j. bradford delong, professor of economics at uc-berkeley. if you want to follow his blog -- guest: delong.typepad.com. host: thank you for getting up early and joining us on "washington journal." guest: you're welcome. and now i get to see the sunrise! host: in about an hour, the democratic governors association will be having a discussion on 1994 versus 2010, and gubernatorial opportunities for democrats. that is in about an hour or so. we will see you tomorrow morning on this program. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010]

. >> and to reiterate, the democratic governors' association is meeting today and state executives will hear a panel discussion focusing on the 2010 midterm elections. there will be a democratic strategist. that will start at 11:00 a.m. eastern live here on c-span. a little bit later today, it is the defense department briefing. reporters' questions will be answered at 1:00 p.m. eastern and that will be live on c-span. in the meantime, the president

of the john birch society will speak today. john mcmanus will address the unite in action group. that is on c-span 2 at 11:00. >> at long last, the united states of america joins every other industrial nation in the world that says health care is a right not a privilege. >> senators and congressmen have been holding a town hall meetings in their states and districts and we have covered them. watch them on line at the cspan video library. it is all searchable and free on your computer any time. a briefing now on the social security and medicare trustees' report. several former public trustees discuss the findings of that report as well as the current state of u.s. healthcare. this hourlong event is hosted by the u.s. center for policy analysis.

>> good morning, i and john goodman, president for the u.s. center for policy analysis and i want to welcome all of you here today. one of the most confusing things about the health reform law that congress passed in the spring is how it will affect senior citizens and others on medicare. in general, the media has done a poor job of covering this issue. now that we are in an election, i understand their tv commercials that are part of various campaigns around the country and many of those commercials seem to bear only a small resemblance to the facts. on the one hand, most people know that health care, the

health reform bill is in part paid for by reducing spending on medicare beneficiaries. , more than half the cost of the first 10 years of the reform consists of reductions in medicare spending. there has been no explanation of what that really means. for the government's part, health and human services sent out a pamphlet to every beneficiary on medicare, but most people who looked at the pamphlet said that as propaganda. they said it is not an explanation. there is an md graphics commercial that is running on television paid for with tax dollars that tells passengers that there are only benefits and no costs to the legislation. a similar message is coming from the aarp. there is a government website that tries to explain the new law but it did but -- but it only focuses on benefits and does not talk about the costs. adding to the confusion are

contradictory and may be confusing statements about have been made by president obama and kathleen sibelius to be a fact that on the one hand the health bill that was passed is supposed to lower health-care spending and is supposed to put medicare on a better footing. at a different press conference at a different time, they say the cuts that are required in payments to physicians are intolerable and they are fully behind doing something about it. it is hard to do both. either we will have significant cuts in payments to providers that will affect beneficiaries or we are going to let those payments to providers increase at the rate of growth of health care spending generally. what we want to do this morning is focus on what the law really says and look at some projections of what would happen if we actually implement it the way it is written. to help us, we have two former

trustees of medicare. we will begin with professor thomas r saving zero is the director of a private research center at texas a&m. he is a senior fellow of my on institute, the national center for policy analysis and he was appointed by president clinton and reappointed by president bush as a trustee of social security and medicare. let's give a warm welcome to him. [applause] >> thank you. i think there are two things to think about. each year in this report since congress began rescinding the sustainable growth rate assumptions for physician reimbursement, the trustees report itself has been prepared assuming those things will

happen and a supplemental report was always issued at the same time by the office of the actuary which, in a sense, corrected that assumption and send congress was resending every year the reimbursements for the physicians. that was about part b. that was the only thing was the first 10 years apart b. in the 2010 version, both parts are pretend throughout. because of that, the supplemental memo issued by the office of the actuary contains a very real assumptions or their real forecast about what will happen to medicare. it is easy to see in this first line which is part a, the percent change between the 2009

trustees report as issue, not a supplement for a 81% of the unfunded obligations, the future general revenue requirements disappeared from part a. 25% will disappear from part b. they all disappear because we simply assume or pretend that suddenly by magic the health- care industry productivity will increase. that is something that has never happened in the past and is not likely to happen in the future. the unfunded liabilities for part a disappear completely. we pretend that everything will be more efficient and suddenly all this will happen. it is important to compare the

annual flows and these are important as percentage spending from the 2009 trustees report. by 2020, as you can see, medicare spending for part a will fall dramatically and by 2015, it will fall by 50%. part b will fall rapidly. before this, it would have fallen from the current law because of physician reimbursement. everything in b will be covered by a similar kind of change perry will stop reimbursing people. you can expect providers to respond. some benefits have been expending for part d. can we bend of the curve? one of the issues in health care -- one of the issues is the level of expenditures in the u.s. versus summer else. it is important to understand that we spend more on health care.

we buy high and health care and have huge amenities in our health-care system. when my grandchildren were born, they were born in what i call birthing spas - two-room suites and that's the hospitals. my wife was in the labor room with other people in labour. we are -- we buy high and health care. whether it is worth that are not is another question. will disband the curve? our estimates are no. in fact health care expenditures will be bigger. part of that is because we introduced more free care. if you are introducing free care, you will not make health care expenditures lore. it appears health care expenditures will rise relative to where they were before the current legislation. what we have done in the free care is to make health care expenditures as a share of gross

domestic product which is the big issue they have with the united states. i will not get involved and that argument -- in that argument. the main thing is to demographics. medicare is expanding rapidly. 2011 is the first year the baby boomers will become eligible for medicare and the medicare population will increase exponentially in the next decade. that is the problem that everyone is trying to bet -- address. these are the estimates of what medicare costs per beneficiary. the blue line are -- is what the prior lot is. -- prior law is. the green line is the 2010 estimates from the trustees report. medicare costs per beneficiary will fall dramatically,

supposedly. that is assuming that we will actually be able to get providers to provide medicare services to medicare beneficiaries at these vastly reduced payments. that is what this is about. this is in effect a reduction in medicare benefits as presumed by the bill . but they are starting off at about $12,000 and within a decade, they will fall more than 20%. these are actual dollar amounts, $2,010, they will fall dramatically. we will be paying for medicare beneficiaries less on the cost of providing the services. if that is true, two things can

happen. providers would like to change the composition of their clientele. they would like to move it away from medicare and for regular paying customers. how can they do that? the demographics are working against them. some people may be able to do that. everybody cannot do that because the population demographics are that the share of their clientele with medicare will grow over time. how can they escape that? they can not accept medicare or move to a different facility. you can have a medicare wing at your hospital. instead of having semiprivate rooms, there are several things you can do. you can introduce the one-start medicare health care and the five-star health-care that the birth think spa was. those changes can be made. the percentage of social

security income required to cover the medicare benefit -- if the senior can i get care other than going to beat er, -- other than going to the er, you could step out of the system and move out of the system. there are people that do that. they can go to the mayo clinic for the cleveland clinic or places like that who would accept people who will not be reimbursed that is one of the issues that happens. we will rise very rapidly from the% of seoul's security for these reductions if the sock -- of the seniors or to pay for them. it will rise very significantly. that is important the implications of the spending reductions are that medicare right now pays about 118% of medicaid by 80% of medicare.

by 25, care nobody is dumb enough to write a blank check for health care. it will bankrupt you. we all know that health care costs are out of control. we know that health care spending grows faster than non- health care spending. we hopefully now that we spend double per person what most industrialized nations spent for health care but we get below average outcomes. it is not a money problem. we are spending plenty of money. the other area where we do this is k-12 education. the problem is not money. the problem is the system. there are huge of variances between different states for medicare as to what the cost is due to standards of practice, not due to differences in the health status of the population we pay on a fee-for-service

basis primarily rather than an outcome basis. and yet, almost 30% of the costs are triple -- are attributable to the last years of life. some do not make sense and some are not in the patient's interest rate we will have to deal with that issue. in a way that is constructive and not use terms like a death panels which was totally inappropriate. what is happening is because entitlement programs are growing and other parts of mandatory spending, discretionary spending is being squeezed. that means that since 1965, that means that since 1965, there has