switch over. >> i'm delighted to be back to charlottesville. university of virginia gave me my first job and i had a truly wonderful time here and some extraordinary students. it's nice to see students here also. such as eric, for example, who

wandered into my class and realized that the drop date was too late so he had to stick it out. but it really made for a wonderful time. about the quantity side. tom has talked about getting prices right, which is something economists like to talk about. but i'm going to also look at the quantities, how much health care are we really getting? is it the right amount? solutions to getting the quantity right. prices matter but they may not be -- but there may be other ways to get there. so first of all i just want to make this observation, if you talk to most economists and you ask, why is health care cost growing so rapidly? why is health care -- wry health care costs imperiling the fiscal soundness of the united states government going forward for the next 20 or 30 years? they'll give you one answer, it's technology growth.

technology growth gives us good things, but it also costs more money. but my usual response is to go back to an earlier debate about gun control where people used to say, guns don't kill people, people kill people. and what i'm going to try to convince you is that it's not technology growth, itself that causes health care costs to grow, it's the people who use that technology, it's the rate of diffusion across the population that really effects the growth in health care regions in the united states and different countries in the world that have dealt very differently with that kind of growth. and i'll show you some pictures. here's one from an earlyier article that shows regions in the united states and i'll talk a little bit more of about these, and it shows the change over time in spending between 1992 and 2006. these are adjusted for inflation

and per capita for age, sex and race in the medicare population. what you see first, sorry that the type is a little bit small, the orange curve on the top is miami which is a very special place. it started high and grew faster at a faster race. but the place i want you to notice is the one we're looking at in particular is san francisco which is kind of an -- a yellowish color. and their growth rate was only about 2.4% per capita during this time. compare that to the 3.5% growth rate of the -- in the national average and the idea is is that if we can figure out what it is that san diego does, that san francisco does, even that dallas does, that the rest of the country hasn't figured out with regard to restraining growth, that we can basically get medicare back on at least an even keel for the next few decades and if you run the numbers out, that is, if you say, ok, san francisco, 2.4%,

united states, 3.5%, that's a difference of 1.1%. it seems small but that difference grows over time. this is something economists teach either the wonders or horrors of compound interest. it's the difference, as you can see, between current projections which is the blue line for the sort of combined medicare deficit or debt, i should say, versus what would happen if we mansioned to slow growth by 1.1%. it's dramatic. it's dramatic. and that's the key to getting health care costs under control. it's not some -- something that's never been done anywhere in the united states. in fact, it has been done, we just have to learn from how they do it and to provide the vite right now medicare has no incentives to reduce growth rates. in fact, they will pay for anything that doesn't kill you. the second observation is that -- is it gets back to something that herb stein, president nixon's economic advisor used to

say, and he used to teach here for a couple of years in the economics department. and what he said is that unsustainable growth is unsustainable. so health care costs cannot grow without limit, current projections are that they will account for more than 100% of g.d.p. if they grow -- at the current rates by -- within 75 years. that's clearly not something that's going to happen. but we can look to other countries to see what has happened and i want you to note, again, this gets back to my earlier point about how different countries have dealt with technology growth in very different ways. let me explain to you what this number is. the number on the left-hand side is the change in spending on health care as a percent of g.d.p. so you see the u.s. is at the right. that's seven. that means that in -- 7%. that means that in 1980 u.s. spending was 9% of g.d.p. -- sorry in 2007 it's 16% of g.d.p.

so the difference is 7%. but you notice at the left-hand side there's s.w., that's sweden, d.e., that's denmark, both of them have not grown health care by more than 1% of g.d.p. they have sustained it. that is a sustainable growth path for those places. and the question is, why sweden, wyden mark, why germany, why the netherlands, as opposed to the u.s. and there's some hint to this, this is a scatter diagram, and it shows, as before, the change over time in g.d.p. on health spending on health care and again you can find u.s. in the upper left-hand corner which is 7% and you notice sweden and denmark below 1%. the key is that sweden and denmark started with a very high tax rate in the 1980's. you can't raise taxes much beyond 42% of the economy. it gets very, very, very

inefficient. we can show this theoretically but you can see this. there are natural limits to how much you can spend on health care. it's a very unfortunate way to do it. but it will happen. and i think everybody recognizes in order to basically feed health care, you have to raise taxes, there's really no other way. but i think that sooner or later we're going to start reaching limits which the united states is not comfortable with. do i have time for -- >> you have two more minutes. >> excellent. the third point, and this is something getting back to tom, tom's points, as well, is that there's lots of inefficiency in health care. i promised a map and here's a map of the dartmouth at lass referral regions. miami leads the country in spending. $16,000 per person compared to laces -- places like grand junction which are about $6,500 per person. and so there's a lot of money

going on. in fact, if you count up the lifetime differences in medicare expenditures between, say, los angeles and minneapolis or miami and massachusetts, -- minneapolis, you end up with a really nice car. this is used -- i mean, it's on the order of $80,000. .

on the left-hand side, you see rates per 1000. in ohio, they like to do a lot of sense. -- stents. in canada, this is the estimated rate. there a2oju potential savings. you would not pick up what comparative effectiveness unless you monitored what doctors did in particular regions. the idea here is that is is that doctors to decide, not some panel in washington or an insurance company. the idea is that these doctor- hospital groups are paid on the basis on how well they sustained growth and cost.

this is the scenario that we would like to have played out. the doctors in this group get together and say that our stent rates are really high. the internal medicine doctors go to the cardiologists and say why is the rate so high? let's bring the cost down. it works internally and that is the way out what to see the direction of health care reform. >> one question that time answered in his comments. you see anything in the current bills that are going to do much with the with the problems you just outlined? >> i agree with tom, they are trying to set up frameworks for these kind of organizations. the language is actually en the legislation. in some cases, there are pilots

which i think necessary because we do not how to roll this out across the country. the greatest disaster is to quickly have them not work and people reject them. >> it is a good first out an incremental stock -- small steps. >> in the short term, get the prices under control. and then restructure the way that health care is practice so that people are an integrated groups. -- are in integrated groups. >> it would be much less worrisome it every dollar was used for better outcomes for patients. a large share of use it -- u.s. health care spending is wasteful and inefficient. it persists because we do not have a good mechanism for identifying the. we often adopt a new as and a significant treatments and technologies even if there is no object of scientific evidence to suggest it is better than

available alternatives. as tom mentioned, congress and the obama administration has been supporting increased spending on comparative effectiveness research about what treatments work best for patients in the hope that better information one not only help reduce costs but improve quality. already nations -- other nations already use this to some degree. but as the problems with the mammogram guidelines revealed, it can develop into a political firestorm. there can be tremendous backlash among providers and advocacy birds. the question is -- what does the general public believe about medical evidence? this is a new issue in the american political debate. we did not know what ordinary citizens think about it. what are people's biggest fears and concerns about this initiative?

to try to get at these questions, my research partner, a professor at yale, and i recently conducted an opinion survey, and i want to share some preliminary results to date. they are subject to revision but we think that our results are sharp an unambiguous and not that we feel confident in sharing them. first of all, the public expresses some support for the concepts of evidence-based restrictions in the health care spending but the public does not fully understand this problem. large majorities are concerns that -- convinced that research on the relative effectiveness of different treatments will not be useful and that treatment guidelines are bald marble to corruption and abuse. lots of groups -- almost everyone is worried about this. the two most fearful are republicans and senior citizens. they're particularly skeptical of treatment guidelines. they think it will lead to rationing and interference in

the doctor-patient relationship. when we as people who should decide if the treatments and technologies are better, the public has the most trust in a panel of doctors and citizens and the least trust in an independent government agency. the public thinks that new treatments are bitterly -- generally better than older ones but this is interesting -- there is some port are willing to except cheaper treatments if their doctor recommends them. let me show you a couple of graphs. when we as people that medicare paying for new treatments of technology only if they provide better results than current treatments, you get a large majority agreeing. i think medicare should only spend money on them if they are better. but if you ask them -- and this is the vast majority of health researchers would agree with this. hard evidence is also -- often unavailable about which treatments work best for which patients -- only 14% of the

public thinks this is completely or mostly accurate. there is a lack of full understanding of this problem. 41% say that this is mostly are completely are almost completely inaccurate. the next question -- if we begin to give the public some of the reasons, both pro and con, about comparative effectiveness research, and we see abbacy groups and others trying to press these arguments and we wanted to test which ones resonate the most, what we see is that some of the arguments against comparative effectiveness research have a lot of traction. one of them is that the research will not be useful because medical studies of this on the effects of treatment for the average patient and every patient is different. some of these studies are not going to be useful for them. there's so much very an spirit everyone has their own health

history. the next question -- the next argument against comparative effectiveness research that generates a lot of support is that treatment guidelines cannot keep up with the pace of medical innovation and will not reflect the latest scientific breakthroughs. somehow they will be obsolete as soon as they are formulated. 73% of the public believes that. and here's one that i think we begin to see some of the fears that the public as. the government and private insurers are going to use research findings to influence decisions about treatment, in appearing in the relationship between doctors and patients. deeply about having a personal relationship with their own doctor. even democratic voters have this concern. a high percentage of republicans as well as independence. another fear is just decided that some outside entity is going to come between doctors

and patients in making treatment decisions. again, democrats find this very convincing are somewhat convincing, a majority. republicans and independents are even stronger. if we look by age group, we see the same kind of concerns about an outside group interfering in this relationship. especially seniors are particularly worried about this happening. 67% find is a very convincing and 21% find it somewhat convincing. again, we see concerns throughout the political spectrum, republicans and independents are more concerned and democrats but there is concern everywhere. we gave people a list of

possible entities who could make these decisions about treatment technologies providing better results -- who should be making these findings? we gave people range of possibilities, and you see that the people -- a group that people trust the most our panel of doctors and citizen. university scientist did not fare as well. a commission of business leaders did very poorly. an independent government agency, only 3% believe it. >> what happens when the panel of doctors and citizens is empaneled and powered by an independent government agency. >> good question. who would you trust the least? an independent government agency wins by a nose over a commission of business leaders. and we press that one. here's the breakdown by democrats -- by demographics.

those who have the least trust in an independent government agency, 39% of overall, 90% of democrats, 63% of republicans, 53% of seniors. part of what is in public opinion -- this is new, something that political scientists have not spent a lot of time to understand how americans think about the health care system. one thing that is clear is that people but that health care is getting better and that new effect -- that new treatments are more effectivenes. all large quantity of people believe that. this one i thought was interesting. if your doctor tells you that there are two equally effective treatments that your insurance will pay for completely -- so there is not going to be any financial impact for the patient -- which is still prefer the more expensive one?

your insurance company is going to pay for it. the doctor says, they are the same. would you go with a more expensive one because you think more expensive things are better? the majority disagreed with that. they were willing to defer -- warsaw among the whites and other ethnic groups. we do not have a full understanding of whites. this is important about doctors mediating decisions about costs and prices. >> i would still watch what they do, and not what they say. >> absolutely. and just to finish up a few other slides. how to probe about how americans think about the health care system, 55% -- 59% of seniors -- and this is really remarkable -- they believe that modern medicine can cure almost any on this for people who have access to the most advanced technology and treatment. we believe in america that

madison can keep us young, can keep us healthy, can keep us alive. of very large extent. 64% of the public believes that improvements in the quality of health care is the most important reason that people live longer today than 75 years ago. we gave people a lot of reasons like better public health, decrease in smoking, better nutrition -- but a majority believes that it is really medical care. she i do not know that they are right about that. the last point here is that if you asked a lot of help economists and experts about why is health care so expensive, it would come back to this fee-for- service system and the distortion that it creates, and that special the groups, although they care deeply about the patients, they try to maintain their incomes.

is there recognition that this is a part of the problem? only one in three americans believe that this is an important consideration when doctors groups are making recommendations for patient care. >> we should feel very fortunate to get an early look at these fascinating numbers. >> these are preliminary, i should stress. >> we are happy to see this. it is fascinating. i think the three of you have made a very compelling demonstration that the current system -- if you can call it that -- in the united states is indefensible and unsustainable, to "the american president, said the status quo is not an option. but leaving aside that, we are in the middle of a great debate in this country about how to move forward on health care. and one option, tom, is the one that you laid out to move to if not a say it -- single payer

system but something like it or you have a monopolistic purchasing power and the purchaser uses comparative effectiveness training to decide which treatments to pay for and which treatments not to pay for. that is one direction, single payer. the other direction is -- can we do in the health-care area what we have so successfully done and so many areas of our economy and create an actual functioning market place where consumers have bundled care, that improve -- that consumers can look it comparative effectiveness studies, that this is more cost- effective than i do not want to blow all of my savings to purchase this one. create some sort of system work choice works to create cost -- keep costs down and quality up and to satisfy what ary demonstrated is the public's belief that if the government is making choices for them, they are going to get stepped. -- stiffed.

please comment on that debate. is it real? as you pointed out, tom, no one else is taking this on. but americans have great faith in the market and sent word to their great benefit and airlines in telecommunications, why not been held? john, i will let you go first. what is that? [inaudible] well done. to uche. >> this is the fundamental question, whether we're different from other countries, whether we should look to other countries for a model on how to reform health care or continue to try to make something that we feel comfortable with that has obvious links in the past. a brilliant surgeon the works for the and new yorker wrote some time ago that if you look

at health care reform in other countries, they often draw on their -- they did not come up with something brandy. they draw on their existing structure and try to move it forward. my own view is that i think that people find it difficult to make market-based decisions at the time of deciding what kind of treatment to get. i ran into this recently when i was called about my cat, whether i wanted to spend $600 on an operation that had a 33% chance of success. this cat is not even like me. [laughter] -- does not even like me. and i had to make that call. and about my family members are myself, i do not know how to do it. but i actually like best a system where everybody gets a doctor that is worth a certain amount of money for their own insurance plan. they can choose what ever insurance plan that they want. it is single payer, but it does

not single provider. if i want to get an insurance company that tells me in in advance, we are not going to pay $30,000 for that treatment for pancreatic -- advanced pancreatic cancer that expands your life by two weeks, and then your premium will be less. but you have to agree to that beforehand. i would sign up for that kind of plan. >> does any other country in the world use that sort of system? i do not think so. >> de choose other methods. this is new and different and not exactly the way that other countries do. >> it would be an american market-based solution. >> that is fine. you pay for it. >> based on your comments earlier, tom, you would not agree with that. >> the -- we ration in our

country, and this is consistent with what john was getting on, if you can get a cheaper policy did not cover something, that he does not think would be useful, he would choose not to get it. other countries do the rationing on the supply side. they do not have as many specialists available, they do not use technologies as much, and basically what they do is rationed on medical necessity rather than the ability to pay. i think that is a better way to go. i want to get to the question -- >> before we leave that, eric's numbers show that the american public is profoundly disturbed by anything that approach as a government agency making decisions on what care they can and cannot do. >> i was not in favor of that it depended government commission either. >> know, those are quite high opening. distrust in government is not new in the united states but it

is getting even greater. all i did specifically to your question about choice. i talked about how i thought market power would be a way to control costs. you asked about an alternative, which would give consumers more choice. i don't think that works pretty well here. an example i can get the medicare drug benefit. it gives people a tremendous amount of choice. most people have about 50 different choices of medicare drug plans. he tried to do itself your -- yourself or for parent, you see how very difficult it is. and i tried it out with a parent. it does not work out very well. it is very hard to figure out among 50 plans which is the best for you. what is happening is when people make a choice one year, they do

not change to another plan and subsequent years. year after year -- four years of experience in this -- they stick to the same plan. they can save a lot of money if they switch. most people are in the wrong plan for themselves. those that switch can save $500 a year. when you get people off choice, they do not have enough information or that time or the expertise. they end up making overtime bad choices. >> it sound like you're not talking about -- in other words, the choices have to be fairly simple and managed. if there are 100 different choices -- >> that is a problem. >> you've got a problem in your hand. >> but tom's point is well taken. people can get very confused quickly. health insurance is a very complex product. >> i know that these new results that you represented and you of

all legal little bit of time to assimilate them but what did they tell you about how to solve what is really a grand theological debate about how to move toward on health care? >> that is an oversimplification you can do this at the system level, which is where it is done in other countries, or at the individual level. the problem we have in the united states is that we do not make either choice. what we have done in this country is a delegate to doctors and providers -- they are the experts, they know what is best, and they should tell us what health care we need three the problem is that what we're finding is that doctors are not very good at controlling costs. doctors often do not have the d!5%mm%=9"uz determine what is best. >> part of the reason we run double to make the choice is because we're greatly divided. i wonder if you think that your poll results help us get to an answer? >> i think what the poll results show is that there's tremendous

distrust in government. if we're going to have any of this intervention, it will have to be a new institutional structure that will not be seen as a federal agency, and even in the senate bill they aren't talking about non-profit organizations -- it is responsive. >> who appoints the members of the nonprofit private commission? >> the membership is going to provide representation for a lot of different groups, including industries, doctors, and others. but not so much on a researcher side. but it's just going back to john skinner's pointed the beginning, the importance of doctors and changing the culture of dr. behavior so that they will see results in their hospital or in their practice. why are we doing this when our colleagues in another state and not? >> and can all three of you talk about comparative effectiveness studies?

they can inform three different careers. they can inform the single payer, they could inform doctors, or they could inform consumers. where do you think they are likely to have their most affect? >> i think it will ultimately have to be doctors. but i also think that there does have to be this sense that doctors are working together in deciding what is best for their patients, even when compared to the effectiveness studies come along which are quite definitive. a recent one showing that a spinal procedure has on average no good if that spirit the "boston globe" went to interview a doctor who said i worship at the altar of comparative effectiveness but i do a lot of the spirit and my patients seen to do pretty well with them. i am going to keep doing them. a total disconnect.

how will that surgeons change his behavior -- him, it is not her -- and the answer would have to be that if together they realize that this group of patients are providing funds which are limited, which is not be for service, where you cannot keep spending and spending -- >> said that their pay is not rely on how many surgery's they do. >> then all the other doctors will start putting pressure on them and saying, are you really sure you're getting better results? can we not do this better? or they will hire somebody else. >> or giving the group that power to say that we're not going to pay for this. congress is being very unwilling to do it -- to give that power. even in the language in the house and senate bill, tried to promote comparative effectiveness research, they are saying that it ashley cannot do it.

>> because that smells of a government agency rationing care. the boys you would be a disaster because you have doctors telling their patients -- >> it would be a disaster because you have doctors telling their patients, i want to do this but the government is saying i cannot. the hospital could sit down with a doctor and say, we cannot afford to. change your practice -- in the summer of. >> people to respond to incentives. when you're dealing with the matter of life and dead, making an economic decision is pretty difficult. but i think all of us have been in a situation where the size of the copiague on a drug -- on a copay on a drug will decide whether we get the generic name brand. >> the incentives are probably

more effective on the doctor level rather than the patient. when you come in in your set, you're not able to make the rational cost effectiveness calculus. but we have not been giving doctors of very strong incentive to act in the way that we're talking about here. there's something called pay for performance, were you give doctors more if they do a thing that that the medical guidelines. the incentives tend to be pretty small. it is not clear really rewarding better quality or just more parsimonious use of services. we haven't done enough research to tailor economics incentives to make it really worth while for doctors to follow the practice guidelines. >> the other thing that has been unfortunate in this emerging debate about evidence is that it is been framed entirely in terms of controlling costs. that is important but another side of that is improving quality. i did not want to go to the doctor and have a problem and a doctor not know what the best

treatment is for me. i want the best possible madison. and the reality of today, my doctor may not know because the studies have not been done. trying to frame it as and quality improvement, and shouldn't every american be entitled to the best treatment and the best available science behind the treatment? that would be a more positive frame and it has not been pushed in that direction. >> if nothing else happened and you had widespread comparative effectiveness studies done by the government and clearly publicized, how much of a difference would it make? >> not as much as you may think. you really -- you are asking an economist. ucla would take away my degree by did not say incentives really matter. -- if i did not say that incentives really matter. >> eric, you did not answer the question that tom and john answered. what do you think of the bills

that are being considered by the house and the senate? how far did they go in dealing with the problem? >> they did not go very far at all in terms of cost control. they have some promising ideas that the pilot level that past history suggests that most of those ideas will not be taken up. they will not be institutionalized. thing that gives me some hope is that unfortunately but john was talking about, there is going to be pressure on the tax side. we will have to face some hard choices. unfortunately that is the mechanism that is going to pressure us to face up to these health care costs. >> an interesting point about pilot. this is similar to what happens in education. another area of where the overall market system does not work. you have all sorts of great pilot projects that people can point to going on all of the country, saying, that is really great and it really works. but they do not get adopted.

there is no best practices process. there's no incentive for people to do with the best people are doing. why is that? >> i think that for institutions that try to effect -- adopt best practices, they take a big hit. they actually lose money for medicare if they keep their patients out of the hospital. the boilers is does not paid to do the best practices. >> a terrific article from a couple of months ago in the ability york times magazine," sorry. a doctor named grant and james in salt lake city he was experiment in with these things and trying to get best practices and measuring, measuring, measuring outcomes. he says that we take a hit financially but this is the right thing to do, to provide the best quality care that we can. there are not that many people who can manage to do better. >> tom, your analysis of why you thought the health care bill was the right thing to do, i thought

was very interesting, because it mirrors what i hear some of the proponents and some of the opponents say about the bill. which is, you'd think it will take us down a step toward where you think we need to go, some sort of single payer or single payer-like, monopolistic by your system. >> not quite, although a coroneted payments system would be a good way to go. i do not think that this bill will necessarily bring us there. the public option does not seem to be a big part of it. it will do two think -- it will get us universal coverage and required insurance companies to take all comers and charge them the same amount. it is so important to get universal coverage and to get rid of insurers charging sicker people more, that is important that we can worry about the cost containment. i am skeptical about being able

to use purchaser's the way that other countries do. i would still like to see this bill passed. >> jim, you made a compelling argument about health care costs going up and inevitably taxes will go up. as taxes go up, we will get health care costs under control. you did not really tell us how that is corned happen. it is a historical fact and other countries. what is the mechanism? >> we have a specialist year. >> one thing that is fascinating is the tremendous stability and the political acceptability of taxes in the united states for before this economic downturn, since the 1950's we only taxed about 18.5% of gdp. we've kept it there since the korean war. we've added medicare and medicaid and the great security

and social security, and despite all that new government, we have kept taxes fairly consistent. we have not decided that we wanted a bigger government and we want more taxes. >> are we not inevitably headed toward 30%? >> i am not seen the political willingness to raise taxes to that level in either party. the list was put taxes aside and talk about spending. spending has been slightly higher. do any of you see any way that we're not going to find ourselves 20 years from now at something closer to 30% gdp? >> if we are spending that much, it is born to be cutting out of the things that we can be spending on. americans might not find that acceptable. how we control health care spending? we were quite successful in the late 1990's through street

managed care -- but there was a managed care backlash. but it might provide a mechanism and allow us to manage care better. one weay is to control -- is charged higher deductibles. there are lots of ways to get health care cost and in control. there has to be the will to do it. and it crowds out things that we want more, that will probably help. >> prediction -- 20 years from now, the federal spending is at a level of gdp -- best guess? >> where are we now? >> 20%, federal spending. >> 24%. >> i think it will be between 20% and 30%. i don't think we will go that far because public pressure -- and >> public pressure will force it down. >> i think we should open it up

to question. make your way to the bag. i want to ask one other thing based on a ridge numbers of people are selling very the difference between republicans and democrats is pretty straight corporate republicans tend to have less faith in government and more faith in individuals. but how do you explain the senior citizen number? these are people, many of them already are in a government-run system, and to probably have the most familiarity with the health care system of people in our society. >> i think many seniors do not think that they are in a government program. i think many people believe that medicare -- they see their own doctors and i have a lot of choice. medicare advantage is a private program. they do not see themselves as a direct recipients. >> how can that be? [laughter]

ñi>> when the medicare point -- plan was set up, it tried to preserve the professional autonomy of doctors and hospitals and people view it that way. >> is a wonder. >> go ahead. >> i am mr. kaplan. no mention has been made of the employer-employee relationship and so much of the medical costs are the employee having an exclusion from income of the cost of plans paid by the employer. now at one time, these costs paid by the employer or taxes. -- were taxes. back in world war ii, when there was great price control and a shortage of labor, great

pressure was put on the internal revenue service to come out with a ruling which excluded this from income. it was rather strange. because if the employer paid for your food or your clothing, that would all be taxed. but health care was taken out. that was a way of really attracting more labor back into the market. now what do you think the impact on costs would be if congress reversed the situation? >> let me ask you as irs commissioner, did you ever tried to limit the import tax benefit? >> it was later incorporated in the statute. we always abided by the statutes. there was no discretion. it is articulated very carefully in the statute right of your >> you told me 20 years ago when congress took away some of the

deduction that you are in a posh restaurant and you're let -- in your waiter dump your meal in your lap. >> absolutely. he said, i've been serving for 25 years and this is never happened before. but think about that. senator mccain, when he ran for president, was calling for that. and a lot of discussion about cadillac plans, why not tax the difference between the lower and a cadillac? >> it seems like a fundamental difference of difference. >> i agree with you on that catlike plan. provide a fixed dollar amount -- on the cadillac plan. provide a fixed amount. i think that you would end up

being criticized because you are trying to keep this balancing act where firms continue to provide employee health insurance, and if you no longer give them that benefit, many would just say, fine. they may find a defacto public plan, because some of -- so many more employees would be dropped into whatever options are out there to pay for the plans. that is the balancing act that they are falling, but i in agree with you as a proponent of the cadillac tax. >> i am curious whether you try to get rid of the tax deduction for home interests, mortgage interest? [inaudible] >> all of this has been in the

code. one of the things i had to commit to when i came up for confirmation is that i would really follow the law. [laughter] >> one reason i have mixed feelings about your proposal is that our current system of making the employer contribution to employee health benefits tax- deductible is that it is very regressive. it really favors wealthier people. they are more likely to have felt insurance, to have comprehensive policies, and there are also higher marginal tax rates. it really is an unfair system that we have right now. justice deductibility of home interest is a very regressive system as well. we do not give that to the renters. i think there would be some mild savings, but i think there would be tremendous political opposition to taking away -- taking away across the board.

it was suggested almost 30 years ago, take that money and you give everybody a tax credit of the same amount, to make it there. >> karen johnson. years ago when hmo costs were first introduced into the system, they were thought to be able to solve some of the incentive problems that have been discussed, that they would bring into the organization of the hmo issues with over use of technology, that was not affected, or use of specialists, the billing would be different, and the doctors would see the trade offs because they were sharing in the pot of money that was being paid. is there any evidence that hmos did this? is there any proof that the incentives can be managed and we have some experience? it did not seem as if they were widely lauded as having changed

things fundamentally. >> i will start off here. in the beginning, it appeared that there was something great going on with hmo's. you actually went to a building that was an hmo. it turns out that the marketplace did not favor those. all of the growth happened and what we call independent practice associations. hmo's without walls, where you're going to a doctor but they are paying in a different way than that beeper servant patient. you're going to a doctor, some are hmo patients and some were non-hmo patients. there is no corporate culture to control costs. the people seem to favor that and relatively few people state but the kaiser. i think than what we have now

are not the ones with the corporate culture that led to cost control. if you look at rates of increase in health-care costs, a gem of's have not done better than fee- for-service medicine. and their role and has declined. the p.o.'s gives them more flexibility. -- that ppo's gives a more flexibility. it is the really exist in many places them. >> if i could follow up, kaiser grows at probably the same rate as other places but it is consistently lower. so that would not be a bad thing. but that is the staff model, where doctors are on salaries. during the 1990's, they tried to expand and never contracting with private doctors and they were negotiating on price. so of the doctor did more things, they would get paid more money. so they did not release scale

up. there wasn't this fundamental set of incentives. so they never work particularly well. it is a bit of a mystery by kaiser-like programs did not sweep across the country. but in part i think it is because they are not necessarily pay that much more, relative to fee-for-service. fee-for-service doctors can typically make more money, but also there's a perception that once you're in there, you do not get the same kind of choice. the idea behind me accountable care organizations is that if you stick with your own bout -- your own doctor, there would be organized into a default capitation structure where they are paid on the basis of the patience -- the number of patients and their practice. but they would still see this --

see the same doctors and go to the same hospital. the was good morning. i been a very grateful recipient of medicare for six years. fortunately i have not had a call upon its very much. it is a form of socialized medicine. that is not a dirty word. nor is helping our veterans. that is socialized medicine. medicaid is also socialized medicine. the point i would like to make -- and i believe i am in complete agreement with the first speaker -- i was very ignorant about the rest of the world -- industrialized countries at least, and what they provide their citizens. and yes, i do have a question. i have recently learned much and i'm very grateful and i wish everybody in congress had read the book that i am currently

reading. >> what is the book? >> i am proclaiming a interest rate is sitting at the kitchen $3 is this the book by t.r. reid? >> absolutely. it is a book that should be read by every american. what i saw are two very evident differences between our country and others, including taiwan, is that when our doctors -- and i am not a doctor -- come out of medical school, they had a tremendous amount of debt, for the most part, unless they come from an extremely wealthy family. plus their malpractice costs are so astronomically different. in some countries, i don't even know if they have malpractice. also, the pharmaceuticals -- we

pay far more for our pharmaceuticals than any other country in the world. i do not know why, but perhaps you can address that. -- and i do have a question. [laughter] do you feel that lobbyists are influencing congress, whether it be from the ama -- and i and stand with this incredible malpractice step -- and are pharmaceutical companies, are they much more influential than intelligence information that our congressmen are not receiving, as mr. reed's book? >> it was to take that on? the list of course lobbyists are of tremendous influence. it is inevitable and making -- in many ways it is beneficial. groups that felt intensely

about an issue will organize a petition the government. what i think it's remarkable is the degree to which these issues of cost control, on the evidentiary basis, have gone on to the agenda. present obama clearly understands this issue, would you agree with him not, but he is concerned about it. it has gotten very far because of researchers like john skinner and others at dartmouth have pointed out these amazing patterns that we're spending a lot more in some parts of american and other, and people do not seem to be any help there. something weird is going on there. a lot of pressure, you can have organized groups of voters that are extremely powerful and important. but when the problem exists and it is so stark and enough people are pointing to it, eventually elite discourse does change. and i take it has changed. -- and i think that it has

changed. i talked about this at the miller center and there was more need for some of the problems, and it was a fun and challenging paul because a lot of the people -- this is maybe four or five years ago -- they had not heard of this that medical evidence was a problem for their raw lot of doctors that were resistant to the idea that there was any problem. i think that that has changed. i think there's been a recognition that there is a problem. where we have a hard time is going from the agenda setting, getting this into the debate, to actually solving the problem. at the solution stage, that is where lobbyists have the most influence. that is very hard to overcome. >> i'm a faculty member here at the miller center. a lot default on one aspect of the current compromise on the public option. -- i would like to follow up on one aspect of the current compromise on the public option.

over the last 10 years, although medicare's cost growth is unsustainable, it had been lower than the overall health care system. i'm curious about the panel's du of the medicare buy yen as a mechanism for potential cost control, particularly as a substitute for the public option. and the question is the strong public option bs by the public option that we ashley had. and then following up on the employer and notice. given the long term and sustainability of health care cost growth in the united states, i'm curious as to why employers have been as resisted the changes they have been, or that there has been mixed support for reform in general? and i am curious whether that itself is something that relates

to issues of ideology or aspects of actual technical dimensions of reform and preferences. >> i think we all have opinions about the medicare by ian. this set me by surprise when it hit the newspapers. i think medicare is an effective program. i like the idea of more people being able to buy into medicare. power on the buyers' side is an effective way to control health- care costs. the opposition that we're seeing is just because of that power. what we're seeing is that there rural states are against this because they say that there hospitals are not paid enough, and since medicare pays less than private insurers, they will get less money. it is a slippery slope and a concern about single pair. it is natural that there would be concerned. i think that medicare has been a very effective interest program,

and i like the idea of more people being able to take advantage of it. i do not think that this is going anywhere they planted this idea, and it just seems to be too much opposition, though -- so i do not think it will be in the final compromise. with regard to the employers, a great question. they originally favored the clinton bill in 1993 and then they change their mind about it. you mentioned ideology as the best answer that i have. entreprenuers generally do not like to have the idea of tremendous government involvement in anything. i defer to the others but i do think that ideology is a big part of it. on the surface you think you would like to get out from under that mess. >> i can tell you that we do a meeting once a year, 100 ceo's, large companies, different industries, and we had a group

of them in washington a month ago. two things was very clear. there was enormous interest in measures to reduce health-care costs. many of them had served on various panels for the business roundtable, and a number of them had been in to meet with the president and the secretary of health and human services, but to a person they felt like the legislation itself had gone in a direction that it was not going to do anything to their health care costs. they're pretty much unanimous. from what the three of you said, you would not disagree with that. >> is a building block. it is getting things started. >> that is the hopeful approach. >> again, as i from putting every doctor on a salary in the united states, and overnight switching to the english system, it has to be an evolutionary process. at least there seems to be a recognition that incentives matter and that the current

people -- that this current system does not seem to be working very well. that is the first that. i'd agree that covering the uninsured is the first up, but health care reform is going to be on the agenda for at least the next decade. i did not see it like happening once in and stopping. >> president obama said that other presidents have tried to reform health care, but we hope to be the last one. that is a problem -- that is a promise that is not going to be kept. we're going to be modifying and tinkering with our health care system for many years to come. >> especially when it passes on a straight party-line vote. l will be a discussion for the next panel. never let go of the microphone. he has got it and he is holding on to it. in a court had to be very quick. >> the current bill among

employees, do they honestly believe that they can do with cost control within the current system if we do not take this up? ok. >> i think there there is huge frustration. >> i'm a third year undergraduate and my dad is one of the cardiologists bankrupting america right now. [laughter] he had a practice in las vegas it which is where i live. he move to arizona with malpractice insurance reached six figures. he is currently being audited so he has to go back, he and my mom who handles the issue is part of the business. they have to go back and look up five years worth of records and checked every procedure that he has done. now he and other doctors are at the point where they are spending time excessively reporting their dictations and documents and what they have done in order to avoid getting sued and get money taken back

from them. i will not be going into medicine. my dad said a few -- if i want to go into medicine, only to a plastic insert -- plastic surgery because there is no insurance and it is only cash. why should i do that as opposed to going into business or law? and that the best of the brightest -- and it the best and brightest in not going to medicine, what does that say about this? >> i think that with regard to malpractice, there was an early question about most of the key evidence suggests that it contributes about $60 billion a year in spending, which is a lot of money by relative to that $2.20 trillion in overall spending, i think it is small. we need to talk about this not because it may save money,

although it may well, but simply because we are exacting a terrible toll on doctors every day when they going to work because they do not know whether today is the day they are going to get sued for something they may not have caused. oftentimes if something bad happens, and things that are bad to happen in health care just because that is way the human body is -- that they will get sued as a consequence and the jury will take pity on this poor individual an award lots of money to them. in the implication is that the doctor did something wrong, where in fact they may or may not have done something wrong. i think that one of the real interesting pieces of the puzzles is why malpractice reform is not on a table as the way to get the republican side of congress on board. and doctors and the ama on board. it seems that that is not happening.

dallas is partisan politics and i think it is bad partisan politics. i think it would help the bill in the long run. i do find it puzzling. >> trial lawyers as such loyal supporters of the democrats they are not willing to take one step. >> we did ask about malpractice and the public is particularly worried about the current malpractice system and having more study. 70% of the public that we interviewed agreed that doctors worried about malpractice suits may follow the results even if they think something else is optimum for their patience. once the studies are there, they will call it even if they think another treatment exists. >> we will have to limit this to one more question. >> i'm from the german ministry of finance. as the german system was praised by data and by some of you, you

feel that the germans -- as a german citizen we feel that the german system is a complete mess. [laughter] it is a private insurance system, and below that there is a public insurance system, it is called insurance, but it falls -- it is very strictly policy- driven. it paid out by contributions and state subsidies. you may be right that there is something but in germany we have the feeling that we pay much more than you would buy them in italy. then the public system, there are big this incentives. -- big disincentives. people are getting more and more annoyed with all of the stock. what about a system