is that the thing you throw over the side of the boat. i don't have any reservation that class will survive. what we are watching is the structure and basic underpinnings of this doesn't change because this wasn't giving a freelance ticket to the administration and say craft whatever you want. it is written very flexibly. this was not about here's a ticket to create something new and different. we are going to be very careful to make sure that the constructs that are in here don't get pulled apart and the expectation the real people, 275 national group, that's a lot of providers and people and all kinds of different groups that were on board weren't sold a bad bill of goods in terms of what this is meant to do. as far as the big bill, i don't have any idea. i really don't. we believe it will go, should go

and will go at the end of the day and hopefully it will be in a form that everybody will benefit from and do know harm. . . kennedy was so clear. if you're going to do health care reform that is not just about acute illness and and triggered if he did not give them what they need to maintain a function and prevent them from slipping backwards, you have not done anything. the long-term care piece is help in our eyes. in our eyes. they are split philosophically if it is a disability bank or a

long-term thing. he was cleared to sire if you're going to do health care reform you have to do acute injury and prevent people from slipping backward. decide what you are doing. i remember that. if we can control it at all, it will be she -- it will be in. >> i have a feeling that when we >> i have a feeling that when we are in that place where we hope is a lady at the front desk that remember our name, there'll be a lot of people out there who will remember yours. thanks very much. [applause] we are going to adjourn for a

quick 50 minute break. >> we're now going to take a quick 15-minute break. we will be back in 15 minutes for the next panel on places and care of the news -- and care venues where people obtain care.

>> the next panel is on care and living venues. we think all the children in this issue are wonderful. these three in particular look at issues we thought were very important. the first is whether the benefit structure we created in this country speaks meaningfully to the needs of different individuals in different care settings. we have heard that the answer is not. we will hear about an interesting proposal to reconfigure those benefits, particularly to meet the needs of people who might be in a conventionally long-term care setting better arguably nearing the end of life. we will also hear about another relatively new feature on the u.s. landscape that you have heard about already this morning. that is assisted living.

we are publishing a definitive piece by david stephenson -- david stevenson on long-term care and the issues that pertain to assisted living. we will be harkening back to david catania, nursing homes in washington and how they can be improved. we will hear more about the culture change in nursing homes. let me give you some background on everyone who will speak. the first piece i mentioned on the new benefit is by haiden huskamp in the department of health care policy at harvard medical school where she focuses on mental health policy, prescription drug policy, and the end of care -- in the blood

care services. she has a grant funded by the national institute on aging to examine the -- examined the impact of medicare part de on medicare -- on nursing home residents. she also has a steady among cancer patients. that funding is provided by the national cancer institute and the department of veteran affairs. we're happy to have her here to speak about her article. we also have david stevenson whose recent work has focused on a range of topics in that sector, including long-term care financing options, the rising use of hospice care, and so on.

we are delighted to have him speaking on the and assisted care -- on the assisted care piece. mary jane koren manages the commonwealth fund at the harvard program. she is an internist. she was vice president of the leslie samuels foundation in new york city prior to joining commonwealth. she began her career in geriatrics where she started a fellowship program and was the assistant medical director for the home health care agency. she has had plenty of experience in the real world. she is had plenty of experience in the real world delivery of these services. let's welcome to the podium dr. haiden huskamp. [applause]

>> we want to thank you for giving us a chance to speak on these issues. i want to apologize for the poor quality of my voice. a high-quality and of life care is an important component of nursing home care. we know that the quality is often poor with and relieve pain, poorly managed systems and -- symptoms. many of the quality deficiencies are influenced by how these services are covered and financed. for example, even though a person's care needs are interdependent, medicare and

medicaid reimbursement and coverage rules tend to create benefit silos. there is one for long term services, another for hospitals, another for acute care discharge in a nursing home and so on. this can make access to a corporate services and ongoing communication across providers difficult. the reimbursement for nursing homes creates incentives to hospitalize residents to obtain the higher medicare rate for the 100 days. that to result in patients going back to the hospital and leading to poor care over time. the primary mechanism for financing and of care -- in of white care is the hospice benefit. it includes a broad array of services for terminally ill beneficiaries. to be eligible, a beneficiary must have two physicians

certified that they have a prognosis of six more or less. they have to agree in writing to forgo treatment for the terminal condition. the medicare hospice benefit is a one-size-fits-all benefit. the eligibility rules and benefits package and payment for hospice are the same for all nursing home residents and community dwellers who use the benefit. hospice is paid a fixed daily rate to provide all care related to the terminal condition. when the benefit was adopted in 1983, it was intended to allow terminally ill and the fisheries -- beneficiaries to die at home with improved quality of life. it was expected that hospitalce enrollees would have reduced hospital costs. it was extended to the nursing home setting in 1989. the use in that setting has grown. a relatively small amount of nursing home patients elect a

benefit, about 6% per year. the payment the nursing home receives for the long term support services is the same, regardless of whether a resident elects the hospice benefit or not. if they do not, the nursing home is responsible for providing end of life services out of current funds. low medicaid rates in some states can make this difficult. we believe the hospice benefit is not a good pitching for the nursing home situation. many of the residents have long term conditions that may be related. the potential for part eight offsets -- the potential for part a ossets may be lower for nursing home users relative to community users. eligibility requirements for hospice can be problematic for nursing home residents. only 2% of residents have cancer as a primary diagnosis. most of advanced chronic

conditions for which it is difficult to estimate time to death accurately. the prognosis requirement may create barriers to a hospice for nursing home residents. there are high levels of cognitive impairment in this population. there's limited family member involvement for some residents. there is a limited presence of physicians in the facility. these make it difficult to have conversations with residents and family members about hospice or to complete the paperwork needed for hospice election. a third reason is that the package of services needed by terminally ill nursing home residents may be different from what is needed by a community- dwelling resident at the end of their life. a nine-year old with advanced dementia receiving supportive services in a nursing home may have different needs than a 65- year-old with cancer living alone in the community. the average hospice costs are lower for nursing home residents

than four community residents. that is due in part to the overlap between support of services provided by the nursing home and those provided by hospice in the community setting. hospice may be providing some of the things that the nursing homes are providing. the current res perspective -- the current reimbursement rate fails to account for this. we would like to create a separate benefit tailored to the needs of a nursing home residents. with our proposal, all residents of demonstrated end of life care need would be eligible to receive covered. get negative and psychosocial services. there would not need to elect the benefit formally or forgo sure to treatment. the family could choose to deny the services of any time. instead of paying hospice directly, we suggest paying the nursing home. that is the party that has the

most control over the care and is accountable for outcomes. the nursing home could choose to contract with hospice for these services or provide them directly. the payment could account for the different costs of providing end of life care to a nursing home resident as compared to a community-dwelling resident. that could account for the deficiencies i mentioned. these funds could be bundled with those for long-term care to remove incentives to charge patients from one setting to another. it did providers more flexibility in meeting needs. a third piece that is critical is to create a new set of and of life quality care indicators for nursing home residents and hold the nursing homes accountable for the care provided at the end of life, as they are accountable for restoration of maintenance and functioning. we do not want to push people to pandit of care. we want to give nursing homes greater flexibility and resources to allow them to provide high-quality in of life

care to all residents and allow for better integration of palliative care at the end of life. [applause] >> the title of my brief remarks and the paper is about what the market for assisted living parco of electric knowledge my -- i would like. knowledge my co-author. the purpose of the work in this area was to develop a more detailed look at the market

level in terms of the assisted living supply nationally. there has been a good deal of work from the national academy of state health policy focused on the state level on assisted living supply and regulation. we wanted to focus more closely on the market level and with it what factors affected where a facility tended to locate. assisted living facilities have emerged recently on the long term care landscape over the past few decades. the growth occurred largely without a substantial amount of government financing or regulation. on the financing side, medicaid waivers provide financing for some services in assisted living facilities. around 100,000 slots existed nationally in 2007. there's not a great deal of financing available for low

income people. on the regulatory side, most regulation is that the state licensing level. these facilities' tend to be licensed across a variety of categories in states. the categories and services can vary quite a bit across states and even within states there is standard heterogeneity in the populations served. there is no single definition of assisted living. there is a definition that many and here to in terms of what assisted living facilities should be about, what services they should provide, the type of support and things they should allow individuals to do in terms of participating in communities. there is no single definition in terms of assisted living facilities. there is no single source of supply data nationally.

for individuals wanting to do nursing home work, there is a national repository of data that goes back in time. there is no resource that exists for assisted living facilities. these gaps in the knowledge base gave genesis to the project. it was the primary data collection project to collect data on assisted living facilities nationally. with the names, the number of beds, and precise locations. it is mostly going to states in finding out if they had detailed registries. in some instances, it was going to associations to supplement those. i will present on the cross- sectional peace today. it is 2007 data. we also tried to collect data back in time of assisted living supplies in particular markets.

we merged the supply data with nursing home and other market level data. that is what my remarks and analyses focus on to a large extent. a quick way to give you a sense of the data collection and what we found is to show a map. the demarcations on the map are counties. we find counties as the markets we were looking at. that was an easier definition of market to look out in terms of blending it with other data sets. you can see going from no shading to the darker areas with more penetration. assisted living penetration is defined by the number of beds or units per 100 elderly in a market. the darker areas are where there are more beds per 100 elderly. the lighter areas are where there are fewer units per 100

elderly. the main point -- the two main points i want to get from this is that there's a substantial amount of variation across states. some states have a robust supply of assisted living facilities. it may be oregon, washington, minnesota, vairginia. these have high rates. there are other areas with fewer assisted living facilities by the state of texas, arizona, west virginia. there is substantial variation across states. that is the first point. the second point is that there is substantial variation within states. this is not that surprising. assisted living facilities tend to locate in more urban and suburban areas and less so in the rural areas. i will point this out again below. to detail briefly our primary

results from the paper, the first and simple result is that assisted living facilities are widespread option nationally. we found around 830,000 beds and nationally. depending on how you count facilities and release mullins, the number could be as large as 1 million beds. there are 6 million nursing home beds nationally. the penetration can vary substantially across states and within states across markets. given that assisted living facilities have tended to rely largely on private financing and people paying out of pocket for the benefits, lower income people have not had access to medicaid benefits to pay for the services. it is not surprising where assisted living facilities tend to locate. they tend to look in higher socio-economic areas. areas with higher education

levels, median income, a greater levels of household wealth, these are where the assisted living facilities tend to locate. areas with no assisted living facilities. the average housing prices are around $60,000. or the average housing prices are higher, there is more penetration. it varies in the way you would expect. the highest interest areas have the highest income and wealth. the lowest penetration in areas have the lowest wealth of a widow . there is a lower -- the lower penetration in areas of the lowest wealth levels. these statistics correlate with the socio-economic variables. this is not surprising. we also looked at the nursing home markets within the markets as well. we wanted to see what the impact of assisted living facilities

penetration had on the nursing home markets. we looked at some of the associations here. we found that the lower and medicaid higher private paying nursing home markets tended to be were the assisted living facilities tended to be. if states had more long-term care dollars going toward home and community-based services, this tended to be where assisted living facilities located. it suggests that this capacity matters a great deal. the philosophy matters in terms of the state's where the services are provided in greater proportions but also where assisted living facilities tend to locate. there are a number of policy challenges. i will detail a few. we go into more debt in the paper about some of these. the first is a basic one. -- we go into it more depth in the paper about some of these things. the first one is based upon. the definition of a nursing home is fairly standardized. there are comprehensive federal

regulations that dictate what the nursing home should be essentially. assisted living can vary quite a bit in terms of what they're allowed to do and what types of individuals to conserve. there is a greater standardization of what assisted living facilities duke and allowing the innovation that many people would like to see. assisted living supply is concentrated in higher income areas and with a higher community-based infrastructure. access is problematic in rural areas. there's also a capacity issue as well. disparities in assisted living access can reinforce the long- term care system we have currently. individuals with lower income who rely on medicaid for support services are not likely to benefit from assisted living facilities.

as robyn pointed out earlier, assisted living care has typically not available for lower income individuals. there is not an affordable assisted living model in most states. states are reluctant to go too far into the assisted living arena because they know how popular such a benefit would be. there is tension between expanding these services into assisted living facilities. there is a challenge in ensuring that services are targeted to individuals who would otherwise be going into nursing homes. states have a balancing act in terms of their policies. thank you. [no audio [applause]

>> this is an interesting topic. you may be thinking that nursing homes are so last year. [laughter] they have to be part of the long term services we offer. we will continue to have a population because of the adl needs and the social nmiliue. they are used as care settings as people transition from hospitals to their homes. this culture change movement is a real opportunity to capitalize on the transformational power.

we can realize the potential as policymakers. problems with nursing home care are long standing. there was a recognition that there needed to be a different way on the part of providers. this culture change movement came out of consumer advocacy. it started in the early 1980's when organizations like the national citizens' coalition for nursing home reform insisted that they recognize the voice of the resident and recognize that they have something to tell us about what quality was the them. this partnership with the underpinnings between partnership and advocacy.

this develop the revolutionary statute. if you read it, you will see that even though we did not have the language of culture change and persian-center does, this is a mandate for individualized care for each resident. after that, many providers looked around and said it did not have to be this way. something is wrong here. things are not right. they started to think about new ways of providing care to overcome some of the boredom, loneliness, and hopelessness that was killing people in nursing homes as much as pressure ulcers. it was not just a group of providers. it was researchers, policymakers, academics, regulators. they came together to try to create a body of information that people could draw on to do

the transformational change. it requires we think about nursing homes in a different way. we had a group convened as stakeholders. we asked them what a totally culture changed nursing homes look like. they identified several parameters. it should be resident-directed. that means people get to make choices. they have rights. you argue that they are demented and cannot. you can still decide if you want to wear the red or blue dress. you can still decide if you want to stay and watch the late news. there are lots of choices we have to afford people. do you want a bath or shower? that is pretty easy. it should be home life. people are going to be there. the more homelike it is, the more functional you will become. how many of you have an overhead public address system in your homes? [laughter]

with the technology today, you do not have to do that. we have got to try to think about what is not a homelike in the environments and what we can change. it is easy to change. we asked the residents what they value the most. it is the closest they have with the nurse's aide. culture change is trying to bring people together to form these relationships and bonds. it also recognizes the fact that quality is based on staff. it is giving staff resources and skills to do the job, the authority and autonomy to do it, and then thank them for the work they're doing. it is incredibly hard work. quality is dependent upon the empowerment of those people. it is also a collaborative decision making. the culture change nursing home spreads decision all authority. it lets people on the front line decisions.

it also is continuous quality improvement. we have a feeling that it is just about the environment or the lobby. it really is about measuring and showing the changes you are making and how it affects the physical care and well-being of people in the nursing home. there is growing evidence base for culture change. it is not a single model. it espouses a set of principles and how people enact those differently. we have had evaluation of some models. the eden alternative you probably heard of, certainly the greenhouse model. that shows there are very good outcomes for residents and staff. there are a number of practices associated with culture change the starting to be researched. i think some of the work that the greenhouse project is doing will give us some very good

information on the costs of this type of program. in 2005, we did a survey of health care. we found that 73% of health care and opinion leaders had never heard of it. we repeated the survey in 2008. less than 34% had not heard of it. we did a nursing home survey asking directors of nursing if they were doing culture change. almost everyone had heard about it. this is a well-known phenomenon. it is not an easy thing. it takes committed leadership over a long time to get this to happen. about 1/3 of the nursing homes said they were doing something about it. they were trying. they were starting. another 1/3 said they knew about and we're committed to starting soon. how do we get the 1/3 that has

done nothing to get in there? that is going to be the challenge. the culture change movement has been very fortunate in the partnership and support it has had from cms. thomas hamilton and others have all worked very hard to ensure that regulation is less of a barrier to culture change. there are other problems. there is the need to train people not just to work with the elderly but to work in a very different way. it is a very team-based way. we also have the finance problem and other issues. there is the dominance of clinical concern in nursing homes. maybe we should be looking more at well-being and quality of life. what can policymakers do? you may think this is something we cannot do much on. there is an incredible amount they can do.

robyn stone did an amazing study looking at what states are doing around culture change. many of them are being very generous with their staff. they are letting them participate in culture change coalitions. there using penalty funds to create -- support these movements. four states are starting to use payment incentives. their pay for performance things of the culture change phenomenon. colorado springs in particular. support for innovation and design, so many nursing homes are obsolete. we do not want to start building 1950's nursing homes again. we know that there are other models that can be used such as the greenhouses or small houses that bring people together in households some of the recognition programs are at the forefront. kansas is at the forefront.

they go out and find to is doing culture change. they found people love to have a three-year dollar party and the picture with the commissioner. it does not have to be high cost. workforce enhancement and participation in research efforts is important. you do not easily finsay fun and nursing homes in the same sentence. the green houses were started in tupelo. when hurricane katrina threatened, they moved people from assisted living areas of into tupelo. they have four brand new greenhouses set to open. at the end of the aftermath of the hurricane, most of the houses and centers on the gulf

were still intact. they had not been damaged. the people who had been moved to the grain houses did not want to leave. -- the people who had been moved to the greenhouses did not want to leave. thank you. [applause] >> i once did a story on a greenhouse in lincoln, neb. one of the older residents was able to celebrate her 100th birthday at the greenhouse before she died. the staff after what she most wanted for her 100th birthday. she said she wanted a margarita and the cigarette. she got them both. [laughter] fun can be had. we have fallen behind schedule. we're going to try to keep this q&a short before moving on to the final panel. we will then have a longer stretch of time for more

generalized questions and answers. let me ask you to discuss one issue that arises out of the conversation earlier this morning and your paper. we heard earlier this morning about the problem of having particular programs drive people into situations that they may not want. there are particular benefit structures that lock people into situations they do not want. medicaid has been driving towards the institutional side. as we think about creating new benefits like the one you describe that sounds like it would meet the tremendous need, how do we get out of the business of creating new benefits that will lock people into various structures or settings as opposed to creating the most flexibility for people to have choices of where they live? i know you have given a lot of thought to this. how do we get out of this

policymaking bond going forward? >> one of my co-authors is sitting here as well. he should feel free to chime in. these silos have been created with medicare and medicaid. it results in poor quality of care in many ways for the patients. that is one of the reasons why we wanted to advocate for a bundled payment. there is lots of talk these days about bundling of payments. there are advantages to doing that in terms of creating more flexibility for meeting needs. if you did on all the post-acute payments with those for long term services and the end of life care payments, we think that would go along way in terms of giving more flexibility to facilities in meeting needs. >> of a second what she said in terms of rationalizing the incentives instead of having

different silos of benefits. -- i would just said it what she said in terms of rationalizing incentives instead of letting different silos control benefits. hopefully, it would happen conceptually as well. >> we do want to open this up to questions and discussion. let's take a question right over here. " this is really a comment on the last report. i have to say that i am rather disappointed that it does not the ultimate bottom line of the decision process and cultural change in nursing homes. that is the management. it is not 1/3 of homes. it is 1/3 of managers and owners

that are or are not doing something. that reflection repeats itself as you go through the findings of who is doing what. it is not the physician deciding to change the culture. they are not even there half the time. it is not the nurse. it is the managers who decides if there will be a nurse or not. we have got to figure out ways to strengthen the professionalism and investment in the management level in those institutions. they are the translation people. they are the ones reading the journals, hopefully. they are the ones you are reaching with the findings of a study of this kind. the only person who will carry it in the front door and something about it really is the person running the place. that is more true of the nursing home than any institution in the system. >> that is why i pointed out that you have to have committed leadership.

that is what i was referring to. it is not just organizational design and enhancement. the foundational part is the committed leadership. >> let's take a question from larry. >> everyone is complaining about nursing home care. it is the one sector we all seem to love to hate. we know it needs to get better. can you comment on the culture of quality improvement in the effects of advancing excellent on creating a management culture of quality improvement? does that hold promise or is it a flash in the pan but we can feel better about? >> he is referring to the advancing excellence for nursing homes. that was started by pau mcgann

at cms with other stakeholders. it has been remarkably effective. hopefully it will be a continuous process. we have tried to have nursing homes work on the organizational support for good quality as well as the clinical areas. we have set up local area networks for excellence in every state except for about two. we hope it will be a legacy of the campaign. it seems from the data that we can show a campaign effect in the clinical areas. it also helps nursing homes reduce turnovers, stabilize staff and the work force, and try to create this assistant -- consistency of assignments between the assistance and

residents. that way the relationships that are so valued are there. it will continue but may not continue in the current form. the idea of culture change is permeated in that even though the terminology is not particularly used. >> what's take the question or comment from -- let's take a question or comment from diane. >> haiden and david, i am very familiar with your article. mary jane, a red years this morning. what has not been mentioned is the link between a culture change in improving access to palliative care. the culture change moment sets a new default and standard of care for all people in nursing homes. it should include attention to

resident centered nest. it should include the focus on making things homelike. all people in nursing homes have similar needs. there's a vast majority of similar needs. i argued in my perspectives peaciece that of nursing home residents not receiving rehab are near the end of their life. they have universal palliative care needs. that is care focused on the relief of symptoms, understanding patient and family goals, and making sure that care is in concordant with those goals, and reducing transitions. it is not prognosis' driven. my concern about your proposal is that it remains prognosis- driven. it depends on being able to identify the population within the nursing home who is more likely to die than another population.

my concern is that virtually everyone in the nursing home is in the last few years of their life, how do you justify trying to subset the population and of different -- and deliver different care to that subset than you do to the whole? >> who wants to respond to that? david? >> we spoke earlier about this. to some extent, we're basing the palliative service needs on the trigger. it may be through mds or other clinical information it may be part of the practical mechanism to limit the reach of the benefit. your point is the right one. all residents with long-term care who are not there for rehab or going back to assisted living care facility will have

palliative care needs. drawing the line can be difficult and may be counterproductive. that needs to be taken into consideration. that is in terms of what we have a suggestion would be implemented or something broader. >> it is very difficult to draw a line. we tried to base our line on need. i think it is a difficult thing to do. you are weighing the practical aspects of getting something like this through congress and a broad expansion of something as opposed to redesign that could help. these of the things we were waiting when we did it. -- these are the things that we were waiting when we did it. >> let's take another question. >> i am from the urban

institute. i was interested in david's talk. i was wondering if you could comment. you cannot know what assisted living is so how can you count it. it is a different methodology. he numbers suggest no growth since the late 1990's. -- your numbers suggest no growth since the late 1990's. >> the way we define numbers in terms of our study is that with limited assisted living facilities to those with 25 or more units. that reduces the number of the steassisted living facilities nationally. previously, they identified about 30,000 facilities. our work identified basically the same number, a little bit more than 38,000 facilities and a little bit more than 1 million

beds. those numbers are comparable to the late 1990's. there has not been a great deal of growth since then. we looked at facilities that had 25 or more units. there were about 850,000 beds. the rationale for excluding the small facilities is that we wanted to look at the purpose built assisted living facilities and less at the smaller care homes included in previous analyses. it was a judgment call. we did the analyses both ways and found similar things. some states like michigan have of high -- have a high number of these facilities with your beds. we did not include those in our study. >> the rap on assisted living facilities is that there's a lot of living going on in them but

not much assistance. what is the likelihood that this could change under implementation of the class act? there would be resources available for people to import their own assistancts into assisted living. would that be good or bad? >> i think it would be a good thing but there could be negative aspects as well. if individuals have a few extra thousand dollars per month because of the class act benefit, it could be advantageous to people hoping to six services in the assisted living facilities. it can average $35,000 per year. prices can go up quite a bit. people pay for substantial levels of services. it is a good thing to give the option to more people. there is an oversight responsibility that will arise if more people are being served in assisted living facilities.

potential government oversight would be needed. >> the recommendation to policymakers as they watched this unfold? >> it is charges a. assisted living regulation has largely fallen on the states. i think that would continue. i do not know that it will change with the class act. the states will be on the front lines of assisted living facilities oversight now and in the future. >> i am sure they will be grateful for the opportunity. terrific. this was a great discussion. for those of you who might have been looking for mary jane koren's article, we're publishing it this week on the web. you will be able to access it on the website.

we have hard copies available as well. we increasingly have the ability to not only publish on paper but to publish timely pieces on the web. we did that to bring out the article as quickly as possible. thank you all three for a terrific discussion. [applause] we will now move into our final panel on who pays and how. and like to ask the three panelists to join me on the stage. -- i would like to ask the three panelists to join me on the stage. we will be hearing from the offers on three papers. one deals with the public and private financing and support services. david stevenson was also a co-author on that.

we also have mark cohen from life plans to speak about that. we will then hear from thsomewht from the university of pennsylvania on how to incentivize market improvements. we will hear from mary manaylor who was our adviser on this. she is also a professor in gerontologist at the university of pennsylvania school of nursing. she will be speaking about important announcement today on the formation of the new long- term quality alliance. in the journal, there is a people and places: the provides more information about that and the exciting opportunities it will afford to improve long-term

quality care. i am not going to go into your terrific biographees. i do commend them to your attention. let's turn to you first, mark cohen. >> i also want to thank the foundation for the opportunity to present a paper. my co-author, david stevenson. in this paper, we hope to put to rest the false dichotomy that long-term care should be either a public or private responsibility and that public policy should prioritize development of the private market or expanded public coverage for long-term care. proponents and critics point to the current modest role of private insurance in financing care. they argue that public policy impedes development of a more robust private market or that

private policies are not affordable for most americans and are therefore unlikely to play a substantial role. we'v bel believe they conserve o roles. the key policy approach is how to align incentives across public and private financing sources to create a rational, more sustainable system for both public and private coverage. valuable roles. proponents and critics agree on one point. the distribution of financial risk where many people will spend much on care and some will not spend much implies and a proper role for insurance to spread risk. most people do not have private insurance. a review of the current state of the market shows that there are

around 8 million policies in force. the market size and complexion have not lived up to projections. ironically, the quality of policies is greatly improved over time. there's expanded coverage for home-based and assisted living care. there are also inflation protection features. the buyers today have also changed. they tend to be younger, wealthier, and less likely to be drawn from the middle class. why is it that more middle-class americans do not buy long-term care insurance. some argue that the product is not affordable for a broad cross-section of americans. it is not viewed by the majority of consumers as providing sufficient value in light of its premium costs. there are supply and demand side reasons and why there is a value

gap in the market. on the supply side, there are information differences between buyers and sellers the effect premium pricing and the comprehensiveness of policies offered in the marketplace. research has shown that individuals who do not buy policies tend to underestimate their risk and overestimate premium costs. many people mistakenly believe that if they need care, the government or their current health insurance policies will cover this care. moreover, some think the presence of medicaid crowns up of large part of the market. an important area where demand and supply intersect is consumer confidence about whether benefits will be paid when they are needed and whether premiums will remain relatively stable over time. data from claims denial reporting and independent

research show very low denial rates and high rates of satisfaction. even so, there have been serious allegations that the claims practices of certain companies are suspect and may be designed to make it difficult for people to access benefits. there's also been consumer concerns about rate increases that have resulted primarily from optimistic interest-rate assumptions, lower than anticipated voluntary lapse rate, and inadequate risk- management strategies. what should be the thrust of public policy? the focus should be around better integrating programs like medicaid and the disability insurance model proposed in the class act. a needed conceptual change about how we think about long-term care and retirement needs to happen. protecting against long-term

care costs through an insurance mechanism should be considered part of an overall retirement protection strategy, not merely as an extension of health reform. it is similar to how social security payments, pensions, and personal savings all contribute to provide individual's retirement income security. long term services and support can and should be met through a combination of resources. public education is vital to ensure that people understand the risks that they face, the options available to address them, and the importance of planning ahead. understanding where public coverage begins and ends is important if a limited public program is established. in other words, in the context of partial public coverage, individuals need to understand the limits of that coverage and the value of any supplemental private coverage. to the extent that any public

coverage relies on an insurance model, policymakers should take note of lessons learned in the private market. any voluntary public program will have to balance concerns about adverse selection, against broad goals to covered populations. the program must be structured so that premiums are no more costly than for similar plans that can be purchased privately. they must be sufficient to ensure that the program is sound. it must employ adequate risk- management controls related to participation, validation of benefit access criteria, and more. policymakers should focus efforts on more innovative strategies that encourage individuals to purchase plans at younger ages by making them less costly through flexible as mining accounts and by supporting models that explicitly connects public programs and private insurance coverage such as what is down

and long-term care partnership programs. for wrap around products to take hold, there must be a consistent definition of eligibility for private and public coverage. these are some of these important prerequisites for the markets to work together. i do want to point out that there is no consensus that in the context of the act the private insurance market will thrive. some believe the program will lead to the demise of the private sector because it will be priced appropriately. . .

>> in all likelihood, public and private coverage will continue to work in tandem to mitigate the catastrophic coastest associated with long-term care. this holds the greatest promise for achieving efficient and equitable outcomes for consumers and taxpayers alike. thank you. [applause]

>> well, thank you very much. i would like to join the previous precepters in thanking health affairs, the scan foundation and acknowledge mark and collaborator. this has taken on a tremendous momentum as a way to improve quality of care. however, these reforms may not be compatible with the goals of exroofering long-term care quality. we are going to examine what the goals are and see how to use market-based reforms to advance those goals. long-term care policy and practice have pointed to several broad goals that are generally agreed upon goals of long-term care quality. the first is to improve quality of life. because part of long-term care is daily life, and daily life is an important part, improving quality of life is an important goal for long-term care. second, the second goal is to

reduce the fragmentation of the delivery of the finance something, leading to discontnutes of care and for providers leading to conflicting incentives for quality and cost. the third goal is where feasible to increase the use of home and community-based care. although there is general agreement on the importance of these goals, it is the unclear how to achieve them. at the same time that people have agreed upon these goals, there has been increased momentum to adopt market-based reforms. we define this as policies that are designed to change the underlying-in sentives for quality of care in health care. so in the typical health care market, little information is available about the quality of provider, leaving consumers who wish to choose high quality

providers with relatively little information or tools to do so. as a result of the lack of information, providers have less innocentive to deliver high quality care or compete for consumers based on their quality. so we are based on those two qualities. to improve information for cob tsunamiers and have providers improve the quality of care that they deliver. there are a number of examples of market-based reform in long-term care, most notably in public reporting and paper performance. back in 2002, the centers for medicare and medicaid services began reporting on line. this was followed by a similar effort in the home dealt arena. simultaneously there have been a number of demonstration

projects led by medicare and paid performance in home health and skilled nursing facilities. state agencies have begun experimenting with pay for performance. the question is how do these market-based reforms address the foals of long-term care. in theory, these reforms of compatible with the goals of improving quality of life, and reducing fragmentation. there are several key attributes that may limit their effectiveness in this regard. a first limitation is that curent mark-based reforms tend to rely on narrowly twined clinical quality measures. this tends to reinforce a medical model of care that pays more attention to clinical quality than issues related to quality of life and may tend to crowd attention on quality of life out. second, all of these reforms are setting-specific.

therefore, when a consumer goes to choose a setting for their long-term care, they must choose a setting and compare quality only with that setting. and then the incentives are all payor specific. so in non-traditional care settings, these policies have not reached there yet. so the limitations of current policies are really problems of form and the implementation of market-based reforms. so in theory it should be relatively straight forward to address them. one of the easiest ways to address them may be to add different or new measures. so quality of life is one measure that is used in some settings but not uniformly used across existing market-based reforms. it may refocus attention on qualities of life over the

discreet -- instead of the discreet clinical problems that are currently tied to incentives, but in addition to the clinical problems that we currently look at. another option may be to look at broader clinical measures such as hospitalization or palliative care because we know these are associated with quality of life in long-term care. next, to move away from clinical quality measures and instead focus on organizational characteristics. one may be to use the adoption of the principles of culture change in nursing homes. being able to reduce fragmentation is a more complicated matter. it requires coordinating measurement and incentives. this would be an important first stone to reduce

practicingmentation and comparisons across settings. and finally, the last one is a logical challenge and requires a great deal of work. it would developing and collecting a core set of measures botha cross existing formal avenues of home based services and less than formal ones as well. it would require a long-term commitment to measuring these activities, but would also enable, again, the comparison of quality across these different settings. these changes we have described here are big changes to the current format of market-based reforms, but they also provide an important opportunity to use the levers of market-based reform to improve the quality of long-term care. thanks. [applause]

>> well, good morning. i am in between now and lunch. i want to join all of my colleagues in thanking susan and the health affairs team, bruce ant foundation, not only for a terrific health affairs issue, but for this very special opportunity to announce the launch of the long-term quality alliance. this alliance is the result of many months of work by a dedicated steering committee. the membership organization that results will be guided by a richly diverse board, founding board, most of whom are here in this audience today. these are leaders in the delivery of long-term services and support, representative payors, purchasers and evaluators. consumer and care-give advocates, funders, policy-makers and others who have joined to go with a common

mission and a commom vision, to significantly accelerate quality improvement for the growing population of individuals who wake up every day requiring support for all the things we take for granted, bathing, eating, walking, et cetera. this will focus on that invisible group carol referred to, the care-give that these individuals rely on for help. the awill achieve this mission by for hisering the development and use of measures that offer the most promise to improve causality in all con text. and by implementing practices designed to achieve growth in performance. i had the great fortunate to serve as the theme advisor for this issue in health affairs, an issue that has generated not just an outstanding set of papers, but an excellent

foundation for action. the alliance hopes cob an important vehicle to achieve many of the recommendations outlined had this issue. so first, why focus -- backward. why focus on the quality of long-term services and support? well, it has been outlined by steven and many others. there is a demand for these services. approximately 11 million americans currently receive long-term services and support, and this number is expected to double by 2050. not so much because we are not doing a better job in prevention of disability, because we have a silver tsunami along it is way. currently the measures we have available-to-assess the quality of services and support do not quarterly capture information that is important to the vast population for whom progressive loss of function rather than cure is the projectry. we lack measures to help us to understand the experience of

the consumers and family care givers and their perceptions of quality of life. perceptions can be greatly influenced by the quality of support in the home. services that do not include respect for the individual may adversely effect quality of life. we have very few measures focused on this context. most available measures, as you have heard, focus on the quality of services in institutional settings such as nursing homes. wells have with this alliance a great opportunity to impact national health priority. among the major opportunities identified by the national priorities partnership, a converse group of organizations, are the need to substantially enhance engagement of the recipients of

care and family care favorers, to promote earlier access to palliative and end of life care and to minimize services. these was greed upon by the perpts in order to ensure high quart affordable health care. the recipients are proportionately lie con sufficienters. we expect to make a great contribution to enhancing quality and decreasing cost for all americans. how can we make a difference? we hope to facilitate dialogue and partnership among all providers of long-term services and support as well as between providers in a long-term and acute care sectors. and we want to brake down the things in which issues occur. we want to help caregivers

partner with others to set goals for quality. efforts we will make not just to improve the measure of care, but to better link practices to improve performance. we hope to collaborate with other quality groups on common priorities. woe want to complement, leverage and advance a number of the initiatives you have heard about today, public and private, targeting this population. in the long run we realize that organizations that provide long-term services and support must have adequate causality and financial incentives to continue to improve quality. so we will use what we learned from pilot efforts and democrat owes to assist policy makers in defining incentives. what are thundershower short-term priorities? clearly advancing things that are important to consumers and care givers is a top priority. we need measures that are respectful of and responsive to these individuals' needs,

preferences and value. you have heard from carol and others that measuring and improving care transitions is exceedingly important. among the population of people with serious disabilities, transitions in health and there four health care are the norm. notely, episodes of acute health care resulting in free went hospital sations are common. in any six-month period, one in six nursing home residents are in the hospital. 40% of them are accessing care during the 30 days prior to death. within the broader population of those receiving long-term services and support living in the community, 40% will be hospitalized each year. these hospitalizations are disruptive, fraught with complications, and frequently associated with poor outcomes, accelerating social cognitive design and others. individuals who are receiving long-term support are especially vulnerable. lack of transfer of

information, poor communication between family members, providers and others. inadequate preparation of staff in both the acute and long-term sectors to address the needs of these people. we have lots of opportunities here. high rates of voidable hospitalizations, though, are major outcomes of the gammons in care. available data suggest that between 25% and 40% of hospitalizations of just elderly recipients are avoidable. so decreasing health care cost is a major goal of the alliance. in addition to the burden associated with acute health care hospitalizations, these hospitalizations have been associated with rapidly escalating costs. the estimating savings, just hospital costs alone for medicare alone range from $1.1 billion to $1.4 pl. we want to set meaningful goals

for achievement of personal family never cares. improve care transition, to work toward preventing avoidable hospitalizations. we want to identify and disseminate effective practices to improve performance and incentives to reward performance. reducing avoidable hospitalizations and streesing health care cost foss this group are essential if we are to substantially contribute to addressing health care priorities. these priorities have the additional benefit of placing a spotlight on a growing population of people who need much more attention with local and national reform efforts. these individuals deserve long-term services and support that are aligned to meet their definition of quality. we have a huge opportunity to make a major difference in the lives of millions of american, and we plan to capitalize on the ideas generated in these great papers today by many of

the thought leaders presented here and others sitting in the audience, as well as others to make the most of this moment. thank you. i should mention there is a press release on the alliance at the table. so we welcome you taking a copy of that on your way out. thank you very much. [applause] >> and in addition, the alliance is also holding a press briefing right after the session just across the hall at the press club here. so conveniently situated for all of you who would like to go over and find out more. mary, a quick question to start with. to tie us back to rob ib's discussion about the work force. where is the quality of people in the work force on the alliance's agenda and the investments she and others have said are going to be needed to improve the quality of the work force there? >> there is absolutely no question that we will not

achieve the standards of care we need without improving the work force. but setting the benchmarks and expectations is the first step to recognizing where the fwaps in quality are and then what investments need to be made to address them. there is an absolute link abbling between the work forward and the work of the alliance. >> once again, we will open this up to questions or comments from all of you. let's take one right here. >> thanks. i have a question for mark. in regard to the middle-class uptick of private long-term care insurance, can you comment on the success or failure of both the federal long-term health care insurance policies that were offered, the big massive campaign to reach federal employees, and then the public awareness campaign that

has been i think others have been doing, own your future or something like that, and how both of those have certainly gone out to middle-class people. can you comment on the uptake? >> sure. i have an advantage of having some i maverick co-authors here, so i am going to let eileen talk about the own your future campaign since she has been involved intimately with that. it depends on what the definition of success is. by all measures the growth of the mark has been less than what optimists as well as pessimists thought it would be at this point. it is clear that with suitable rules that have been put in place where, unless you have a certain level of income and assets you are not considered to be a suitable purchaser. but definition, that means you

are going after hire income people. i think we have john cutler as well, and maybe he could comment on that. it is still considered to be the largest group long-term care player out there. i don't know what the benchmark was in terms of penetration. i will let john answer that question. john was intimately involved when that program was set up. >> thanks for that. the federal program is a group program, and we have to say -- the same 5% that most employer groups have. as an insurance success story, think it is. as a public policy marry, i think mark is right. private insurance sales have not been where insurance would want. eileen can answer the own your

future problem. >> well, the own your future carb sorry about that. an educational campaign on long-term care planning. it was destined to address all segments, including those with different financial needs currently receiving services, looking at housing, insurance, finance, service delivery and selection. so it wasn't just about insurance. we did achieve the goal of reaching a very broad and diverse group of people. so there was no income cut-off for the mailings. they went to about 30 states to individuals aged 45-65, and there was no income cut-off or exclusion. we saw the response rates coming back among those people who ordered the planning kit, the how to plan for long-term

care and those that did not being similar demographically, particularly with with respect to income. we did find that people who got this planning geithner were twice as likely to have some kind of planning action. action was defined very broadly . not just buying insurance, but talking with your family about what your needs and wishes would be, talking with an agent or financial planner about long-term care, looking at existing health care coverage to see if it covered long-term care. that was a wake up moment for many people. thinking about your housing needs as you get old. when the issue is broadly defined, planning is not something that need take a lot of money as we have defined it. you see more representation there and the response. >> great. thank you. do we have any other questions? if not, let me ask just a

couple more, one of you, rachel. you referenced the importance of making information available to consumers to a greater degree to enhance theirability to make smart chances. we have the example of nursing home compare up and running. you suggested in your paper that there is a lot further we can go. what should be an ongoing transparency agenda in long-term care? if you were talking to mary, what would you suggest ought to be the transparency agenda for long-term services and supports? >> that is a great question. i think there has been a real struggle in the public reporting arena to make information useful to consumers . consumers generally are very happy to have information available. however, very few people people

seem to use the information. we have made specific efforts to make the information more available and understandable. they instituted a five-star rating where nursing homes, given the large array of qualities, is all down into a star system. there is a lot of work that needs to be done to improve the way that we create these overall summary measures, and i think that is one area that deserves a lot of attention. in making information relevant and important to consumers when they are looking to choose a long-term care setting or facility, it is an important research agenda that hasn't been fully addressed. there are a lots of complicated issues about summarizing them. there are a lot of people doing important work on how to make the information hero relevant and salient to consumers.

but i think there is also opportunities to try and allow consumers to identify the areas of care that are most important to them and allows for a more flexible ranking or display of information that highlights those areas to them. it is a challenge. >> thank you. terrific. let me close with a final question to you, mark. everybody in this room is well aware there has been just a disturbing free of polarization in the current health reform debate, much of it along partisan lines, but to a large degree, along conceptual lines, the whole distinction between public and private and the whole notion that anything done on the public side is doomed to be screwed up because it involves government. and the other side anything done on the private side is doomed to fail and be corrupt

because of the profit motive. so we have this obviously, as you referenced, in the case of the class acts. the same set of discussions. is it going to completely destroy the private market, or a tool to enhance the private market or something in between? how do you think we move forward as a country in address some of these plarets that really don't make much sense given the magnitude of the issues. >> we must focus on the issue of what should be central here, the private sector or the public sector, that doesn't make a lot of sense. the most important thing is that you have -- and there are

examples of public and private programs working together. the partnership is a good start in that direction, but it took a long time. the original, i don't know if the word godfather, mark minor, who has been working on this close to 30 years. you have to have people sitting together at the table to make these things work. it is clear, i think, to everybody that when we are talking about solving a national problem, there is just not the capacity for either sector to kind of work outside or not work in tandem with the other. that is the point we tried to make in the article, so suggest some ways of doing this. but you've got to have people sitting around the table. >> well, a wonderful note to close on. i would say we at health affairs would hope that those of you sitting around the table

would have a copy of health affairs with you, as well as our thursday and others who have contributed to abet ability to driver this to you. give a copy of the journal to your friends. thanks to our friends, to bruce and the scan foundation your support. this will not be the last sal video from health affairs. we have a renewed commitment to keep our coverage going forward. thank you very much. enjoy the rest of your day. [applause] [captions copyright national cable satellite corp. 2010] [captioning performed by national captioning institute] >> and more on health care this afternoon. president obama will talk about health care during his weekly address, which we will have for

you at about 6:15 today. the associated press reports that senior house democrats have largely abandoned homes of including a government-run option in the final bill. they want a house-passed proposal for a nation-wide insurance exchange where consumers could shop for coverage. this as the democrats intensify efforts to agree on a final measure, possibly before the state of the union address late this month or early in february. paul kirk predicting a bill in early to mid february, again just before the state of the union address. and jared allen of the hill says that former president bill clinton will address house temperatures at their annual retreat, and may take on a more prominent role in addressing the issue than president obama. it is designed to remind house democrats of the pair ills of

killing health care reform. and the house is back in session on tuesday, january 12, live coverage here on c-span. the senate starts their second situation on january 20. they plan to look at an increase in the federal debt ceiling. off the floor, house and democratic leaders gorbleting with the white house on a health care bill. the senate passed its bill on christmas eve. it does not include the public option in the house bill. discuss now on the health care legislation and its state in the industry. this is about an hour. >> we are going to address you to our guest this morning. host: we will introduce you to our final guest, dr. atul gawande, a surgeon, and has been involved in the policy on health

care for a decade and have now. he has written a number of books, and his latest book is called "the checklist manifesto." will talk to him about all that this morning. during the clinton years, he served as a senior health policy adviser during the campaign and in the white house from 1992 to 1993, and you can reach him on a fairly regular basis in "the new yorker." when did you make the decision that in addition to practicing, you would also be involved in health care policy? guest: i tried to avoid being a doctor for awhile. the son of two indian doctors, you will naturally become a doctor yourself, and i wanted to push against my own inevitable path. during that time, i did a master's in politics and policy and came to washington and work for jim cooper, a conservative democrat from tennessee.

i worked on the al gore campaign for president way back in 1988. in 1992, i came back from medical school, which was the thing i kept falling back to, because i did not like depending on working for other people to figure out how to -- what i really think and how i can contribute. host: let's get to the 30,000- foot in view of health care in the united states. will you give us your view of what kind of health care the american public has right now, and then let's talk about some of the -- how much it costs us to get, and how many people don't have access. guest: in many ways, we have amazing, cutting edge of health care. we have access to unbelievable technologies, unbelievably well trained people. the same time, you can find some really abysmal health care, with a lack of access in poor communities, cities and

neighborhoods, and that is a stark contrast and a major problem we are struggling with. the second major problem we are struggling with is that the pieces don't fit together for any of us. the thing we are struggling with in health reform -- we have focused on the insurance hassles and insurance organization, but we've missed the point that the deepest struggle is with the complexity. science has given us 13,000 diagnoses that we have identified as problems that the human body can sustain, 13,000 ways that the human body can fail, and out of the last century, 6000 drugs, 4000 medical and surgical procedures. try to deploy it city by city, optimally, in the right time and my place for people. -- and right place for people. host: is there a big fix that is possible? guest: coverage, providing insurance to the white population of people who are

missing dead, 45 million -- wide population of people who are missing it, 45 million, we have been battling over a period is a public coverage, a private coverage? which ever way, there actually is a solution. when it comes to quality and cost, this is more a management problem. you never fix it all at once. we have had this great frustration about the health care bill -- where is the master plan for solving costs once and for all? the reality is that in order to organize care more effectively, we know we had a fundamental problems. doctors don't work together. we are fragmented. the incentive system where we are paid piecemeal, fee-for- service, has led to be small care -- to piecemeal care, has led to overtreatment in certain sectors, undertreatment and others, and his treatment,

mistakes and a carrot that happens all 2 ft. -- mistreatement, mistakes and get that happens all too frequently. host: have you come to a conclusion about what is moving along the track on capitol hill? guest: you know, might litmus test is are there tools here -- we have clinicians working with patients, be able to use to make the care better for our local communities. the 15% of our patients who come in the door and don't have coverage -- that is a constant clinical battle. i'm a cancer surgeon. . i spent years struggling with what we are going to do with chemotherapy or radiation treatments for people who cannot afford them. when massachusetts passed this plan a couple of years ago, it suddenly disappeared as an issue. we still have our struggles

with some cost aspects for the patient, but the coverage part is there. the second part is that we really have not as a community of clinicians worked on how to make care more consistent, more reliable, and less wasteful. for the first time, i'm hearing people in our conventions, our meetings, and in our hospital organizations trying to figure out -- if the bill passes, there is a lot in here to push us in the right direction. i'm hearing discussions i have never heard before about what we should do to get our costs down. host: we would like to invite you to take part in this conversation. many of you involved in health care debate. we have been talking about it is not here. as congress goes back to work, and opportunity for you to get engaged in discussion with dr. atul gawande. one last question before calls

-- let me ask you to tell us your views about the implications of the aging baby boomer generation, both on the kinds of care people will be seeking, and the countries ability to pay for it. guest: the one we people are voicing about the health care bill is that covering the 45 million people, where are you going to get a primary-care doctors? the larger issue is that over the next 15 years or so, the population over 65 is going to double, which means that the number of breast cancers, calling cancers, heart attacks are going to nearly double. our work force for managing this problem is not going to get bigger. we have not been thinking through how we organize ourselves to handle a larger population of people with more complex needs and not as many people in the system. we are thinking, let us hire more, spend more, and there is every sign that we can make it safer, higher-quality care and organize themselves better in ways that we can handle that

problem without expecting 50% of americans to become doctors. host: how does that get implemented? how does that break into the system as an idea? guest: let me give you a small example. assthma care -- asthma care -- i was at a children's hospital recently, and they implemented checklists, a counter intuitive idea for experts. if out about a half a dozen things that the major happen for each patient, and they found that you tackle things like having calls to keep them on inhalers and so on. the rates fell over 80% to guess what their number one revenue source was? asthma admissions for children's hospitals. under reform, you say, but let us take for a package of care

will be paid for results, rather than just extra money every time you bring a kid into a hospital. we are seeing hospitals talk about how to organize care so that we actually become more efficient, and get better results for people. it is going to be a real turn in how we think about ourselves as doctors and nurses and others working on problems. it is the kinds of experiments that we have to be taking seriously. host: buffalo, missouri, the democrats' line, you are on the air. caller: good morning, susan . doc, what i want to talk to about, and susan, too -- senator coburn was on your show about a month or two ago, and he was talking about running all of these tests that he knew was unnecessary, but he had to do it

for his liability, whatever. now, is that not waste, fraud, and abuse? if i would do something like that, i would be in jail. i know of doctors that do this. i am 63, i am in the va system. they control my blood pressure and everything. it is not cost me a dime. i could be on medicare, but i chose not to do it. i've been with the va since i got out of the service in 1971. but why are all of these tests being run? and i know it costs money. host: thank you. in fact, testing has been a regular theme of your story here is 1 "new yorker" article with the headline, "testing, testing." guest: your caller hit the

button on one of the issues driving the process, the malpractice system, which is driven in ways -- let me give you an example -- headaches. one community tried to look at how many ct scans and cedar rapids, iowa, they were doing for people. they did 50,000 cds dance for a population of 300,000 people a year. all of us know this is not necessary. 10,000 of them were for had ct scans, and only a tiny number of them turn out to be abnormalities. many of them were just takes. some of it is fear of malpractice. we have not really established what our process is, the appropriate guidelines for care for handling the headache so that we can do it the right weight. we have tens of thousands of

unnecessary ct scans that are causing more harm, because we have radiation exposure, and we're seeing increases in cancer likely to appear over the next 10 to 15 years. this situation is not going to be solved entirely by malpractice reform. one frustration is that we're not seeing that as part of the components of the package. but it is out of meeting the communities to begin looking at the numbers and find ways to drive down the use of these scams, and we've found ways to do it even without malpractice changes that is able to drive high-quality, low-cost care. host: is malpractice the primary driver, the scenario you mentioned earlier? guest: i've looked at communities and in texas where there was not practice reform,

and after substantial and malpractice reform, -- it there was malpractice reform, after substantial malpractice reform, there was not a significant reduction of costs. when community spent twice as much money for health care as the other, and you what you saw was that home care agencies and others that have cropped up to take advantage of the insurance system, and use of relief fragmented, disorganized care, where doctors had -- you saw really fragmented, disorganized care, where doctors had not organized to make sure we get good care up front. even more, you sought two to three times as much surgery in the population. we are rarely doing surgery just to protect ourselves from the malpractice suit. instead, you have gray zones. you have someone with a gallbladder attack.

the textbooks say that you wait, but when you make no money, watching and you make some money -- no money watching and you make some money doing the operation, there is that tension between those needs and the we could. i know that there are a lot of advancements in surgery and things. is it possible that we could have a loss of jobs because our medical system gets so efficient, like what happened in the industry of working class people, fabrics,

automotive, and, like that? is that a possibility that could happen? guest: it is. it is actually -- the move towards our being more efficient, we can have lots of people who are digging ditches, and we can hire more people to dig more ditches and fill them back up again. but if they are not providing value, then it actually doesn't help our economy. in a similar way in health care, if we are moving more and more of the labor force into that sector of our economy, it means we are not able to grow many other parts of the economy. and so the places that we are going, we are far from a world where we are about to -- one of the striking things in this recession, health care is one industry where it has continued to grow and employment. we have expanded spending in health care 130% over the last 10 years, and a lot of it has

been in middle men in the system and not necessarily getting you more time with your doctor. that is one of the bizarre parts here. unexpectedly even for me, it is why i ended up writing a book there. is about saying we are going to be more more disciplined and organized about how we provide care. we had a two-minute check to make sure there are 19 things we get right in every operation. i was stunned to see in two of three cases before we wrought it in, patients had a key life- saving step omitted. we reduced major complication rates by more than 35%. the savings from this kind of program, which we deployed in eight cities, is massively more than anything we would invest in it. but we don't work on these

kinds of organizational problems in medicine partly because the incentives haven't been there, and we don't think of these as the kinds of problems to work on. host: we have andy on the republican line. caller: i want to chastise the callers. most callers call and ask you how you are doing. you answer it once at 6:00 in the morning, and you don't have to answer it any more. it is crazy that callers do that. anyway, the reason we've got the best health care in the world is because we spend to much on it in this country. we just spend it the wrong way. what we should do is we need to specialize. when i need a gallon of milk, i know where to go buy a gallon of milk at the best price and value for my money. but when i break my leg, i don't know where the best value is for my money. what we need to do is promote the capitalism in health care

and get it away from the insurance model. i'm so tired of everybody saying we need to have coverage. well, we don't really need coverage. what we need to do is be able to know where to go to buy the quality care at the best price for our money. host: andy, let me interrupt for a second to poke around the edges of your analogy here. with the milk, you know you want milk. but you don't necessarily know you have broken your leg when you have fallen. so there is a first step in here in getting a diagnosis. how does that work in your process? caller: exactly. now we've got the internet. i am actually writing a book on how to fix all this, and i know how to fix this health care system in the country. it is completely opposite from what they are doing in congress. it is to unleash the specialization.

several economic principles, specialization, supply and demand. we need to have health care professionals much greater, train them in free or nearly-free clinics where people are tested and have a co-pay. electronic medical records for every american. several points and too detailed to go into here. host: let's put it up, and we will answer with what you have put on the table so far. guest: well, he is on to something that is right. we have a failure to really be transparent about where the choices are in medicine. one of the fascinating things to me about the bill is the effort to create these kinds of things for us. i think the really choice of competition here is we want organizations that are willing to be accountable for the spull

span of your health care and dick:ing it well. whether it is these vert -- vertically integrated models. i am trying to move in this direction with the partners health care system in boston. what these systems are about is being able to say to people we will provide the full package of services, even the complications, and we will work to ensure the higher quality at lower cost. and the bill offers a world where we have competing ensurers that are driving in the direction of giving people more choices like these. but the second part of it is we have not been as transparent about our results or to work on these organizational problems. my sense here is that we want this desire to sweep away the

old system and drop in a new one, but the reality is we have to build from where we are today, and it is taking steps forward, including the ideas of really driving our reform process in the direction we have. half the 2,000-page bill is about insurance and plans, but the other half is changing the way we pay for health care and measuring and making health care more transparent. host: dr. gawande's book is for sale. what will you find? guest: information about books and the research that we do. we are developing ways and are actually deploying them to reduce complications in surgery, childbirth and beyond.

host: new jersey? guest: i am a nurse practitioner. i have worked in nursing for 40 years. you had a guest on, susan -- i don't know if you were the moderator at the time -- but some months ago. he was either from johns-hopkins or the mayo clinic. and he confessed that there were no standards of practice for high risk surgeries in hospitals, and that astounded me because i feel that that really is a tremendous waste regarding toward reform. i think it is necessary to have

standards of practice in hospitals where they perform high-risk surgeries. if it is the fault of the physician or the hospital, then they are the ones who should pay to the people. this would reduce tort reform a lot. secondly, i want to talk about primary care physicians. i know that president obama is pushing for primary care physicians and to increase them in rural areas especially. i go to a primary care physician, and i like them very much. however, i had an experience with a drug they put me on while i was under chemo. that raised my been, and i was put on altase.

host: patricia, with apologies, to your point, please. caller: after i found out my kidney function tests were elevated, the primary care physician didn't listen to me. host: what is the point about primary care physician? we have to get there. caller: the point is i was sent to other physician, and multiple tests were done. this was a west, and my private insurance had to pay for all of this waste. i am trying to say if you're going to put primary care physicians in, you have to teach them to know what they are doing rather than relying on specialists to get your answer. host: thank you. sorry to interrupt you. guest: shegzrire be a world we are struggling with as a profession. the average physician cease 300

to 500 new diagnoses a year. we can't know it all. we can't admit that. we have not developed the systems in place that can thank that. it is why i ended up writing on something as mundane as developing a check list. we looked at the aviation world and how they handled themselves, and we look at the skyscraper world. we found that the first principle of making success under conditions of come flexionity, is for the experts to -- complexionity is to admit they don't know everything. we should have checks on things we never should forget. it runs against our expert instincts. becoming an experts is about

the idea that we don't use check lists. that is for low >> status people. but as we have developed them and then asking people to use them, they are saving errors over and over. i started using a check list for my patients, only because i didn't want to be a hypocrite. introducing them at other hospitals, i thought up as harvard, we know what we are doing. then i have not gotten through a week without finding our checks are catching problems like the sort she is describing. we have tools that can improve our quality and saving costs. host: mark, the independent line? caller: i was wondering what his views are of the news media on malpractice, as far as contributing to the cost of

health care, unnecessary procedures and tests. constantly the press is representing this and repeating statements from some of those who are involved which imply to the public that these are -- that these tests or surgeries are done because of the risk of medical malpractice, when in fact performing surgery is the most risky thing you can do. it is absurd to make this claim to the public on a regular basis. the press is getting enormous amounts of advertising. when you get hit by a car on the street, of course you are going to the hospital. you don't need to see full-page newspaper ideas -- ads in the newspaper. lasik surgery, different kinds of advertising, different methods of pumping money into the news media to corrupt, bribes that are being paid to vice presidents at newspapers

-- host: we get the point. thank you. guest: it is hard for me to play the blame at the news media's feet here. i did some of the research around what the malpractice cost drivers are and house speaker they contribute. the reality is about 3% of our increased costs comes from malpractice. one side says see how much money is coming from the malpractice system, and another part is it is only a small part of our cost drivers here. there are multiple drivers, and the striking thing is that it has to do with -- yes, some of the things about maltra -- a lot about our disorganization in our care, a lot about the way we pay for care on a piecemeal basis. and it has to do with the sheer clesmity and technology of our care.

here is the heartening thing. we have about a third of our communities that are providing higher than average quality with lower than average cost. and moving our communities to emprays what those kinds of practices are at the medical front lines is likely to be the place we will get the most bang for the buck and actually make a difference. with our economy struggling because our wages are being diverted over to our health care benefit costs, we've run into this wall. it is why reform keeps pushing ahead even though it is so complex and gives all of us headaches and we worry about where it can go. it is because if we don't act, we are already finding ourselves in deep probable. it is hard for me to blame the news media on that one. host: we are having a discussion about health care and the delivery mechanisms for it in this country and what we did do to improve it.

our next call is from alabama, and this is linda on the republican line. caller: good morning. i have two questions, and i will trying to make them brief. this sounds like a very nice doctor i am listening to. . . after nine and a half hours in the er, the doctor came in and its stated, "i believe your father has suffered a stroke, there is nothing we can do for him." my son says, "what can i do? i cannot get him home. my father is greatly il." he said, "if you want a question my diagnosis, i have a form you can fill out to take a discharge and go of my recommendation." recommendation." my son to get rid -- my son

that. my entire family from central kentucky drove seven hours to get to birmingham. they did nothing to it did not come into the room, -- they did nothing. they did not come into the room. he needed to go to the bathroom, and we assisted him. three weeks later, the same scenario. my son called me, and i said, " you called 911, you call them now." they got there, my husband, since august 19, has been in birmingham, alabama, and they did not do a simple test on him. he had pneumoniae. it turned into respiratory failure. at dr. -- that dr. got in my face and my son's face saying, "it will not dispute what i as a medical professional have told

you." we had come to realize that there were two deaths last year in the hospital from pneumonia undiagnosed. he got a bill for that one day, $18,000. guest: the kind of story you are telling gets at the heart of many issues we are struggling with. look, first of all, if you have a stroke, you don't necessarily know, but with slurred speech and not moving one side of your body, a family member needs to called 911 right away. 60% of the strokes in our country are treated in completely or inappropriately in our hospitals. we want to say is that hospital or that dr.. for the most part, what i find is that unbelievably hard working people, unbelievably trained, but pushed against the limits of the complexity of

delivering -- things i say we are fooled by penicillin, where we thought that most medical treatment in the 21st century, an injection that would make an infection go away, make a stroke away, make a cardiac problem go away. the reality is that it has been much more complex than that. the pneumoniae you talk about -- 40% of newmont yet in our hospital -- of pneumonia in our hospitals are treated it incomplete or inappropriately. not because people are not smart, but we are fragmented in our care. you experienced a drop in communication between one person coming on shift it and the next person where we have not gone forward is embracing ideas that are, in some other industries -- as professionals, we see mistakes by lawyers, we see mistakes in foreign intelligence failures. the common issue is what the

public feels about what the philosophers called ineptitude. our biggest struggles are no blogger with ignorance, although there are areas of scientific -- no longer with a difference, although there are areas of scientific ignorance. the solutions will come with doing ourselves from focusing on individual experts to thinking of ourselves as teams that have to have discipline, standards, and most critically, effective kinds of checks on ourselves that can aid the expert to be more effective than they were. host: taxes come mark on the democrats' line. -- texas, a month on the democrats' line. caller: i think doctors prescribed pharmaceutical drugs way to much. the to be the last option. -- i think it to be the last option. second, i want a public health care option. i'm self-employed and i have had

terrible health insurance my whole life. and i am healthy, so i am lucky on that. those are my questions. host: let's start with prescribing too many drugs. guest: we have a clear areas of undertreatment, and clear areas of overtreatment and mistreatment. drugs are often not given a four key conditions, especially preventive care, drugs liked saturn's for people who who have high coronary at risk, not offered as consistently as they should read it in other instances we are -- as they should. in other instances we are over- prescribing drugs. do we have complete let the experts locally run things

without any sense of feedback or information on it? we are on the way to carving a path between these two. of course we do not want on manned control. what we want ouare tools, better statistics and information about how well we're doing with the producing overtreatment and undertreatment, having that information --with reduecing or overtreatment and undertreatment, having that information available by county. that information is critically needed. and then what comes in behind that is the sense that doctors will check for themselves. i had a patient who led an onset of depression and went to her doctor, and they tried and i to present medication after its anti-depressant medication to -- they tried anti-depressant

medication after an anti- depressant medication. they realized years later that they had forgotten to check a hormone levels. the problem was not too many or too little drugs. the problem was that they missed the basic check along the way once she got the thyroid -- along the way. once she got the thyroid hormone, within two weeks she was better. host: how'd you feel about drug advertisement? guest: i'm conflicted. i feel they are largely unproductive spending. the reason they spend money on the advertisements is that the surveys show that 80 percent of the time, when they come up with the advertisement, they get the drug prescribed to them. trying to argue out of it just takes too long. what we really need, though -- i have no idea concerning the legal issues -- what it reflects

is that we have a value to the payment for things, drugs, tests, things that i do, without valuing the time that the doctors spent with people, where you can talk through what is the best problem here and how to best take care of it. doctors time is actually now cheaper than many of the technologies we have, and we have undervalued that critical he main component. it is not just doctors treated as respect -- not just doctors. it is nurse practitioners, people who can get the right care in the right time in the right ways. host: kentucky, good morning to you. caller: this bombardment of high-profile drugs and things like that -- you have a lot patients who go to the doctors it or something they have seen on tv, and is not necessarily something that they really

suffer from, because they had one of the symptoms. also, what about the drugs for minor afflictions -- with a lot of the drugs from one of the actions, they have severe side effects. is something that the -- with a lot of the drug some minor afflictions, they have severe side effects. it is something that the fda is getting on top of. guest: when a patient comes to see me with a particular treatment they want, they want to surgery potentially or a drug. if it is completely unindicated, that is an easy call. the hard part is that when people are responding to an advertisement or just when a patient comes in and has a fever for one day, and the temptation is to prescribe an antibiotic

when in certain circumstances, a cold is much more likely. over-prescription has led to massive resistance to the antibiotics that we are using. we want to be able to push back and say that in this circumstance, we should not use an antibiotic. but under the temperatures and the production model of the medical world, it is often easier for physicians just not to battle writing a prescription or an mri scan or sometimes during an operation. understanding how we can make systems that recognize -- we don't even measure how much overtreatment there is, identifying the places where we can work on it, and working with communities towards making sure that the mix of care patients get is much more suited to what their problems are and what their needs are. host: this message here --

how challenging has it been to incorporate that into use in major practices and hospitals and that sort of thing? gues s where we have done it and we have seen improvements each time we have done it, but it really has to be clinicians who are willing to embrace it. there is a huge difference between good checklist approaches and that checklists are purchased -- bad checklist approach is. if they are poorly designed and they take way too long, a doctor cannot use them at the bedside, or find them on helpful. when we put in our approach for surgical care we found a greater than 1/3 reduction in publications -- in complications -- the u.s. has only had a 20% of hospitals moving with this idea. partly it is because we are all

working as solo agents and are not used to getting together as an organization. host: with a national health- care system where that is easier to implement -- guest: that is right. people are more organized in many ways. the other component of it is that everywhere, experts are resistant to these kinds of ideas but we don't like having checks. when we surveyed teams after the implemented the checklist, in the beginning, they did not like at the end, 80% like it, but we still at 20% who hated it, said it was excess paperwork, too much time, "i hate this." then we ask, if you work the patient in the operation, but would you want the checklist to be part of the care? over 90% said yes.

host: next call. caller: doctor, when you do surgery on someone, you get compensated for your costs, and rightfully so. as the materials surrounding the surgery, gauze and whatever medical supplies you need, at today's surpass what you charge for surgery? and lobbyists in congress -- to what is the hospital administrator obligated to buy these products at high cost that really influenced the way out insurance pays off and the way the patient pays off? have a wonderful day, folks. guest: under the current structure, i get paid 1 feet, anesthesiologist gets paid 1

feet, and the hospital gets paid a fee, including what would incorporate the cost of the cause and everything else. the person who decides whether wheat open net disposable equipment, whether we use that thousand dollar item is the surgeon. i remember going into a case just a couple of weeks ago where we found we had wasted about $500 worth of stuff. first of all, i try to find out how much does that cost? it took a week. we could not quite figure it out until i found the right person. second of all, the striking thing to me was i had not really noticed it until i started writing about these issues because each of us are so separated and our responsibilities that we never actually looked at the whole system of care where we said, let's do this operation in the most efficient way possible, this is the best quality result

of working together as a team. we do that at a hospital in the sense of wanting to be as clinically smart as possible, but really organizing ourselves, taking ideas from other places, trying interesting things, think of ourselves as the kind of organization moving in that direction, that is something of a surprise, but is a way that we need to move in the future. the fascinating thing to me is that as the incentives of the health reform package are moving through an materializing and people are seeing what they are, for the first time i'm hearing that the conversations in our conference rooms in meetings where we say, ok, how could we as large groups of people, surgeons working with anesthesiologists, primary physicians and others, make it so that we have a package of care that is smarter and less costly? host: i want to show you a few of the headlines regarding healthcare in the morning

newspapers today. from "the washington times," "pelosi sees democrats close on health care." stories about the use of the excise tax on high-cost insurance, the difference between the house and senate. and "the new york times," "obama urges excise tax on high-cost insurance." in "the washington post," "experts remain skeptical of taxing health benefits." finally come in "the wall street journal," it david wessel writes about the lessons of medicare part d. finally, from a local perspective, this goes back to the discussion about access. "the miami herald" as a story about "the jackson halts

dialysis of poor patients." they cannot afford it anymore. guest: the striking thing to me is that we are becoming aware of these kinds of situations. it has been a common at -- it is fascinating to me that it that is finally a front-page piece of news, because the point at which we have been turning people away from care, struggling to figure out how to get coverage for people when they have dialysis, cancer troubles, has been an underlying current in our experience for a while. host: the chief executive of the jackson held system -- health system is quoted as saying that the decision was not taken lightly.

but they can get the treatment in the emergency room. guest: a way that happens is that when you have a kidney failure, you can function for all while, and then after a week or two, you become so sick that you were at death's door, you go to the emergency room and get emergency dialysis, but what you really need is dialysis in two or three-time-per-week basis in order to survive. it is an appalling kind of situation for a country like ours, which has, as one of the callers noted, amazing capability and technology and care. but the fundamental commitment is one at that, if pelosi is right and we are as close to changing that as possible, we underestimate the ways that that represents a significant change for the health of the country. host: minneapolis, you are on. caller: i have a question for

dr. -- host: gawande. caller: what is your take on people who are living with hiv and aids, and health care -- you know, how they plan on cutting -- i hear they plan on cutting medicare part d are doing something with medicare part d. hiv and aids have come a long way since the 1980's. but now that they are cutting medicare part d, what is your take on that? thank you. guest: the h.i.v.-aids patient

care is a nice microcosm for thinking about what is happening in corporate medicare part -- what is happening in care. but why wouldn't hiv or aids patient qualify for medicare -- would and hiv or aids patient qualify for medicare, given that they are on disability for the most part? we have turned into a deadly illness into a chronic one -- turned it from a deadly all this into a chronic one that people can live with and be healthy with. but getting insurance coverage, if you are self-employed or needing individual coverage, the pre-existing conditions make it said these patients cannot get coverage -- so that these patients cannot get coverage. the only way they get coverage is if they filed disability and no longer work anymore because of their illness.

they don't get treatment, they get ill, they file for disability, and we're in this town about where we lose the productivity of a significant part -- of the in this round about where we is the productivity of a significant -- lose the productivity of a significant part of the population. we could have a larger population of people that could really moved back into being productive in the lives as possible and have the advantages of the science so that they can also help contribute to economic recovery. host: just a few minutes left with dr. atul gawande pre confine him on the internet, and his book about -- with dr. atul gawande. you can find him on the internet, and his book is in stores. caller: good morning, susan, and dr. gawande how will health-care reform might affect the time i

spend with my doctor? will they be able to check on the basic things, or will this be quicker than normal? secondly, correct me if i'm wrong, but is malpractice insurance driving our costs up, or is it just a red herring? guest: let me ask a question about physicians and then come to the second one. -- answer the question about physicians and then come to the second one. two years ago, massachusetts took an approach similar to the new reform package, offering it for people who do not have access to insurance or for whom insurance is too expensive. if your income is very low, it can even be free. it has capped the cost at about 8% of income, and it has allowed people a choice of plans. we had 12% of those who have insurance, only 2% who have

insurance. the striking thing is, for most of us in the clinical world, for all of our other patients, we have not noticed a difference at all. i am a cancer surgeon, and i have not seen a patient with insurance coverage problems like we used have in two years. it has been an amazing thing. it can affect physicians in the sense that we are starting to embark with this package on experiments to deal with how we deal with costs. that means struggle at the local level, but for us to be thinking about what can i offer a package, can i join with colleagues in the hospital so that we can change the way we organize our care? it is an opportunity, and it is also one that we will find hard. malpractice reform i have been in favor of. i am not in favor of taps, but instead moving towards a kind of

no fault of practice insurance system. but as a driver of costs, it is one, but it is about 3% of the increase in costs from the studies that i've been part of and that others have been able to do. it falls in between. it is not quite a red herring to talk about malpractice reform, because it is available to us, and as long as we are being fair and accounting for the costs for patients who we harm. at the same time, it is far from the be-all and an ego-a -- and end-all. texas had a strong malpractice reform in this, and did not improve the cost structure there. host: next call. caller: good morning, susan, and dr.. the doctor seems like eight very common sensical kind of

fellow. is it necessary to achieve all the reforms we talking about, to create an entirely new branch of the federal government to compensate for this? guest: it i don't have the easy answer to that question. there is a bunch of the functions we have to have agreed although i am someone who would have liked to have seen a government insurance option as a backstop around the country, and the plan does not have that. the private insurance plans that would be offered -- even there, resorting to a world where we want to have private insurance, we want to have a structure of insurance exchanges that can make it so that you have a panel of options available to you. if you have no insurance or access to insurance through an employer. it feels like, yes, in order to have reform, there are new rules

for government, and new rules to get rid of preexisting conditions, which means enforcement of those rules. then we had a substantial number of programs trying to improve, for example, health care statistics. we don't have timely information on what the costs we are, we do not know county by county how well we're doing with pneumoniae and surgical complications and that kind of information has to be more readily available. although i am pretty much in agreement that creating more government is a place where we can find ourselves hamstrung by bureaucracy, at the same time, we are in a place where the leading the system to itself -- where leaving the system to itself, we are watching it

collapse, people o ought not ony by a lack of care, b host: thank you for spending an hour with the c-span audience. >> sunday, the states that are facing shortfalls with scott pattison. also, the political outlook and 20 term -- 2010 midterm elections with peter hart and bill mcinturff. following that, a talk about the book "notes from the cracked ceiling." that is alive at 7:00 a.m. eastern on c-span. >> david wessel will discuss

his book, "in fed we trust." "book tv" on c-span2. >> sunday, 1 "newsmakers," a recent report that the irs is not effectively answering phone calls from taxpayers. >> only 71% of the people who call will get through to a real person. why such a low percentage? >> first of all, with every irs program, weather service enforcement, i believe we can always get better. the report that you are talking about talks about declining service rivals these last two years as compared with the years before. to put that in broad context, i tried to make sure that we run very good service channels. when i say channels, i mean phone service, web service, service over the internet, out

walk-in service, the paper that goes back and forth between the irs and taxpayers. our phone service has decreased the past couple years. the demand has really exploded. on average, we get about 65 million calls every year. two years ago, when we sent out economic stimulus checks, we had 150 million calls. last year, we had about 100 million calls. even though our levels of services we were decreasing, we were answering and servicing more taxpayers than ever before. we went from 35 million calls answered to 40 million calls chanted. >> watch this interview sunday at 10:00 eastern on c-span. it is also available right now online at c-span.org. >> and looked out a health care insurance exchanges as part of the house and senate bills. it would offer several types of

health-care insurance for purchase for those who did not get through their employer. this is about one hour, 45 minutes. [captions copyright national cable satellite corp. 2010] [captioning performed by national captioning institute] >> if i could ask you to find some seats. i can usually point to empty seats up front, but we even have those filled. there are a couple, though. i appreciate your patience. we have tried to accommodate as many people as we could. but we have a very popular topic and powerful speakers and a very timely occasion. so we will do the best we can, and i ask your indulgence. i want to welcome you. my name is ed howard, with the alliance for health reform. on behalf of senator susan collins and senator jay

rockefeller, members of our leadership, welcome to the program to examine the parts of the senate and house reform bills, health reform bills that would set up a health insurance exchange or set of exchanges to improve the way individual and small group insurance markets function. the lot of different models for exchanges, and they can defer vary widely from each other. everything from simply a farmers' market-style website that allows better grasp of the available options, to an exclusive, highly regulatory animal that exerts substantial control over who can buy what and at what price. substantial control over who can buy what and-what price. -- and at what price. fortunately for our purposes in

looking at this issue, exchanges do exist in nature. both government and privately run. and we will hear today from folks who have been running some of those successful exchanges and we will hear about some exchanges that have not been quite so successful. and we will look at the exchange provisions of both the house and these animals, a lot of which look pretty similar, but there are some noteworthy differences and we will look at those as well. my colleague and moderator, sara collins, will be helping to for in that discussion about what issues need to be addressed in reconciling the two versions, which is a nice segue to the fact that our partner and co- sponsor in this briefing is the commonwealth fund, which has both commission and done some very excellent analysis of this

issue. the exchange proposals in the bills and the idea of an exchange itself. now let me turn to the aforementioned sarah palin said, vice-president for the help -- sara collins, the vice-president for the health insurance program. she is an economist and also the main author of the papers that you have analyzing the provisions of the respective per -- respective reform bills that were available as handouts. sarah? >> thank you, ed, and good afternoon. i will briefly laid out the broad provisions in the senate and house reform bills and where people are estimated to gain coverage under the bills, in particular, the number of people covered through the exchanges, and then discuss why we need an expert -- and insurance exchange and the type of reform bills that are before congress, and what the key issues are in terms

of structure and implementation as we move forward. everyone knows by now the broad outlines of the bills. they both came for near universal health insurance coverage by focusing on the strongest aspects of the employer based health system, medicaid, and the children's health insurance program and by regulating the individual and small group insurance markets, which are arguably the weakest part of the system. each bill would be set -- bring sweeping change to those markets, which would fall under the purview of the state's by establishing new federal rules to require insurance carriers to accept everyone who applies, prohibit rating based on health status and age vans. that would create an exchange that would operator of the state or national level. it would allow individuals to purchase health insurance coverage.

sliding scales would improve affordability and reduced under insurance and a substantial benefit package with different levels instead of floor for plans offered through the exchange. large employers are required to offer coverage or contribute to the cost. and nearly everyone would be required to have health insurance coverage. in terms of where people would gain our estimated gain coverage under the bills, these are our estimates for the congressional budget office. employer's coverage would remain the predominant system. the exchange would provide a new source of coverage to 30 million people, either individuals or employees of small companies. small to mid-sized companies purchasing coverage through the exchange would bring about 5 million to nine million people under coverage.

coverage through the medicaid program is expected to rise from 35 million to 55 million. and 23 million under the senate bill. what is the purpose of an insurance exchange in the context of broad based health reform post in the bills on existing health insurance system? the individual and small- business markets are poorly art -- poorly organized for now. there are substantial barriers to obtain coverage. the market's rules vary widely from state to state. plans are often difficult to understand. large amounts of premium dollars go to insurance like. and lack of competition is based on avoiding risk rather than enhancing value. the exchanges can be designed to provide structure and oversight

to ensure its markets with goals of improving consumer protections, enhancing transparency of the benefit packages on lowering premium growth, changing the competition dynamic from risk to value. the key provisions of the exchanges in terms of their viability over time and their viability to provide comprehensive in -- coverage include broad risk pooling and individual requirement to health coverage, benefits standards to ensure comprehensive coverage and informed choice, sliding scale premium and subsidies that should only be available through the health insurance exchanges, the authority to negotiate premiums, a choice of high value plans. tim jost is going to provide much more detail on the

similarities and differences between the senate and house bills on the exchanges on his excellent paper included in your packet today. i will skip the slide and leave that discussion for tim. and get to what i view as some of the issues as we move forward. those include federal versus state operation or control of the exchange, exclusivity of the exchange -- and by that i mean, whether the exchange becomes the whole market or if the individual and/or the small group markets are allowed to exist outside of the exchange. the extent to which the exchange has the authority to set rules and plan participation and whether the rules for participation are aimed at encouraging planned innovation and the value and health care design. and finally, whether the exchange will have the ability long term to focus on by you and not on risk.

-- to focus on value and not on risk. >> in the packet to you will find a lot of good background material, including speaker biography information, much more extensively than we will have time to give them orally. and you will find the power point presentation that you may find hard to read on the screen in your pockets as well. if you are watching on c-span and have access to computer, you can find copies of everything the folks here have in their case at our web site which is www.allhealth.org. and for the record, we did not get a letter from c-span asking us to open this briefing to the cameras. we volunteered it. there is a webcast and a podcast

available probably monday at kff.org, stands for kaiser family foundation. thanks to the folks who make that possible. he will find material there as well as at our website. and in a few days, you will find on our site a transcript of today's session, which a lot of people find it useful in reviewing things very quickly. you have question cards in your materials, green cards that you can use to write a question and have answered by our panelists. there are also some microphones that you can use at the appropriate time. following the program, i would appreciate it if you would feel out and leave with us the blue evaluation forms that are --

fill out and leave with as the blue evaluation forms that are in your pocket. we have a very knowledgeable group today. we will hear some great presentations and have lots of time for discussion and your questions. let's start. leading off today is timothy joseph, from the washington and lee -- tim jost, from the washington and lee university school faculty. his paper provides the jumping off point for our discussion today. he has written several books on health policy topics, not to mention his co authorship -- co- authorship of the leading book on case law called "health law" nowlin its sixth edition. whether you agree with him and not -- now in its sixth edition. whether you witagree with him or not, i think he will find him

very intelligent. >> thank you very much. i must say as an aging law professor, power point is still something i'm not very comfortable with. i will do my best to move my slides along, but you might also listen to what i have to say. if there is anything that we can predict with almost certainty about the health legislation that will emerge in the next month, is that legislation will include the health insurance exchange. a health insurance exchanges quite simply unorganized market for the purchase of health insurance. the exchange's most familiar to us are the -- are those represented here by mr. kingsdale and the employees' program. the medicare advantage program, the medicare part "d" program and those in the netherlands and switzerland and arguably in germany, also exchanged -- contain elements of health

insurance exchange. the connecticut business and industry association represented here by mr. vogel today represents a successful private purchasing cooperative. while each of these models can be called an exchange, they are, in fact, quite different. indeed, the models represented by the house and senate bills are different in very significant ways. the focus of my paper and my brief presentation this morning is how the house and senate bills differ and which model is most likely to result in the most likely to result in the exchange first, quickly, why do we need an exchange? what we expected to accomplish? the exchange is intended to play a number of roles in health care reform.

sarah briefly went over this, but let me do it again. is if acted to be the locust of competition. it is hoped the exchange will focus competition on price and quality rather than on at risk avoidance, thus making health insurance more affordable and accessible. second, the exchange is expected to create a sizable risk pool that will, together with the insurance reform found elsewhere in the bill, allow insurance risk to be more efficiently managed, reducing the incidence of adverse selection by insurance and the practice of risk selection by insurers. third, it is hoped the exchange will reduce administrative costs by simplifying marketing and premium collecting and by eliminating risk-based underwriting and simplifying the packages that insurance companies put together for insurance. some bovine the packages that insurance companies put together for

insurance as well. at fourth, the exchange offers the possibility of making health insurance market more transparent and facilitating consumer choice among health insurance plans by standardizing plan offerings and providing more and better information about health insurance options. fifth, the exchange may play regulatory role, helping to make insurers more accountable. in particular, it could serve as a form for reallocating risk among insurers and guaranteeing that those who sell comprehensive insurance company -- that those insurers to sell comprehensive coverage with manageable cost sharing and respond properly to consumer claims and complaints as well. sixth, the exchange will likely play a role in facilitating other key features of the health care reform legislation, such as the premium -- payment of premium credits or perhaps even

the positioning of the individual employer mandates. in many respects, the house and senate bills perversions and exchanges are quite similar. both the house and senate bills -- provisions and exchanges are quite similar. both the house and senate bills allow employers to purchase health insurance through the exchange. both require that health plans offered through the exchange offer standardized, essential to benefit packages that are arranged by teaiers based on cost, by you and consumer choice. both have transparency and disclosure requirements to insure accountability. both provide premium subsidies, which will cover over half of uninsured individuals in the non-group market and are only available through the exchange. both give the exchange some

discretion over whether or not to offer health plans, and thus, some bargaining power with insurers. both bills generally outlawed risk underwriting by insuring some pre-existing condition exclusions and both contain provisions for griot -- reallocating risk for insurers. both finally allow grandfathered plans to exist outside the exchange, which will undermine its ability to cool risk. the bills, however, differ in key respects. which approach is in the end taken will have a profound influence on implementation and effectiveness. at first, the house bill has put responsibility for creating exchanges on the national government. the house bill creates a national exchange that allows states to create effective alternative exchanges, like in massachusetts, to opt out. the senate bill, on the other

hand, places the responsibility for reforming exchanges on the states. it depends on each of the states to enact legislation that will mirror the federal legislation in terms of insurance reforms and creating exchanges, and then to proceed to create each state, its own exchange or sub-state exchanges. if a state declined the invitation to do so, or of the department of health and human services determines that a failed -- that a state has failed to do so, hnns can set up an exchange to do so. this will depend on the federal government effectively determining that a state has failed to comply with the law and stepping in after the fact. the state exchanges are also an unfunded mandate. there is no federal monday -- federal funding in the states to do this. they will have to pay for them

themselves, presumably by taxes imposed on insurers. -- insuranceds. state-based exchanges have advantages, including perhaps, not a better knowledge of local insurance markets and restore the ituri environment. but national markets offer larger risk pools and greater efficiency. you do not have to set up 50 exchanges, each with its own programs, each with its own capacity to do all of the functions that each exchange will do. the federal government already has extensive experience with running exchange-like programs like the medicare advantage program, the medicare part "d" prescriptions drug program and the latter two include risk adjustment programs, which will probably be part of the exchange or at least the insurance

regulation system. most importantly, in national program promises uniform implementation of the exchange. if some states want to go beyond the federal program, the house bill allows them to do that. but it does mean that no state will be allowed to lag behind, that no state will be allowed to simply refuse to set up an exchange and then have the federal government stepped in belatedly and try to clean up the mess. the second biggest difference between the house and senate bill is the exclusivity of the exchange. the house bill requires all non- group health insurance coverage to be sold through the exchange. the senate bill allows a non- group market to exist outside the exchange and does not require policies sold outside the exchange to meet all of the requirements of the qualified plan sold through the exchange.

this belief -- this leaves the door wide open to risk selection by insurers against the exchange. both bills also allowed a small group market to exist outside the exchange, which i think to some extent threatens the same difficulty. the senate bill partially compensates for its open market by requiring insurers to include all insurance in and out of the same exchange and the same risk pool. and requires issuers of qualified health plans to charge the same premiums in and out of the exchange for the same plan, by requiring insurance outside of the exchange to cover the same level of coverage and actuarial value and, finally, the senate provides the same program inside and outside of the exchange. but the senate has plans that

are configured to attract the best risks away from the exchange for those existing outside the exchange, and leave that for the more high risk groups. the senate bill will also require a greater amount of regulatory oversight because it go require -- it will require the states, not the exchange but the states, to collect enough plants on data -- in the date on plans outside the exchange to do a risk assessment of plants both in and out. it seems to me to be a better requirement for them all to be sold within the exchange. does the exchange merely offer whatever plans insurers made available, or does it have read the ituri authority as well? both -- regulatory authority as well? both the house and senate bills have some regulatory authority,

making sure -- making insurers for dissipate -- participate in certain programs. the house bill does go further, however, in negotiating the terms of the insurance plans with the insurers. while the terms for these negotiations are not specified, the legislative language leaves room open, for example, for the exchange to negotiate with respect to issues like premiums, medical loss ratios, administrative costs, etc.. the manager's amendment to the senate bill on the other hand also allows the exchange to take excessive premium increases into account in certified plans and, in fact, requires generally is some general language of being in the best interest of the insureds. i believe there is some language

with respect to issues like premiums. there are other differences between the bills that we can address in questions. the house bill still includes a public plan, may be for another few hours. [laughter] to be offered through the exchange. the senate bill, of course, include these multistate plans that are offered through ltm so the senate lawyers one exchange on top of another exchange, which can lead to some interesting dynamics. the house bill only borrows them -- bars them from premium subsidies. the senate bill has drawn bertrand's parity and disclosure requirements. i believe the transparency and -- the senate bill has a stronger transparency and disclosure requirements. i believe the trans. -- transparency and disclosure requirements are exceptionally good. the senate bill requires a qualified health plans to provide insurance programs,

which the house bill does not. neither bill -- and i do not know how much opportunity there is too slick in the anything at the last minute, but neither bill addresses the issue of privacy of health data. under current harrahipaa requirements, i do not see that is covered. a key point, however, is that although the exchange holds great promise as a health policy tool, we also have a history of some pretty disappointing experience with exchanges. we will hear today about some good experience with the exchanges, but a number of states have tried exchanges that have failed. we have a chance to get it right with this legislation. to come up with a powerful tool for improving access, controlling costs, and perhaps even controlling the quality of health insurance and health care. it is very important that congress gets it right. and i thank the commonwealth

fund and the alliance for sponsoring this meeting today to allow us to talk about this. thank you. >> thank you, tim by the way, in his paper there is an executive summary of front and text in the back and wedged between them is one of the conesus charts that you will at -- one of the neatest charts you ever see that summarizes this information. the next is jon kingsdale. he is the executive director of the biggest real world pilot of a real world insurance exchange this side of the federal employee plan, that would be the commonwealth health insurance connector authority set up by the massachusetts landmark reform law from 2006. jon has worked for more than 20 years in the private insurance

world. it would be tough -- and he has even done reporting for "forbes" magazine. i know many of you called him during the debate as you try to shape this language, not just on the exchange, but on related topics. jon, welcome back. >> that was a very helpful introduction from sara and tim on the basics. i do not know how much further i go, and if i lose you -- and i have been added since the civil war and occasionally i lose myself. [laughter] there's more that we do not know that we do know about how this -- the house and senate versions would actually play out. i am so pleased that philip vogel is here. he runs and exchange extort in connecticut. -- he runs and exchange next door in connecticut. and they could not be more different.

when you see a house version or a senate version, you have seen one out of a thousand permutations that may play out. that said, let me try to shed a little bit of light. i start from the promised that this is, perhaps, the most challenging domestic implementation of a domestic policy initiative, at least, in this century. that is easy, only 10 years, but i would go back maybe another century. it is personal, complicated, partisan to say the least. and then of course, cost control, which is far more ambitious than we were in massachusetts. we just did access expansion. we are on phase two of cost control, which means taking money away. that is even harder. that is even harder. the administration will as has been said, most exchanges have failed. it feels a little like the 14th

century or 15th century european map makers trying to describe their charts incog need no, and i have a personal bias that implementation is 90% of the game. i know that a lot of people here are actually focused on the act, but i believe it lives or dies with implementation. a lot of humility. i would start by saying the way to improved odds that an exchange of any sort would work is to define very realistically a limited set of objectives. i will go into the details, but when i hear some of the objectives set forth and policy papers that run into the dozen or half-dozen objectives, i shudder. each bill has some weaknesses and i will get into that, and then try to resource them for whatever exchange we come up with adequately for implementation.

most of what and exchange operator will have to encounter has not even been thought of. . to encounter has not even thought of. it will depend on the circumstances as they evolve during a whole new set of realities. i think there are maybe three objectives that our party doable. and one is, to reduce administrative costs of buying insurance. there is tremendous waste, if there is tremendous waste, if you will, or cost insurance, particularly in the small group end of insurance. that is clearly a target. secondly, to improve consumers' shopping and buying experience. particularly, in the non-group and a small group and of the market. i actually, to this day, four years after we got up and running, get a stop and help --

and thanked on the street for buying insurance for their kid because instead of spending half the money -- half the morning on the telephone trying to compare different carriers and coming away with it much of scribbled notes, they can go on our website and in 20 or 30 minutes compared fairly reasonable products and push a button. i would not underestimate the importance of sick -- for its success and of the mentation of health reform just been able to -- for success and implementation of health reform just being able to help your customers. most of the cost they are trying to place for, they do not control, they generate by doctors, hospitals, pharmacies and etc. through competition and choice, we may be able to add a little price resistance and a bit more fortitude on the part of the

negotiators and take down through administrative deficiencies some of what they retain in premiums as well. -- through administrative efficiencies some of what they retain in premiums as well. i would say there are some weaknesses in both bills. first of all, industry resistance. to be very basic, and exchanges and automated store for insurance. you do not run a store if you do not have products. and there is typically no way to compel a producer to sell through you, even if you require it, unless you close off all of their stores. they're pretty good about finding the store they want to sell through. one thing would be their resistance to an exchange. you can deal with it through making an exclusive channel, that is one way. certainly, that is practical for non-group. i think that is impractical for group insurance, small or large.

make additional segments evolutionary, see if the exchange is working and build on its track record, in fact, invite participation -- both customers and producers -- and then provide for some flexibility, particularly when you get beyond the non-group market. small group is a local market and is different in connecticut than it is in massachusetts, not to speak of mississippi or alaska. there are some provisions in the house bill that i think will have absolutely zero small employers use the national exchange. we can talk about that if you want. secondly, adverse selection is a major issue. this is a complexity option, new rules, all of these encourage adverse selection. it is the easiest way to make your bottom line as a carrier to be positive. one way to counter that is to exclusive channel for non-group

and another way of selling claims based risk adjustment, but has to be across the entire market segment. if you are doing it for a small group, you cannot just do it for the exchange, but the entire market. forgoing the large group market, if that is an option for large groups and they can do choice themselves, the only large employers who are likely to get into the exchange are the ones that somebody else wants to dump their. and thirdly, cost control tools. thank you for plan selection, that is critical. the house is clear on that. the senate is a little money year, but it is pretty clear. -- a little muddier, but it is pretty clear. in massachusetts, for example, over three years, the connector has come to standardized benefits. but in 2007 when we started, we did not know which products

would step -- would sell and which would be preferred. we had to evolve over time and then automate, automate, automate. there are a tremendous amount of administrative inefficiencies to begin with. turning to house legislation for a minute, i think one of the problems -- and tim referred to it -- is what i call market insensitivity. that is only one of several reasons of why there is likely to be zero small group participation in the national exchanges currently envisioned. another regioreason is all of te premiums are supposed to flow directly from carriers to employers and an employer has to get billed and paid for five employees in order to get started, it is pretty much a nonstarter. an exchange is far less complex and less nuanced. most small businesses do not

change states. delegate and decentralize where possible. it is clearly hampered by the focus on a washington-based mowry national management structure. and finally, emphasize -- or a national management structure. and finally, emphasize balance. this is where the backlash will be very real and tangible for the god awful big monster created in washington and it does not actually get me insurance when i go on line. secondly, there is an issue about regulation verses retailing. clearly, the house version is foreign exchange to be more of a regulator than this and as a just, i think. maybe that can be done, but there has got to be a limited set of goals, a considerable amount of independence from the agency that administers this, the health tauruses administration, to figure out what will work to try different things -- the health choices

administration, to figure out what will work, to try different things. i would suggest minimizing the policing role if you want to actually sell insurance, which is basically the mission of an exchange. nobody buys if you have not done anything. you will have to be somewhat less of a policeman, and that may mean regulating carriers more through state insurance read than a national exchange, which is trying to regulate the producer of the product while it sells the product. and finally, i think, customer experience is a potential weakness in the house version and their flexibility phasing in and not prescribing every element of transparency. at encouraging pilots would be very helpful. turning to the senate, i think there are a number of problems and and will add a fourth one. scale of the economy is clearly one.

as a web based electronics store, the fixed costs are pretty substantial and scale is critical to the administrative efficiency, and national is by definition bigger than state by state. but you can make that the exclusive channel for non-group and i think -- well, in massachusetts that would be 300,000 people. at that point, even a modest sized state exchange has got 90% of the scale economies you can get out of volume. 300,000 is a pretty good -- at that point, you are not much incremental savings from growth. developing a national web based tool that the exchanges could use. secondly, geographic portability. people move, split their time between states, etc. but the key is to have national plans, not a national store. as long as you can buy national plans, that is the key. and if you can be supplemented

by a reciprocal plant in regional terms -- a reciprocal plan in regional terms, and there are conventional wisdom things noted on the power point, but finally, state resources and energy is somewhat of an achilles' heel here. given the controversy alateen that has come to characterize this entire reform effort -- given the controversiality that has come to characterize this entire reform effort, that could be problematic. finally, i would turn to the last point about greece forcing an evolving -- about resources in an evolving -- resourcing and devolving exchanges,

legislating and trying to figure this out. some degree of independence to these exchanges to figure out what works. i like the senate version much better, which has funding tied to sales, premiums and transactions actually happening with the exchange. i think that focuses the exchange on its most core mission, to get a bunch of people injured. secondly, clear objectives, but flexible means. we just do not know. there is a much more that we do not know then what we do know about how these things are going to work. there is a huge wash of billions of dollars annually envisioned in these exchanges and a very murky set of auditing instructions. and finally, rigorous evaluation over time. i hope that is helpful. >> thank you, jon. our final speaker is philip

vogel, senior vice president at cbia service corp. he is in his third decade at cbia and the services corp. offers health insurance, among other things, to the thousands of members of cbia. he has also spent a dozen years in the private insurance business directly. he has been a certified life underwriter for more than 30 years and his division has led the way in setting up a statewide health insurance purchasing alliance that allows workers and small business members of cbia to choose among several different policies. we are anxious to hear the experience that you have had, and the successful you have had. thank you for joining us. >> thank you, and i think you have heard a lot of good ideas

from the panelists and i will probably repeat some of it, but i will take you into the private sector a little bit at one point it was called a hipaa because we really designed it under the clinton era under the competition model, thinking that you would set out an exchange and people would make decisions based on price, network, satisfaction and quality data. that is what we were trying to do when we introduced our program. i will repeat some things that were set up here because i think there were a lot of good things said, but what i'm going to try to do is give you a view into the private sector and the exchange that has been running for over 15 years. as i said, cbia is a not-for- profit. and we run it out of the cbi service corps subsidiary. we pay taxes for any that we provide. and basically, coming from a

state that is very highly injured -- we only have an uninsured rate of around 10% or so. we have very high mandates. but we have a lot of practices in place, and yet, we are able to compete in the private sector. nobody has to come and buy from us. this is totally voluntary. we look at a very competitive marketplace and how we work. and what i would like to do is try to take you through that, little bit of what we are, why we are successful. i need to give you some background in connecticut under the rating rules that we operate under because those are a lot of the rules we are talking about federally in both the house and senate bills. we can give you the lessons that we have learned over time and some of the opportunities. we introduced our program in january, 1995. is an employee-taurus model. what does that mean? we have -- and employee-choice

model. what does that mean? we have employees that we contract with with a range of benefit levels from the companies. we have over 500,000 members in connecticut that participate. one of the things that we talked about is looking at the adverse selection one of the hallmarks selection one of the hallmarks of our program when we have come very close to having standardized benefits between the health plans starting on day one in 19905. -- and 1995. we try to determine and said his program out among competition, a choice based on price, network, and as things evolve, they make decisions based on the formula that different networks have and the satisfaction rate. we had the objective when we

first are it having quality data. we think we brought employee choice to the marketplace, or employees and employers. the employees' trust their employers. we need to make sure that we add value to the entire marketplace. to the individual, the company, and insurers. there has been evolution where we have started it. is a win-win. there has been an evolution of where we started it. we tried to set specific rules but we have had to change

dramatically over the last 15 years we have been doing this. health insurance is very personal, it touches each individual. it touches their families and each situation is different. you need to figure out how you can attract and make sure you are marketing to each of those individuals and satisfy their needs. we have stayed true to our mission the entire time and only focused on small business. we did not get distracted and go into the non-group business. we stayed true to keeping our objective straight forward and making sure you concentrate on those objectives and not get distracted. from the private sector, and i will be biased because i come from the private sector. from our standpoint, innovation is the key. you have to be able to set out

to change and adapt. when we started this we hired employees so that we could administer our program. i said tip of the things to those employees. number one, i guarantee you two things, change and that we forgot something. that was the only two things they were told. that has come true because we have changed dramatically. we have to have the ability to change as we go forward. the selection issues, adverse selection is ripe in this. when you're competing with the outside market it is absolutely critical that adverse selection is avoided. i will talk about the background of that in two slides. what we do -- what we do from our standpoint is we look like one large employer to the health plan, but we do everything. one of the differences from our

exchange is we are the exchange in the sense that we have designed the program and negotiated the contracts of the health plans, but we are also the administrator. we are actually doing the day- to-day operations in the sense that we will do the proposing of what the rates would be and benefits, if a company is looking for a " we will sell it and roll it and hold enrollment meetings and handle billing problems. we sent eligibility to the plans on a day-to-day business. there is one bill that goes out to employers, so we are trying to provide everything needed per all the communications to all the different segments we are servants -- everything needed for all the communications for all the segments we are serving. what have we learned? we have learned that -- i think

i skipped one slide which was critical. let me come back to this slide for one second. that is the rate basis. the basis for connecticut is we've passed small case reform laws in the early 1990's. what that did was it gave us adjusted community rating so there was art no decisions that could be made based on claims. -- there were no decisions based on claims. we have guaranteed issue, we do have some rating factors being age, depended status, that can change some of the race. we do have a reinsurance pull behind-the-scenes -- a reinsurance pool behind the scenes. it has been very important. as a backdrop, that has been very important for us as a lot

of things are included in both the federal and senate bills. some of the lessons as we move forward. i talked about the adverse selection. we have tried to avoid adverse selection from day one. one of the problems is if you are looking for administrative expenses and just to save the expenses, we have a real problem. even in the bills -- in the group market place they're looking for 8% group loss ratio. even if you save -- they are looking for 80% group loss ratio. how can we change the risk profile underneath to help look at the claims side?

i have a problem with putting the loss ratios in there because it stifles innovation and the ability of companies to invest in what they would do to help manage the care or help drive down some costs we are talking about. i can comment later on some of the broker compensations, but we have not allowed any in our program. we also look to make sure we are consistent with what the market does outside of the change. some of the things do that about, there are some unintended consequences. we use the unintended consequences all the time for what may take place if we make certain decisions. i really think some of the age pieces -- the house has a 2-1 rate bands on pricing. the senate is talking about 3-1. that can be a problem unless

there are strong individual mandates. if individuals or small businesses dropped out of the marketplace, the ones that will drop out car the healthier risks. we will end up with a higher risk pool, higher rates and that will leave us in a major problem. there will be problems in trying to figure out these subsidies, and when you look at multiple funding sources and where the dollars come from and how to handle part-time employees, those will be situations. the risk adjustment premium redistribution becomes an issue because if you are reid dispiriting -- if you are redistributing because -- they could be reducing risks. they are helping them reduced their price. there is focus on wellness and

behavior change. that is a big piece john and i were talking about prior to was coming up here, but the culture of moving forward -- we have to look at this. how do we bring something to the small business in the non-group market that large companies are doing tonight? they are trying to figure out how to make a healthier population, how to invest and reduce risks within their population. it is very difficult. we have companies in connecticut we talk to all the time that are doing this. the large companies -- trendlines have flattened. if we don't bring that into the small business marketplace we will just exacerbate the problem. i have a couple of questions for you. i guess i want to a show of hands but they are touchy questions. i would expect everyone here pretty much knows -- if i said

how much of you know how much you weigh? most of you would say i know that. how many of you know your numbers? the numbers be and how many of you know your blood pressure? how many -- the numbers being how many of you know your blood pressure? how many would know your bmi? the question is, as we go forward we cannot just look at administrative expenses and say it will reduce expenses. it needs to do more than that. it needs to move forward into how do we change the underlying population, the health of the population. if people have multiple risk factor is, how do we do that? -- if people have multiple risk factors. that is very important as we go forward. >> now you get a chance to join the conversation.

you can go to one of the microphones. you can fill out a green card. let me take the occasion while we are waiting for our audience to do either or both of those to invite any panelists who would like to make additional comments, to do that now. we have tim jost. >> three quick comments. i agree with john that the small business part of the exchange in both the house and senate bill is problematic as to how that will work. other than the very obvious things like the size of the groups that participate, when you start getting into the details of how this will work? it gets very complicated. in particular, the senate bill seems to be poorly fleshed out. the problem john identified of the premiums being paid to the company rather than through the exchange is an artifact of the budget process. the cbo put out a memorandum in

the spring as to how it will score health care reforms. one of the things it said is that if premiums are paid through the changes, that becomes revenues of the federal government. that means any money that gets sent -- all of a sudden the cost of health care reform has gone up dramatically. i am sure congress did not want to go there. it will be very problematic, particular they because every individual as i understand it in both the house and senate bill will be individually underwritten with respect to the rating factors that remain, which means small businesses will be paying a different premium for every one of its employees based on age or other factors. just to respond to that, i agree that is a real problem but that is why the problem is there. with respect to the medical loss ratio, under the house bill and

under the senate bill as well, medical loss ratios are defined to exclude the costs of improving quality of care. things like disease management programs and chronic care programs will not be considered to be part of the administrative costs. there is some room there for flexibility and innovation. with respect to wellness and when it -- wellness incentives, the senate bill includes a number of provisions to encourage plans participating through the exchange to provide various quality incentives, including prevention programs. one of the things at it by the manager's amendment to the senate bill was provision -- one of the things added by the managers and then it was -- added by the managers was --

focusing excessively on title one and for getting the rest. there is a lot on prevention will this -- and for getting the rest. i wanted to thank the other participants because -- >> one of those participants has a comment. >> he first point about the cbo ruling on the impact of premiums on the federal budget [inaudible] i was reading it on my way down because it is a critical piece of technicality that i and a noted -- and in no position to dispute. -- i am in no position to dispute. dispute. there are a lot that is a problem.

i would read this, by the way, as fully indicating that under the senate version where states are given the option to run premiums through their exchange or not, and whether there is a broader range of benefits of qualified health plans down to 60% of actuarial value -- under the construction, the premiums would not be on budget. the revenues would be offset by the extent -- expense. my larger point, of course, however the cbo technical reading is resolved, one cannot look to an exchange which is an automated yellow pages to be a vehicle of competition and choice for small employers. >> there is language in there that says, even though expenditures are run through the state, if they are administering the program under federal direction, they can be considered agencies the federal

government for the budget purposes. i am not sure the senate can completely avoid this. they will probably have an easier time avoiding in on the state level. i would hate to see the whole program driven by that. >> the cbo runs a lot of things. >> i picked that up this year. [laughter] >> we have folks at the microphones. anyone that stands up and asks the question, be as brief as you can. we will get to as many questions as we possibly can. be as brief as you can so we can get to as many questions as we can. >> how do the changes affect the public and private funding for abortion coverage? >> under the senate bill exchanges have to provide at

least one plan that does not cover abortion. beyond that, and other the -- under the senate bill there was a provision they had to cover at least one that did and one that did not come up but i think that came out in the amendment -- one that did not, but i think that came out in the amendment. the exchanges are not very much involved in this. >> kevin. >> the only comment i would add is -- this is a perspective of the retailer. the requirement to resolve this fundamental moral issue that the store packed two products for everyone real product and -- go into a supermarket. the most critical resource is shelf space, " so when the issue

is take two products -- so when the issue is take two products, you have made it twice as hard to shop. probably not a major consideration for people who care about abortion, but if you're thinking about exchanges it is actually a real problem. >> we have tons of questions on carts which leads me to tell you that -- questions on cards, so if you have an urgency with your question we may have done a bait and switch because you might not get your question asked of the green card. -- the question asked off the green card. can you compare administrative costs to states in the senate and house bills? >> the administrative costs to

states in the house bill are minimal because if the state wants to run an exchange it can. it will have to pay matching funds, but it the state chooses not to run an exchange it has no costs involved. in the senate bill pete states are responsible for enforcing the law and -- in the senate bill the states are responsible for enforcing the law and running the exchanges. the cost of running the exchange will be borne by the insurers who will pay some kind of a surcharge, as they do in massachusetts, don't they? but the costs of enforcement will be borne by the state. it is an unfunded mandate. the administrative costs to the state under the senate bill will be considerable. >> i would take issue with that term unfunded mandate.

clearly in the house version, the state does not offer the service it does not have to pay. it is politically unclear what level of federal subsidies will be available to states from the federal budget to pay for the exchange. on the other hand, having the states that run exchanges surcharge the transaction and have to manage the cost of their services in a competitive market is a reasonable way, and focuses the objectives of the local exchange on its fundamental objectives. that is to get people injured in the most and portable web. -- get people in short in the most affordable way. -- get people insured. >> i was not talking about the cost of running the exchange. >> let me follow up with a

related question here that notes health insurance is regulated at the state level today. if the exchange is created at the federal level who would staff the federal exchange, and how much would creating that new structure cost? does anybody have any notion about that? i don't remember seeing anything in the cost estimates. >> the federal exchange would be run by the commissioner of health choices, which is a new administration that will be created under the house bill. the costs of running the exchanges is to be appropriated by the federal government based on funds collected from the penalty for the employer and individual mandate. i don't know what the cost is that cbo put on that. i am not sure there is a cost put on that by cbo. >> we have some cards --

>> how will the senate approach the 50 state exchanges work and the 10 small states under the -- under a 1 million population? >> if i can magnify that, there is a new paper i don't think we had in time to put into your packets of that economic development. it asserts that you need at least 100,000 lives in an exchange to make it viable. >> a further problem is that since under the senate bill the exchange is not exclusive, and since the presumption is that a considerable number of people will stay outside the exchange, i think you will be dealing with some very small exchanges that will have a problem with providing insurers with viable risk pools.

the senate bill contemplates the possibility of regional exchanges. a state could always forgo the exchange and let the government run it, but i think that is part of the problem i was pointing to with respect to the size of a viable risk pools. >> if you take a business approach you have three sets of issues. you have the business functions that are variable, you have the fixed costs, and you have some of the mandated functions, the unfunded mandate. these are the regulatory functions and subsidy distribution functions. i would draw your attention to the fact that it is the fixed

overhead costs of the business functions that are largely where the economies of scale can be from having [unintelligible] when phil's folks are on the phone with employers explaining why they have to file this new form and why they cannot pay somebody more for health benefits and some the else under federal regulation, or what the difference is between a ppo or an hmo, or any other questions involved, that is largely variable costs. you could have at centralized and somebody in washington who would not understand the connecticut market trying to understand this question is -- trying to answer those questions over the phone. what you will have the scale economies on and some of the enforcement things are all so variable. the web site, corporate

overhead, and i don't know about the 100,000 as a reasonable trigger point for adequate risked pooling, but our experience is somewhere between 50,000 and 100,000 is where you get a diminishing returns on scale. if they turn out to the super stuff you could do with 10 million people, which is bigger than any state in exchange, you could have a national utility exchange run by the feds. they could and should make that available to states with their own exchanges. >> go right ahead. >> i am with a national partnership for women and families. to go off to what you mentioned with the regional exchanges, it

the senate language prevails and reform regional exchanges, how they reconcile the difference with trading rules and other regulations? will they have to harmonize -- the difference with rating rules? >> that is a really good question, and it is in a minor scale compared to the same question for 50 states. it is a very good issue. to be perfectly frank, maybe it has happened but i have not in one year of discussions heard an in-depth discussion of hamas as in -- in-depth discussion of harmonizing exchanges with state insurance regulation. i know in massachusetts we work hand to hand with the state division. if you want to take an existing product of the market because we are standardizing benefits, that

directly impacts the regulations on preserving access for the existing members of that product you would like to subset. that is something we will work out in conjunction with the massachusetts division. were the new england it exchange want to do something similar, they have to deal with -- were the new england exchange wanted to do something, they would have to deal with many roles. >> i will agree with that. any time we are making changes within our exchange, even though we are in the private sector we are looking at the insurance law and talking to insurance departments and sometimes meeting with them to determine what we can do going forward. as i said earlier, it touches everybody. is local, -- it is local, so it

will play out more at the state level. >> one response to that is, i anticipate considerable standardization of state insurance laws under health-care reform probably under both bills. the house bill -- the way it works is that it does not nationalized insurance regulation as such. what it does is it says that the national government, we are doing national health care reform. the commissioner for health choices is accountable for the enforcement and implementation of this law. then there are lots of language about coordination consultation, joint efforts with the states to try to implement the law. a lot of the issues currently addressed by state marketing and

consumer protection laws are addressed by this law and will become fairly uniform. they do not preempt state law, but they do cover a lot of the areas that are covered by state law. to the extent a state law would prevent the implementation of the law, that law will be presented. a lot of the difference -- that law will be pre-empted. if the state wants to mandate coverage beyond the essential benefit coverage it will have to pay for that coverage for anyone receiving a premium subsidies. my expectation is that will create a race to the door to get rid of a lot of state mandates that vary from state to state. my response is that we will see more uniform -- seymour uniformity between state and uniformity between state and federal this attitude of cooperation and coordination.

that will be an issue. the fear that i have is the sort of reverse of that. the senate reproached -- an approach, they are pretty weak on insurance regulation. it will stay that way, and they will be responsible -- and number of states have indicated that they do not like a lot and don't want to have anything to do with it. i think some of them are not going on about -- opt out, they would just sit there and see if they call their bluff. that will be a real disaster. >> i agree that some things are going to come together, guarantee readability and how you rate are going to come together. some of the pieces are going to be very far apart. connecticut is one of them. mandate is something that we talk about all the time. they have a very high list of mandates. i have been in the business a long time. i have never seen one mandate

reversed. >> they're going to have to pay out of their own pockets. >> i don't know, i can't say -- >> let me jump in. i am shocked to realize that my 10-member board will seriously began a debate on whether we should have our own state assessment penalties for violation of mcc on top of, and in addition to the federal one. mmc in addition to the federal ones. that is how states think the way they do things even if there is a lot of good will and federal legislation. >> [unintelligible] >> minimum credible coverage. there will be under these bills federal irs foresman of national standards. we have our own in massachusetts. i have begun to realize how

difficult that conversation will be with our governor and my own board about, do we see it that to the federal standards? after all, it is a revenue source for our state treasury. >> go right ahead. >> i have two questions. you mentioned undocumented workers would not be allowed to purchase an exchange. when you talk about what options may be available if they want to go for private insurance? the second question is, if the tax exemption for health benefits went away and that market was forced into the exchange, how do think their benefits might be better or worse off in exchange verses a large group? >> could you repeat the second question? >> are the tax benefits for

employers going away and people in large group markets lost their benefits and went to the national exchange, how consumers might fare in the exchange purse is getting benefits through employers? >> with respect -- the exchange versus getting benefits through employers? >> the hope is that they will go home. [laughter] >> which i think they are unlikely to. if they don't, then under the senate bill they can continue to buy health insurance in the non- group market. if that were incorporated into the house bill and its market is only available through the exchange, i suppose they would not legally be able to buy health insurance. i think that is a real problem. i might be missing something there. >> the seventh part of that question is what happens to

large companies when benefits go way and each individual was buying their own individual coverage, i think that is what the question was. if you look at what many of the large companies today, their benefits are richer than what individuals would purchase for themselves in an exchange, said they would probably be in their benefit to be less. the costs would probably be slightly higher. >> i cannot imagine that happening, although the cadillac tax bothers me because that will grow and grow. at some point we will see a very high percentage of the market subject to that. that will mean a dramatic cut in employee benefits, if not their elimination all together. none of the democrats right now

are talking about abolishing -- that will not be in this legislation. >> two-thirds of the population is buying through their employer. where showing the employer-based staying in place. i cannot imagine that much dislocation. -- we were showing the employer- base. >> what happens under this legislation to undocumented immigrants who are now covered under employer-sponsored plans? are they legally going to be able to continue? >> they are not supposed to be employed. [laughter] but the legislation does not address that. >> fair enough. >> i wanted to ask john but any of you can answer, my assumption is that these small group market

which shrank dramatically, most small employers might give workers a little bit more money and go shopping in the exchange as individuals, as opposed to trying to preserve the small employer groups. so you are hard on the house bill on the small employer pays , -- on the small employer peace, so could you speak to, would that be so bad to grow the individual market? >> i am glad you asked that question because i probably miscommunicate it. i don't have a problem with the house merchant focus in on non- group. when you -- i don't have a problem with the house version focusing on a non-group. that is a huge undertaking and inappropriate task for a national exchange. i think that can work -- a huge

undertaking and an upper brit task for a national exchange. -- and an appropriate task for a national exchange. i know massachusetts is exceptional, but there are a lot of small businesses around the country. when they are competing for your services, whether they offer health benefits as opposed to somehow we can prove we pay you $1,000 more a year for you to go off to this exchange to buy at, there is not much of a comparison. -- go off to the exchange to buy it. he, i would not expect that to

significantly diminished, -- and i would not expect that to diminish because now you have your employees being required to buy it. they are really looking for you to organize the choice and give them to -- give them money to buy it. i don't see small group insurance going away. >> both bills include provisions for tax credits to small businesses to cover their employees. they are short-term and not that huge, but the cbo sees them as having a significant effect. >> could you go into how difficult it would be to administer a risk adjustment plan outside the exchange? at the senate bill work to cost as is, would hhs be the best system to do this? >> under the senate bill there are three different risk

adjustment mechanisms. two of them short term and one long term. one is a reassurance program -- one is a reinsurance program. this ended up in the wrong bill because it talks about hhs paying premiums and they do not. the third is a risk adjustment program that will take -- that will be operated not through the exchange but some other kind of entity. i guess the problem that i see with that is -- what the house bill does is it simply risk adjusts the premiums to account for risks. that is pretty doable, you will

be dealing with in the exchange and will have a lot of data. it seems that is doable, although it does not address the problem of small groups, although it may be john is right there will be no problem because in the house bill you have a small group in and out of the exchange. with respect to the senate bill however, with this risk adjustment program, it can be done. there are many states to have risk adjustment pools, but it will require collect in a lot of information the states do not collect. >> i want to thank the alliance and commonwealth and panelists for a great session. i would like additional clarity on how exchanges can help small businesses which is maybe a

little odd, but i feel like this is not clear at all. there are big differences between the bills. they can purchase within and outside the exchange. i think i heard a panelists say there is no other way to do it. in one bill tax credits are available on both sides and the other can only get them within the exchange. in the senate bill the exchanges are a separate. -- the exchanges are separate. another thing that is very other is in the house bill -- another thing that is very odd is that individuals and groups are put together in a separate exchange. could that possibly make rates higher for individual non-group participants? in general, i would like to know the panelists thoughts on what is a good way to help small

businesses with respect to exchange design? thank you. >> let me start with the exchange itself. the question is, why is it good for small business? if you think about it and let's say -- typically i do a much smaller crowd and say we are one small business, but if you think about it the exchange brings simplicity and brings the choice for an employee based on their specific needs. we offer four a different health plans and a range of benefits, -- we offer four different health plans. why is that important? if a company is choosing benefits they will choose from one carrier and they will have not what -- they will have one network, and typically in a small business the decision is based on where the owner wants

to go. either the owner decides where their doctors are in their network -- now the employee can choose not to go to the owners' side, even though they are trying to provide a good benefit. they can now choose based on where the pediatrician is, based on anything they know even from a satisfaction side. hopefully at some point will have transparency of provider quality and rates so they can make those decisions. it leads to a high satisfaction rate. we do a survey of the companies that participate in our program every year and we get high satisfaction. we go into a lot of different questions and what they -- what their experiences are. that is an explanation of why a small business his satisfaction

to the business and employees, because it makes it simpler. there were also several other questions. >> it is a great opportunity to come back to my theme of humility. tim explained the theory of choice well and i would throw in the idea of employees deciding to buy up, maybe it is a better plan. if they are using their own money as the difference, god bless them. presumably that is our experience, most buy down and it adds price pressure. that is the theory of managed competition. you asked a lot of other questions. i want to be humble and ask other people in this room to be humble, we don't know the humble, we don't know the answers to most of those

some real latitude to learn, adjust, figure it out, make changes as you go along. >> i am from internal medicine news. i am interested in what happened to the role of insurance agents and brokers with exchanges, both if there are provisions for that in the house and senate bills, and what the experience has been in massachusetts and connecticut? >> we both use brokers. the market is not broker driven. that is where refocused in the up set -- in the unsubsidized exchange. now, contrast this -- i will give you an example back to linsey pose a question and by him -- lindsay's question and my humility. there are three non group insurers in california, there

were 90,000 in massachusetts. there is more of a premium in the first year. a very different broker situation. if washington were to dictate the deal with brokers in massachusetts and california on day one, you would have to very different outcomes, no matter what the rule was. it is hard to know, but where brokers are there, they play an important function. . . but when brokers are there they play an important function. we can argue about how much they are paid, but there is a real function there. one of the reasons is no brokers in massachusetts -- we have [unintelligible] and other states brokers are critical to finding a carrier who will take you. it is different state to state.

>> in the current marketplace the broker plays an important role. role. our average size company is seven or eight employees. they don't have a human resource department, some don't have access to the internet. there are so many different aspects to it that the broker typically is meeting with employees and helping them through complex -- they are personal decisions, said that play an important role for us. -- they are personal decisions, so they play an important role for us. go back to california for something, it was a public- sector a change in 1995 as well. they came up with a program

where the employer can determine if they want to use a broker, and here is what the cost would be. 75% had at the beginning used a broker and their sales were not as robust as when they said they would meet the market -. there are adverse selection issues where they had to do things the open market did not come up which created a real problem for them. -- the open market did not, which created a real problem for them. >> originally the house bill said nothing about it and part of the blue dog amendment said the role of brokers shall not be adversely affected. the finance committee bill originally said the secretary

shall come up with the rules for setting commissions for brokers, and that this appeared in the manager's amendment. the brokers have been following this closely and are interested in making sure they continue to work. in respect to hit the small group market, brokers will continue to have a role. -- with respect to the small group market. if you implement any change in the non-group market is hard for me to say a broker will -- it is hard for me to say. there is an insurance agent in every lions club, every pto. some of my best friends are insurance agents. this is one of the most powerful

groups in the united states. it is hard to imagine they will go away, and they serve a useful function in the group market. i would hope one of the things the exchanges can do would be to figure out exactly brokers are contributing in terms of value added, and make sure they are compensated. i don't see any need for 10% origination fees. it is like if you could buy through web-based travel platforms and still had to pay a travel agent -- you have heard me. >> we have time for questions from folks standing at the microphone. first in the back of the room. >> thank you to the panelists and the commonwealth fund for putting this together. my question is about the state exchanges.

in terms of going to scale, this health care reform is proposing to put 30 million people into an exchange and that is a large scale. in terms of having it happen on day one, i wanted to ask you what have been the obstacles for more states taking on a running an exchange that would move us towards that scale, and looking at what those obstacles are, if you could look through the senate bill which puts it on tuesday its first. if they default or refuse, the feds step in. what in the senate bill helps states overcome that obstacle so we get -- of 20 million show up on day one it will work -- if 20 million show up on day one it

will work? >> most state. the local exchanges failed because the value proposition -- most state and local exchanges failed because -- for the exchange to step in and improve, the affordability and value for small employers, and phil has done a great shout, -- i have an expert in insurance who runs a business and connecticut. he loves the concept and is very enthusiastic. it is hard to believe, as i know. you can get the same product for 20% less. his association. the value proposition has been -- allah have tried this and

found it was not sustainable. -- all lots have tried this. what is different -- a lot have tried this. that is all the difference in the world. that gives you the scale economies and the opportunity to develop what has taken phil 15 years to create the value, which is still a couple of points on the premium. people move for a couple of points on the premium. it is great work, so what is the value for our unsubsidized exchange? it is the difference between spending a half hour on our web site and be unable to seek comparable products and make an intelligent choice, to having to spend a day on the telephone to read your notes as a decision

making process. is the price any different? absolutely not. we are dealing with a fairly marginal differences except if you have a mandate to pay for the insurance. >> now the bottle. -- now the rebuttal. >> a lot of states looked at trying to bring up exchanges. a lot of it came to what was happening outside the marketplace and how they would have to run an exchange. the rules are different all over the country. many of the state's we talked to will not be able to get critical mass -- many of these states we talked to will not be able to get critical mass. they have not been able to overcome that barrier of the market forces outside the

exchange. they need to be similar to what is inside the exchange or there will be problems in be unable to run that exchange. it would take me longer to exchange what those pieces were, but that is where the states had to be careful and why they have not been able to become alive. >> i think someone mentioned that standard benefit packages would be in the house and senate bills. i see them as crucial, and would like to ask this question. as far as standardized benefits packages, do you also need standardize co-insurance rates and co-payment rates as well? would that be included? who would design these packages? who would be responsible for leaving in kiev to care, dental care -- leaving in psychiatric

care. >> there is the concept of the central benefits. it lists the things that need to be covered, like a physician services, pediatrics care and vision and oral healt. it leads to a process which is lined out in great detail in both bills. it is a process that would run through hhs in the senate bill and it run by the commission of health choices with a representative advisory board in the house. then it would be updated through a process. that is the essential benefits package. both bills tier packages in terms of actuarial value.

the senate has four tiers and a catastrophic plan available to some people. i forget what the other category is. the house bill has four tiers. cost sharing is then determined by those tiers. tiers are defined in terms of actuarial value, so they drive cost sharing. cost sharing is standardized and there are a maximum amount of out-of-pocket limits in both bills. there are also maxim and deductibles, but there is a lot of flexibility in both plans. -- there are also maximum deductibles. if you want to have a high deductible health plan, you can do it. >> will that be a way of avoiding high-risk individuals? >> one concern i have is under

the senate bill every insurer who participates has to market but the silver and gold plan, but they don't have to market the bronze plan, which means they can do it outside the exchange and higher cost sharing plans tend to attract healthier people. i see that as one of the wrinkles in the senate bill that makes me nervous. >> one of the things tim was saying worth emphasizing is well these actuarial tiers project a level of cost sharing, we have used them with a $2,000 deductible. they can be very different kinds of cost sharing that have the same overall value from an

actuary's perspective. your point about non- standardization, which is one of the reasons we have moved toward standardize benefits so that you do have comparability -- the range of cost sharing in massachusetts -- what we think of as minimum with the middle of the road in texas. these preferences and affordability issues are very different across the country and will be a real issue in the house version which has a floor at 70%, above what most small employers provide. they provide more cost sharing than 30%. than 30%. >> standardize benefits has your just opening up problems. it is very concerning. across the country, it just varies tremendously. >> as