process would be costly. i am saddened we have reached this point even decided to have decided who to nominate. you can read the entire reps -- letter on our website. this evening, president obama and john boehner met for 50 minutes for what is being described as a frank conversation on the fiscal cliff. it was the second time and john boehner visited the white house this week. coming up tonight, we will bring you an update on the fiscal cliff negotiations from senate democratic leaders followed by a briefing from john boehner and nancy pelosi.

>> he was finishing a press conference down the hall. >> with every passing day, the republicans are calling on john banner to guarantee tax cuts to the middle class. today, sen. cornyn will be the second ranking republican next congress. they'll call upon john bennett to the reasonable thing. they will have this below sooner or later. those rates go up by operational law on dec. 31. luol -- and he said this all, this is true. within three-quarters of the american people including 61% of republicans agree with john corn -- john cornyn that they cannot be held hostage were giveaways

to billionaires. he cannot ignore the american people forever. at some point reality should set in. the only question is how much the trust's sole class families and how much they will have to endure during this process. many other pieces of business critical to middle-class families that we will be working on if we resolve the fiscal cliffs. the three leaders here with me will talk about that today. they are waiting and waiting for the press conferences, and reality will set in. and it hasn't yet. he finished another one a short time ago. he is ignoring the points of the -- voice of the american

people. speaker banner knows, or he should know, that we have to pass -- this would sell to the house of representatives. -- sail through the house of representatives. i would doubt that there could be any democrats voting for this and as we know, the republicans -- more republicans joined every day. i understand that the house is gone until -- one reason that they're asking to leave is so more republicans will say that what they think he is doing is wrong. they are leaving and this is hard to comprehend. we have nothing to do until they do something. we're waiting for them to do something that will help the middle class.

the american people should not have to have their tax cuts held hostage and -- to the self interests. it is time to put the middle class first. >> thank you for joining us at this press conference. >> the obvious question that the american people were asking is, what is john bender working for. -- john john boehner waiting for it? the farmers are trying to recover from a tough crop year but john bender will not call a vote.

what is john painter waiting for? -- john boehner waiting for? traditionally, we did not have a vote on this. we would not call this for pat -- passage. what is the comet -- waiting for when it comes to post a reformed? hal blog the delete soon for that bill? so that we would make the postal service still retains the very best in the world. the most obvious and top local question, what is he waiting for when it comes to tax breaks for working families across america? this is the reality we face? . we sent the bill to him that will protect 98% of american families and he will not call it on the floor. is he waiting for what is going to happen january 1 when consumer confidence is shaken across america, as everyone sees an increase in income-tax rates,

including working families because he will not act? is he waiting for the doctors, as of january 1, the reimbursement for doctors goes down 20% -- 27%. is he waiting for that to happen or is he waiting his election to speaker? i hope it is not that. i hope he understands putting this off is not fair to america and is not been for the recovery. it will hurt us as we wait. there is no excuse. there is solid support among republicans and independents and democrats to make sure we protect working families and move forward. now the house is going home again. i do not know what we can accomplish but we certainly have depending on the floor major

things that will help america. >> thank you. some other unfinished business, you have all seen on the tv screens the devastation. i have seen storms and powerful and natural disasters and a hit individual people in an awful way. when you see how broad this is, hitting so many people in some places, it is astounding. let me say, we need help. the desperately need help in the new york-new jersey area.

last night two billion people around the world tuned into a benefit concert to help raise money for sandy's relief efforts and now it is time for the government to step up to the place. congress has stepped up 39 times to help state and local governments to respond to disasters. there is a wisdom here that has been in the federal government for decades. that is, when god's hand strikes no localities can handle it on their own. we unite as a nation to help one another. following katrina the government passed aid following 10 days of after the storm. we passed nine fundamentals a total of $108 billion and frankly, the damage from sandy, the economic damage is worse. they lost about 270,000 homes and in new york we lost 305,000 homes.

gone were severely damaged. that is new york alone. they had about 20,000 small businesses, put out of business, gone. we have over 270,000. so the damage is enormous. and you know we members of new york delegation have always been there when other parts of the nation were struck by disasters. new york tax dollars went to the gulf and to fight fires out west and flooding in the missouri and mississippi valleys and now, unfortunately, we've been struck. we hope and except our colleagues to show the same courtesy to us. chairman, in a way the senate appropriation committee has done an excellent job. leader reid has indicated that we're going to move it to as soon as impending issues are complete. i believe we start monday morning or monday afternoon. we hope this is a bipartisan priority. i've been concerned so see some reservations expressed by some

of my colleagues on the other side of the aisle. i want to address a few. the big unfortunate myth out there is we should not move further until huge spending cuts are agreed to at the same time. we never bog down disaster aid request with political disagreements like this. the first large katrina relief package, the same amount we're talking about here was not offset and it passed with no fewer than 97 votes and president bush's full support. second, some people on the other side of the aisle speculated that the affected areas may not be able to spend the money right away and we should not act quickly. this is a misinterpretation of the report. when a major project is

undertaken the government doesn't pay out the costs until the project is complete. so if a locality is going to rebuild a road or tunnel they need to know that the money is there so they will know they will be reimbursed. if you want to do this year by year, you can't say we'll fix the large tunnel, we'll fix half a mile this year and we'll see if we can get the money next year. or we'll build after the dunes to protect staten island now and we'll wait until next year to see if we have it next year. that is not how it works. the report relies on past strategies. so for instance they said only $85 million would be sent this year. that is laughable. i spoke to new york and new jersey that is wrong. they base it on what happened with katrina. this is a whole different process. in katrina, the number one thing will help homeowners rebuild. in katrina many of them moved

away. we have homeowners living in homes that have structural damage and mold, or relatives waiting to rebuild. it will happen more quickly than the report says. finally, i've seen some critics say what about mitigation? it is not a new thing, it is making sure the same storm damage happens again. we don't want to rebuild a tunnel so to same storm order can flood in. we want to build it better so there is more protection. when we tell homeowners to rebuild, we tell them to build a couple feet higher so the storm won't damage their first- floors and basements. that is natural. mitigation also involves putting in sand dunes and other natural barriers when there is another storm it doesn't do the same damage.

right now there is no protection. so mitigation has always been done. i remember voting for katrina to move a rail line inland at the request of a senator. to build it by the shore it could be flooded again. so it is a foolish view. we're going to work new york, new jersey, with our colleagues to debunk these myths and hopefully we can get support, full support from colleagues on both sides of the aisle so we can pass this bill next week. >> i want to talk about a bill that you referenced and the house is shameful inability to pass this important, critical bill. today marks the 232nd day since the congress has passed the act.

16 republicans joined with us to pass it. that was at a time when we saw a lot of partisanship in this town. it's marks 232nd day of inaction by speaker boehner. they are insisting on an alternative measure that removes protection for tens of millions of women in this country. we should not be picking and choosing victims of abuse to help or ignore. frankly, i'm surprised to see them so adamantly opposed to supporting a women's act when we all know issues affecting women and families played a major role in the election. voters called for putting the protection of women before politics and ideology. answering their call should be beginning by passing the

senate's bipartisan violence against women's act. who they love should never determine whether or not the perpetrators of domestic violence are brought to justice. women cannot afford any further delay, not on this bill. i hope speaker boehner and republicans hear this today. they look at the letter that nine republicans asked for this bill to be brought up. we're not going back down, we're going to keep fighting. 232 days is inexcusable, actually, one day is inexcusable. the clock is taking a women across the country are watching. >> questions? >> republicans are saying this request lacks detail. >> there is huge amounts of detail. i spoke to a senator last night and we're getting him all the details.

there is huge amount of detail. the administration, you may remember, the two governors's if you add their request it totaled over $80 billion. the senate took a week and half scrubbing it carefully and bringing it down to $60 million and the details are very available. >> have you had contact with the speaker directly and do you think it might be helpful in this process? >> my office is open any time to the speaker, our staff has had some contact and he has not seen fit to advise the council. he is doing it directly with the president. i have talked to these three senators and others, i'm mystified that we haven't had significant movement from the republicans.

all the president is asking, all we're asking is take care of the middle class and do something about the richest of the rich in this country. as i indicated with the poll numbers around the country, more than 75% of the american people think we're on the right side of that issue. if we had some movement on that, the president said he is willing to take some significant action. we have a record of recognizing that is important. we have done more than $1 trillion of cuts without a penny of revenue. we have already done that. they keep talking about entitlements, we look at the affordable care act. we look at that. we took waste, fraud, and abuse out of medicare, extended the life for 12 years. we're willing to take a look at cuts, we know we will have to do

some. we'll be glad to do that, it is part of what we need to do. it is unfair to walk away from it. i'm not -- the state tax that is something we should negotiate. right now it is $5 million, 35% tax. these people john kyle and others who talk about how important this is haven't said a word about this to anyone. that is going to drop down to 55% tax. is that what they want? it is all in their hands. as i've said time and time again, to this day, the republicans have not identified five corrects of actual money. -- cents of actual money. they are talking in generality.

we will do revenue. it is the same thing that the share, the super committee, the same problem they ran into, the same problem that boehner and obama had the problem there. same thing with biden -- they will not agree to money. the only people in america think the richest of the rich should not pay more money are the republicans. in this building. >> yesterday, you announced the new democratic committee assignments. would you support term limits? >> no. >> on this issue of bills that aren't getting passed. republicans, i think on both sides they have been saying that there is a lot of bills that the house has passed and come over here and not received votes. >> i can give you a long list of things we haven't done.

hundreds of bills the republicans held up. when you have to every time you come to bill you have to have a motion to precede and it takes 10 days. it limits what we can get done here. >> are you going to bring any of those bills up here? >> sometimes a long time i guess. >> how confident are you with your talks to the republican that you can get the bills through? >> obviously, we need the republican support. i'm confident that the democrats are very strong behind us. we're working on republicans and we're not there yet, that's for sure. we hope that they will be there, you know, every senator no matter what their party all the to think, what happens if a disaster strikes there area? do they want to say there should be offsets? do they want to say do a little bit now even though the needs are so much greater? i don't think so. i'm hopeful they will rise to

the occasion. are you threatening to block it? >> thank you, everybody. >> coming up, more on the day's news. first, john boehner talks about what republicans are looking for. then we hear from nancy pelosi on the democratic agenda. after that, peter orszag gives his take on the fiscal cliff talks. friday morning, nina olsen will be here to discuss with the impending fiscal cliff means for tax filing season. and the formula for paying doctors under medicare.

later, how the u.s. population is expected to change or the next 50 years. jennifer, a demographer, and william, a demographer for the brookings institution. live starting at 7:00 a.m. eastern on c-span. >> the white house was very controversial. the person who designed washington city, there was competition. he submitted a design for a palace. americans were not having a palace. it was not particularly are inspiring. a european diplomat told the congress it was neither large nor of inspiring. but the answer. the congressman dave said, the building served a purpose. if it were larger and more elegant, perhaps some president would be inclined to become a

permanent resident. >> vicki goldberg has gathered a few of her favorite photos in the president's home and photographs and history. watch at 7:30 on american history tv. john boehner's office described a meeting with president obama as a frank talk. he spoke to reporters about fiscal cliff negotiations, criticizing president obama for not being serious on cutting spending and lending herrmann the lack of an agreement. lawmakers have less than three weeks before the bush era tax cuts are set to expire and mandatory spending cuts take effect. this is about 10 minutes. >> good morning, everyone. more than five weeks ago, republicans signaled our willingness to avert the fiscal cliff with a bipartisan agreement that is truly

balanced and begins to solve our spending problems. the president still has not made an offer that meets those two standards. republicans have. while the president promised the american people a balanced approach, his proposals have been anything but. he wants far more in tax hikes and spending cuts. he wants new stimulus spending and the ability to raise the debt limit whenever he wants without any cuts or reforms. it is clear the president is not serious about cutting spending. spending is a problem. how big the problem? look at this chart. this line is the current baseline for revenue. here, if the president got everything he wanted, over $1.4 trillion in taxes, this is what that would represent.

if you look at the spending problem, you see it does nothing, nothing to stop the spending problem that our country has. republicans want to solve this problem by getting the spending down. the president wants to pretend the spending is not a problem. that is why we do not have an agreement. the chart depicts what i have been saying for a long time -- washington has a spending problem that cannot be fixed with tax increases alone. the right answers is to start cutting spending, addressing our debt, and paving the way for long-term economic growth. the white house is so unserious about cutting spending that it appears willing to slow-walk the agreement and walk our economy up to the fiscal cliff. doing that puts our jobs and the

country in danger. it jeopardize a golden opportunity to make 2013 the year that we enact fundamental tax reform and entitlement reform to begin to solve our country's debt problem and revenue problem. as you can see, real revenue growth is critically important as long as we have real cuts in spending if we're going to solve our long-term fiscal problems. the election was not a mandate to raise taxes on small businesses. it was a mandate for both parties to work together to take on the big challenges that our country is facing. republicans are ready and eager to do just that. we made a reasonable offer, and is now up to the white house to show us how they are going to cut spending and give us the balanced agreement that the president has talked about for weeks.

if the president will step up and show us he is willing to make the cuts that are needed, we can do some real good in the days ahead. if not, if he wants to keep chasing higher spending with higher taxes, this chart will look a whole lot worse, and our kids and grandkids are the ones that are going to suffer because washington was too short-sighted to fix the problem. >> several weeks ago, polls said that 75% of the public said that tax rates for the upper- income earners should expire. why are you holding out for tax cut for the wealthiest, when most americans -- [indiscernbile] >> raising tax rates will hurt small businesses at a time when we are expecting small businesses to be the engine of job creation in america. ernst & young has made it clear. if we were to do what the president is asking for, 700,000 jobs would be at risk. it is simple.

[indiscernbile] >> why is it every christmas we are doing this every single year, no matter what? >> we really should not be. i argued going back to the spring that this issue had to be dealt with. in may, the house moved a bill to replace the sequester with other cuts in mandatory spending. in july, the house passed a bill to extend all the current tax rates. i have been pushing all year for us to address this problem. here we are at the 11th hour and the president still is not serious about dealing with this issue right here. it is this issue, spending. you go back -- and i want to talk about polling, most americans would say that spending is a much greater problem than taxes. >> [indiscernbile]

>> unfortunately , that is the case we're dealing with today. >> would you say that you would categorically not put a bill on the floor to raise tax rates on any bracket? >> i do not understand the question. >> you will not decouple the lower rates. >> the law of the land today is that everyone's income taxes will be going up on january 1. i made it clear that is unacceptable. until we get this issue resolved, that risk remains. >> can you describe how it is to craft a deal at your conference with support while not jeopardizing your job as speaker?

>> i am not concerned about my job as speaker. what i am concerned about is doing the right thing for our kids and grandkids. if we do not fix the spending problem, their future will be rather bleak. >> [indiscernbile] >> they put spending cuts on the table. unfortunately, the new stimulus spending they want almost outstrips all the spending cuts that they have outlined. >> [indiscernbile] and people have been wanting to know -- >> there is no such law. >> after the election you said increasing tax rates was unacceptable. you have been less definitive you say things that you oppose the idea and that is what he

said -- >> i do not oppose the idea. >> [indiscernbile] would you permit a vote and couple that and -- >> ifs and ands and buts are like candies and nuts. if that were the case, every day would be christmas. [laughter] my goal is to get to an agreement with the president that addresses this problem. >> [indiscernbile] >> i have no idea. >> leader reid is made it clear that he agrees with the president with the debt limit, giving the president the authority to raise that unilaterally. does that complicate your effort, if they are united?

>> if you thinks that senator reid, of course, then senator obama whichever, had given in to president george w. bush the unlimited ability to raise the debt limit -- >> they are talking about doing it now. >> do you think there is any chance that senator reid or then senator obama would have done that? zero. congress will never give up the ability to control the purse. the debt limit ought to be used to bring fiscal sanity to washington, d.c. >> [indiscernbile] with a $1.5 million [indiscernbile] do you support the idea of raising that -- >> if the justice department is

not going to enforce the law of the land, the congress will. thank you, all. >> nancy pelosi and urged lawmakers to work on a deal to avert the so-called fiscal cliff and follow up on tax reform entitlements next year. congress has three weeks before the bush. tax cuts will expire and mandatory domestic and defense cuts take effect. this is 15 minutes. john boehner went to the whit house with president obama. he released a statement saying

the president and speaker had a frank meeting in the oval office. it lasted 50 minutes." there was no further news or details of their meeting. >> good morning. thank you for being here. here we are, eighteen days from a possible fiscal cliff, hopefully not; twelve days until christmas; and here we are once again having a two-day work week in the congress of the united states. you have to ask the question: why are we going home instead of working very hard to forge an agreement to avoid that fiscal cliff? why are we not working very hard to pass legislation to address the needs posed by katrina?

people out there are waiting to see if we can manage what we are doing. if we take christmas and engineer back in time, 'cause this is all about time, the most precious of all commodities because it can produce results, or not. if you take christmas and engineer it back from there, because that's a day, well, we won't be in session, we could engineer a path forward to say what can we do in that amount of time? we really have to come to some agreement in the next couple of days, or the very beginning of next week, for us to have engineered our way to a solution. i wasn't trained as an engineer, but i admire their work because they find solutions. they make things work. they make things operate. and what we have to do is, is politically engineer a solution. if we agree that we will have a solution and that we will avoid the cliff, as i think we all

should agree to that, then what are the steps we need to take? and how quickly can we take them? so that we at least have a week of consumer confidence that can improve. but we have a week, as the year comes to an end, where the markets have the confidence to go forward. so far they trust that we would not be so stupid as to go over a cliff. the markets have reflected some optimism, i believe, in that regard. but the consumer spending, as you see by some statements of ceos ceo of walmart for one that the season is not as, what was hoped for in terms of consumer confidence and consumer purchasing. we're coming down to the wire. it's, you know, a matter of days.

last week we went out on wednesday morning. this week we'll probably go out on thursday morning having come in on tuesday. two, two-day work weeks in a row. this is just not right. how does this make sense when time is of the essence while the clock is ticking? and, again, we're coming down to the wire. and just to be clear: democrats have said we've already agreed in the budget control act, and in other legislation passed by this congress, to a $1.6 trillion in spending cuts. we already have agreed in the affordable care act, and in the president's budget, to over a trillion dollars in savings in medicare to be plowed back to strengthen medicare and to increase benefits but to strengthen it. and it just remains for the republicans to agree to pass the middle income tax cut which

gives a tax cut, by the way, to 100 percent of the american people for people making over $250,000 a year, they get a tax cut up to $250,000 a year and are asked to pay a little more beyond that. this is all about confidence, consumer confidence, market confidence; it's about creating jobs and growing our economy. chairman bernanke, who sort of coined the phrase of the cliff, has said that if we don't act, and we should act as soon as possible because there's already a slope here, if we don't act the economy will go over the cliff not just our budget process the economy will go over the cliff. what more motivation do our republican colleagues have then to get the job done, to manage the issue, to engineer a solution so that we can go forward? it'll be two stages.

this year we'll deal with the spending and the issues that i mentioned earlier. and next year we can take a bigger issue of reforming the tax code, closing loopholes, perhaps lowering rates for individuals and for corporate america. that's a longer endeavor. and also to look at how we increase savings from the entitlement side of it. so, the speaker had proposed a two-step process. let's take step one as a big down payment, then we go to step two, to some of the reforms that we can subject to scrutiny to see if they really do save money, if they do create jobs, if they do reduce the deficit, if they do grow the economy. any questions? >> madam leader, you talked about comprehensive tax reform -- >> i said katrina, not sandy. i was still thinking of katrina. we have to address the needs. and if i just may say that,

thank you, whoever just put that there. was that you? we had to do this before, where we had an impasse with a disagreement with the executive branch and the legislative branch. at that time, it was katrina. but the important message every day that we didn't pass something for katrina really caused great apprehension in that region and with individuals living there. and it is the same thing with sandy. where is the confidence they will get if they see we want this little bit now, and maybe this little bit now, and you can't spend that now? no, it's not about only what can you spend now; it's what you can plan on now. so, the timing is really important for sandy, as well, as it was when we had a similar impact because of the iraq war that people were concerned would hold up the katrina funding. yes, ma'am? >> speaker boehner said there's no point in raising tax rates for the top two percent,

including some small businesses, if you are just going to turn around next year and do comprehensive tax reform that perhaps lowers everyone's rates. what's your reaction to that? >> completely upside-down. his statement is an argument for decoupling middle income tax cuts and higher income tax. we all agree that we should have a middle income tax cut. decouple it. put high end tax cuts on the table when we review comprehensively how do we get additional revenue to reduce the deficit, how do those decisions affect investment and growth and creation of jobs? so, i take what he said in the complete opposite way. it argues for putting it on the table next week, next year, so we can justify its existence because there is no justification right now, no justification, for a higher tax cut that reduces, that has not created jobs and increases the deficit.

that's what it has done for the years it has been in effect. yes, sir? >> the speaker has said that he has gotten no specifics from the white house about what spending cuts they would entertain other than what's in the budget, and he wants significantly more spending cuts to get more revenue. is he asking for something that is politically impossible for the president, who campaigned on protecting these entitlements? >> no, he's not. in fact, the fact is that i don't know if that's a reason, an excuse, or a stalling action, but it's not a serious statement. the fact is go to the table, debate it out, come out with a product, manage the issue, engineer a solution but don't make up excuses as to why we are working two days a week this week, two days a week last week, the week before that, thanksgiving. thank god we were able to be home for that. we don't know if we will be home for the rest of hanukkah or christmas. but that's just totally the republicans sent a letter, perhaps you saw it, it had a

number in it, it had no specifics. it had no specifics. the president has been very specific. if you compare what the president has put forward, i would need something this high for you even to be able to read the finest print. it would be this high, is what the president has put forth in terms of specificity. the republicans put out a letter that had more signatures than it had ideas, and it had, like, one number. so, let's get real. let's really get real about this if we are going to have a solution. and let's stay here and sit at that table and call you know, make that charge, okay, here are the president's cuts. have you seen the president's specifics? >> yes, i've looked at them. i mean, the question >> so, why do you, i mean, the president has been very specific. do you not agree? >> my question is not so much specificity as, is their demand for even more cuts than what he is offering politically impossible for the president? >> well, that $1.6 trillion?

$1.6 trillion? at some point, you are cutting the seed corn of our future. the president wants investments in infrastructure. he wants education. he wants job creating investments for the future. you're not going to reduce the deficit by only cutting your way to it because you will cut the prospects for job creation, which produce revenue. seen know that you've all the president's specificity. so, if the question is they want more cuts, then that's a different question than they want specifics from the president. but the president has been very specific. in all of it, the president has said, i am open to having a discussion about this, but let's just, you know, let's just all take a deep breath with this thing. the back and forth is only useful if it enhances understanding. the back and forth is only useful if it eliminates possibilities.

thinkave said, don't even about raising the medicare age. we are not throwing america's seniors over the cliff to give a tax cut to the wealthiest people in america. we have priorities on that. but, again, on all these other things, go to the table and negotiate. yes, sir? >> madam leader, $600 billion is where the president has been on entitlement cuts. that's something he hasn't moved on. >> six-hundred billion dollars? >> six-hundred billion dollars, i think, is the number that they've put out. is there any upward movement, potential for upward movement in that? >> four-hundred billion dollars is what i had heard, but >> well, $400 or $600, is there any room to go further? >> i think that, that should be left until next year when you look at what this is. i mean, if you are collecting trophies and you want a scalp in order to if you want the scalp of seniors before you will touch one hair on the head of the wealthiest people in our country, what's the discussion about?

are we serious about what we do to have the pillars of our society, in terms of economic security for our seniors and their families, protected? then that's a longer conversation about where to go. i have said over and over, if you want to talk about social security, having it on the table, it's on its own table. any savings from social security that can be created should stay to strengthen the life of social security, not to give a tax cut to wealthy people and call that deficit reduction. >> madam leader, you said that markets so far have been fairly confident that there's going to be a deal here. >> i'm just thinking that, that must be why the markets are doing so well. >> and i think that's what most market people suspect, as well. what should markets be looking for as clues as to whether or not we are going to get a deal, or not get a deal? >> well, i think that, first of

all, when we met with the president, the four leaders met with the president, we talked we came out with fairly positive statements because we talked about that we wanted to avoid the we agreed that we wanted to avoid the cliff, that we knew that there had to be the elements of cuts, of addressing the entitlements, and having revenue. the speaker suggested, and most of us agreed and had our own versions of the same two step, which was that we'll do a down payment now, which will be significant, and then to go to another stage where we would do things like tax reform fairness, simplification, loophole closing, lowering of rates, whatever you could do in a comprehensive way, not just taking one thing, but in a comprehensive way and also putting on the table how we strengthen medicare, social security, and the rest of that.

so, my understanding from those who had visited our offices, they understand that we have to have revenue. and what we had hoped from that few weeks ago meeting was that we would see milestones along the way with a reasonable timetable to as business works and says, what are your goals, where is your timetable, where are the milestones for success, that we would have seen more by now. because, again, the time is growing short. so, i think that a comprehensive, big, bold, balanced which we are perfectly capable of doing initiative to avoid the cliff as a starter is what they tell us they would like to see. >> so are markets getting it wrong, then, so far because we haven't seen those milestones that you're talking about? >> well, hopefully they're not. hopefully we will have that. and, again, as we get closer to the time why it has to go this

long, i just don't know. >> madam leader? >> but i think we have to go because the speaker has his press conference about now. you had one yesterday. yes? >> leader pelosi, you've been resistant to any major entitlement changes, but the president in his last negotiation with the speaker did agree to some pretty major changes. are you worried that as this goes forward, if there is any progress in negotiations, that he will agree to some entitlement changes that you can't get your democrats to support? >> let me just remind you that we, in the affordable care act, had savings of over $700 billion by slowing the increase of costs to medicare. so we took the first step in this regard. the president has several hundred billion dollars more in his budget which we fully support.

the president knows our views, shares our values, we respect his leadership, and the speaker may need our votes to go forward. so, i am confident about how the president is leading us. thank you all very much. >> coming up, former budget director peter orszag talks about the so-called fiscal cliff. grover norquist discusses tax and spending negotiations. later, the possible impact of the fiscal clef on medicare. -- fiscal cliff on medicare.

tomorrow, coverage on increasing home ownership and the role of government policies in reaching that goal. a conversation with ceo brian monaghan will be followed by a panel discussion at 10:00 a.m. eastern here on c-span. >> my inspiration was the idea, i wanted to to explain how totalitarianism happens. we know the story of the cold war. we know the documents, we have seen the archives that described the relationship between roosevelt and stalin and truman. we know the main advance from our point of view. we have read them. what i wanted to do was show from the ground up, what did it feel like to be one of the people who were subjected to this system and how did people make choices and how did they react in behavior? one of the things that has

happened since 1989 is the region we used to call eastern europe has become differentiated. it is no longer -- they do not have much in common except for the memory of communist occupation. >> more with anne applebaum, and the end of world war ii through 1956. "iron curtain," sunday night at 8:00 on c-span's q&a. former budget director peter orszag says concerns over the fiscal cliff have been overblown and the focus should shift to the debt limit increase. the global vice chairman for citigroup predicted that republicans will ultimately caved in on tax increases. this is 15 minutes. >> four protections. discuss what will

the impending fiscal cliff means for tax filing season. and the formula for paying doctors under medicare. later, a look at how the u.s. population is expected to change. our guests are jennifer, a demographer for the senses, and william, a demographer for the brookings -- >> medicare costs will grow less than 3%, which is unbelievably low by historical standards. or that we saw last year. in a continuation of a value- based health-care system. over time, it offers the best opportunity in take-home pay that has arisen over the past decades because of

globalization and technological change. the third production is more dire with regard to health care, life expectancy for the bottom 30% will decline. this is part of a longer-term trend in which there have been increasing gaps in life expectancy going up very rapidly. at the top of the education, going up more slowly, declining at the bottom. that is combined with an odd feature that has the economy's slowdown life expectancy tends to improve, and life expectancy tends to not rise as rapidly in aggregate, which is the odd finding in a variety of studies. as the economy continues to pick up, that will unfortunately mean the underlying trend in life expectancy for the bottom 30% will not be so great. final prediction, the top tax rate will rise to 37% for one

taxpayer. [laughter] the long-term fiscal gap the nation faces will remain above 5% of gdp. it currently is hovering something around 7%. i think the risks of that prediction, by the way, perhaps we will get to this, i think the administration has a lot of leverage to obtain a some tax rate increases and the concern over the fiscal cliff is overblown. it should be shifting to the debt limit. it is entirely possible the administration will win on the fiscal cliff and face a debt limit problem. >> a very good. that is where i was going to start. tell us what happens in the next few months. how does the beginning of 2013, do we go over the cliff?

is there some agreement before the end of the month? >> i think there will be an agreement. the reason is, on that point, and might entitlements, the republicans have put themselves in a box that is not tenable. to argue that there shall be no increase in marginal tax rates for anyone opens the possibility for a machiavellian democrat -- chuck schumer comes to mind -- to say here is my proposal, we will raise marginal tax rates to 35.5%. are you really going to blow up the deal over that? if you do, you are committing political suicide. the fact that, combined with a lot of outside pressure is being brought to bear on that question, the republicans will cave on that question. the problem, however, the

administration is now jamming them on that and also on a debt limit increase. that may be overstepping. one possibility is to republicans cave on the marginal tax rates. there is a fiscal cliff deal but they're not ruling to raise the debt limit. >> what about another part of it, what happens to deductions? >> i think it is likely there will be some tax expenditure process. if you have a marginal tax rate increase that is less than 39.6%, there will be some limit on deductions or some process that will fuel in the details on how to limit them. details over the next 9-12 months. what basically will happen is they will be aiming for eight trillion dollars in revenue.

they're not going to be able to feel that through the marginal increases because they will be smaller than what the administration is proposing. they will fill in the difference by cutting back on tax expenditures to. >> we are going to open the floor in just a second but one more, unemployment below 7%. one week ago i would have said it was even more optimistic. >> i made it before friday. >> and you did not adjusted. the economy did well. do we end with the view that the u.s. is the best performing of the advanced economies? >> the u.s. has a pretty good medium-term growth prospects. both because of the energy boom, increasing efficiencies and healthcare, and still being the world leader in technology, which is a big advantage.

the other point that i think needs more emphasis, if you look over the next 10-20 years, the growth rate of the economy is slowing because of demographics, because the average education is not increasing and we will have the drag from the aftermath of the financial crisis for a long time. the next year or two or three looks better than what we have been experiencing that better means 3% growth, not 5%. >> ion that note, are there any questions? no questions? i have looked more -- loads more. >> [inaudible] >> can we continue to print money without causing inflation? >> one of the most challenging lines that the next chairman of

the federal reserve will have to walk is unwinding the balance sheet expansion that has occurred while avoiding putting too much negative on the economy -- too much negative pressure on the economy. you can get that balance wrong. my own view is that that is a much smaller risk than the risk we wind up with with very slow growth for a long period of time. reason i think it is a risk but not the dominant one is that while the economy remains weak, which i think relatively speaking, will for a prolonged period of time, it is hard to spark inflationary pressures. the u.s. does not have high unionization rates. so even if you had an initial spark of inflation, it is much harder for it to take hold. not impossible. a lot comes down to the

credibility of the federal reserve in saying we will not allow that to happen. that credibility could be endangered if they wait too long >> something to worry about, not in 2013 could you have to come back next year and the near after. another question? yes. gentlemen right there, five rows back. the microphone, just coming in here >> d.c. area's in increasing contact -- do you see areas and increasing on tap productivity? >> we still have massive untapped productivity because we are not using all of the plan equipment and workers we could. that unemployment rate is still elevated. there are millions of workers that could go back to work if there were demand for what they could produce. that is the biggest hits. not only today it also overtime because of they do not get back

to work now, they may never come back to work. the second thing is if you look at where we are inefficient. the reason i am glad there is a panel on health care is that is by far the biggest area in which productivity improvements are both possible and beneficial. estimates suggest that we spent $750 billion in health care that to not improve outcomes. that could go into take-home pay, raised outcomes. wheat need to be tackling the problem as aggressively as we can -- we need to be tackling the problem as aggressively as possible. we are on mile two of the marathon. >> your second and fourth predictions which is, we need to be upbeat on medical cost control. three% is much slower. -- 3% as much lore.

he said the fiscal gap would be 5%. >> we have not solved the fiscal cliff. >> i should have said, as estimated by the congressional budget office. >> it is not my prediction? >> cbo will not take into account the slowdown in health care costs for a very long time. >> the bigger picture -- it is the slowing of health care costs enough to rid whatever tax or entitlement deal you expect next year for us to be able to say at the end of 2013 we fixed it medium term? >> not really. the first is that deceleration in health care costs is still in its infancy and it is too soon to conclude that it will persist. the second thing is that the revenue base that both sides are looking into. let's say we raise the marginal -- raise the marginal tax rate to 37%. that revenue base for 2020 does

not work. the revenue base is too small. this is what both sides are oneeing to cpaaps discretionary spending because the water had a deficit target. the revenue base is inadequate to hit that target. so they rely on basic with a gimmick to get there, which is we promise we will cut spending by a certain amount but we will not tell you how. >> very washington. we have got time for one more question. yes, gentleman up there. >> i have a question about, you said there are factors -- about economic recovery. i am wondering about student dead and how the burden will play into the economic recovery in 2013 -- i am wondering about student? debt. >> it is part of a broader question. we are most, not all the way through the key leveraging

question. that has been a significant hindrance to economic growth. private-sector debt skyrocketed and has only slowly been coming down. if you look at aggregates, household and nonprofit debt as a share of disposable income, it is most of the way back to pre-crisis levels. with regard to student debt, specifically, that is a particular area of stress carrot i would come back again and say, one of the reasons why we are seeing very traumatic -- dramatic increases in tuition and -- at a public university it is that state appropriations at the state government level for those institutions have been curtailed. that in turn ties back to rising health care costs through medicaid. we are looking at the center here, which is the unsustainable debt levels for many students -- we are looking at the symptom here.

the underlying cause is the government level that no longer sustains the low tuition levels that were the case 20 or 30 years ago. >> we have 12 seconds we are going to have to stop there. we can conclude by saying it was -- glass half full or half empty? >> half full. much better than it has spent carrot relative to the last three years, 90% full. >> thank you so much, peter. >> friday morning on "washington journal", nina olsen will be here to discuss what the impending fiscal cliff means for tax-filing season. then sarah cliff explains the doc fix. later, will look at how the u.s. population is expected to change over the next 50 years. our guest is the demographer for the census bureau and william fyre, a demographer for the

brookings institution. "washington journal" is live starting at 7:00 a.m. eastern on c-span. next, a discussion on how republican lawmakers are at this revenue.ating text forax grover norquist was the guest on this morning's "washington journal". this is 40 minutes. host: somebody who has a bend in the news lately. -- has been in the news lately. mr. norquist, make your case for no tax increases. guest: sure. two years ago, president obama extended all the tax cuts that lapsed in january. he did so because he thought the economy was weak. the economy is not any stronger than it was two years ago. in addition to the tax increases he wants to impose by letting some of the bush tax cuts laps,

he already has $1 trillion of tax increases hitting in january to pay for obamacare. when you think about fiscal cliff, the bush tax cuts would lapse. there is the sequestration to cut spending. then there is $1 trillion of tax increases that obama has over the next decade. obama decided to delay those taxes until after he was safely reelected. but they start kicking in in january. they are painful. they hit the middle class hard. the reason you do not raise taxes as we have a spending problem. we spend too much money. raising taxes is not part of spending less, not part of a compromise. the politicians -- what politicians do instead of reforming government. the european countries have chased their bigger spending with higher taxes and eventually put in energy taxes. and that is what obama is doing.

$5 trillion in debt in one term. and he wants to take this $8 trillion more in debt over the next decade. and there is no way to raise taxes to pay for that. you have to rein in spending, raising taxes is what politicians do when you do not have the courage to reform government. host: if you go to atr.org or, you can read this new press release. 10 million families face higher taxes under obamacare. here is the pleasure of heard so much about that group for norquist sent to members of congress -- that grover norquist --eds tds to members of congres

host: there is no mention of spending in here but you do mention the elimination of deductions. that is one of the issues on the table now is changing the tax system, eliminating some deductions. if they are matched by spending cuts, does that work for you? guest: the pledge's focus is on the tax issue. until you say no to tax increases, the politicians never look for spending restraint. in 1982, they said to reagan, let's raise taxes and we will cut spending. what did they do? they raised taxes and spending went up. then they went to bush 8 years later. they said that we would give you $2 for every $1 of tax increase. i thought that was a little insulting. you are playing with counterfeit money.

why not offer them $10 of a mentor. expenses. he was offered $2 of spending cuts. spending went up, not down. we have played this game before were politicians want to spend more money, say we will cut spending in return for tax reasons. they take the tax increases and because of that you never get to spending restraint. the 50 states, a lot of governors have made a commitment not to raise taxes. those states that do not raise taxes, texas, florida, actual reform government. those states where taxes are on the table, maryland keeps raising taxes and spending like crazy. illinois keeps raising taxes instead of reforming government. california decided to raise taxes instead of reforming their pension system. so the states are divided into those states that do not raise taxes that are reforming government, those states that to raise taxes that cannot reform government. host: joe, in georgia, the

republican line. caller: i think grover norquist is the greatest taxpayer champion in history. we love him in georgia. we totally agree with him. we think the answer is electing more people like tom price. my question to you is i think a lot of john boehner but he has been there 22 years. a lot of us feel like tom price ought to be elected speaker. she will be much more aggressive. he will not capitulate on taxes to obama. what do think of tom price being speaker? you are a national hero. you are right on taxes. god bless you. thank god for it. guest: thank you very much. very kind comments. of course, all the republicans in georgia is in the house of representatives have been stalwarts in opposing tax increases. neither the republican senators have voted for a tax increase. congressman price is a great republican leader and a great

conservative leader. i would point to john boehner'6s as in the last couple of years in holding all of the republicans together not to impose -- oppose the stimulus package. obama put $800 billion of tempting cash on the table and said, which congressman would like to take some of this home and spend it? and there were some republicans who were tempted to do a little shoplifting. but everyone of them decided no. i think that not only their own internal good behavior helped on that, but the leadership from john boehner in explaining if you want to go to the american people and change the direction from the tax and spend that obama was moving people into, you cannot have your finger prints on the murder weapon. you cannot engage in that sort of tax and spend policy and go to the american people and say, trust us. we do it better.

have to make the difference is clear. bain has done a good job of that. everyone can improve -- john boehner has done a good job of that. the republicans are working with john boehner to make sure they have the strongest position against obamacare and its taxes and regulations. and against the overspending of the last four plus years. host: are you in contact with speaker boehner? guest: i work with all the leadership. and have for the last 20 years. always in touch, always trying to be helpful. host: phil, north fork virginia, democrat. caller: to what very much. it is an honor to speak with you. i have a couple of quiet -- comment. first of all, i do not think it is fair to say that reagan -- spending cuts. remember the navy. he was part of that. let me get to my main comments.

it is my opinion that increases in the marginal tax rate may actually be good for hiring and increasing itemized deductions. you think about it this way -- an increase in the marginal tax rate at the top end will make an itemized deduction, an additional hire more valuable to a business -- and the value of that charitable deduction. the additional hire, a person, a company who is just a little bit over the threshold. they want to take a deduction for the additional man. the higher is worth more to him. host: so let's get a response. grover norquist. guest: there are several points here. there is the personal income tax.

a lot of small businesses pay the personal income tax. they are called subchapter s corporations. one of the concerns as it would take small businesses to 43.4% top rate from 35% today. the corporate rate like general motors or ibm, that is 35%, and they're not planning on raising that. in fact, there is a move in the united states to reduce that towards 25%. the reason is the average business tax in europe is 25%. stupider than france is not where we want to be. canadians are at 17%. when you have these high marginal tax rates, it slows economic growth. you can see it on the corporate side and the individual side. i think we will over time take the corporate rate to 25% from 35%. because it will be better for growth, we will have more revenue for the government, not less.

if the government grows at 4% per year, reagan levels, versus 2% per year, france over the last years. do that for a decade, the federal government raises $5 trillion in additional tax revenue. the best way to get revenue for the government is a strong, robust, job-creating economic growth. unfortunately, president obama and the democrats are taking the opposite direction over the last four years and that is why we are in the mess we are in. host: al is an independent in georgia. please go ahead. i need to push the right button. sorry about that, al. hang on. you are on "washington journal". caller: good morning. the last time i managed to get through was on the heels of you're going to atlanta and chastising the legislature here over the transportation tax.

guest: how did george a vote on that tax increase? caller: 9 regions out of 12 voted it down. unforeseen licht, the one i am in voted it in -- unfortunately the one i am in voted it in. i have a bone to pick with you. guest: me? i urged people to vote against that tax increase because i knew they would spend the money on stuff. caller: and the guy that called before the last time called you a carpetbagger. guest: i'm from boston. that is worse. host: what is the bone you want to pick? caller: in the 12th district congressional race, we had a guy who voted for that tax increase and voted for the hospital bed tax. he got an 8% republican advantage in the 12th district. those of us who consider

ourselves real conservatives had to go out and overcome that 8 point differential and we managed to defeat lee anderson, largely because it was a tax increase. guest: what did you get stuck with? caller: our region was one of the three of the 12 that voted for. guest: no. anderson was a fraud canada. yet a tax increase. this is the lesson. republicans who raised texans at -- taxes as young politicians have to live with the fact that that goes on with them the rest of their lives and their capacity to govern rather than raise taxes travels with them forever. it is a mistake. do not raise taxes. speak to young politicians pure shape them sternly. not raise taxes. this is not considered a useful fall. not like smoking marijuana once or twice. it stays with you forever like a social disease. don't do it.

don't raise taxes ever. host: grover norquist got his degree from harvard. you already have the protection pledge. your atr pledge for the 130 congress, the incoming congress next year. and 219 representatives and 39 senators have signed that. the couple have been making some noise. i want to gets your reaction. peter king has signed a pledge, the republican from new york and speaker boehner's has also signed this. and it is easier to list the signers. 16 gop members of the house have not signed and six u.s. senators have not signed. what about peter king? hest: to be fair to savysby, has not voted for a tax

increase. i think it is important to remember that. what he has said, and he said this in georgia last sunday, that he would consider reducing rates and broaden the base in taking 15% of the higher taxes from broadening the base and spending that. paying down the debt with it. so there would be a tax increase after you dropped rates and broaden the base. since the modern day republican party is dead said against reducing marginal tax rates and would never attempt to with an offer to do that, he has laid out a set of conditions that will never be met. and we instagram has also said, if you gave him $10 of income -- and instagram has also said, if you give him $10 of entitlement reform, and a tax increase, it would have to be your vocable.

-- irrevocable. all tax increases and almost no spending strength at all. so i understand why some people think out loud about hypothetical. the challenge is, for those republicans to say, i might do this if you did this is "the new york times" and cbs and time magazine take the first four words in your paragraph -- i might raise taxes. they say, ok. we put you in that category. they do not listen to the very serious and sophisticated comments that some of these congressmen or senators are making saying, i would have to have this large a spending cut. it is -- technically, it is a mistake. because nobody here is the spending cuts you are talking about because you get caught off on cbs after you say i will raise taxes.

they put you on that list. tax increase list. not fair to some of those guys. so the good news is -- these are the same people that two years ago made the same comments when we were doing the budget control act with the debt ceiling increase. we might do this. the republicans did not do that. so i think we are in very good shape in terms of keeping people who have made their commitment to the people of georgia or south carolina, and making sure they keep that commitment to those. what is sometimes confusing is harry reid likes to give speeches on the senate floor and at press conferences suggesting the pledge is to me personally. harry reid should read it. i was glad you read it. the people of your state. as long as you're in the house or the senate. it is very clear. and it is binary. and the people have to talk to on this issue are the people in your state. i was very pleased in nevada, a

republican pledge-taker just one the senate, defeating a liberal democrat. nevada is sending a message to harry reid, please come and knock off on the tax hikes. host: senator tom coburn. here is what he had to say recently. "personally, i know we have to raise revenue. i do not care which way we do it. actually, i would rather see the rates go up and with the other way because it gives us a greater chance to reform the tax code and broaden the base in the future." guest: tom coburn it said the exact same thing two years ago. he said, we are trying to get a $2.50 trillion spending restraint, the john boehner role. obama keeps hitting the debt ceiling. he has had more regularly than other politicians have in the past. bain has reiterated, one of the things during this debt ceiling

we have not focused on is that john boehner said that the john boehner role is still in effect do you want to raise the debt ceiling $1 trillion? you have to cut spending at the same time. coburn thought that we had to raise taxes. he was wrong. we got that written into law because we took tax increases off the table. and coburn went into the gang of six for months and months and had to walk out of the room because the democrats were not willing to reduce spending at all. he has not called to say, thank you, my approach was wrong. but in his conversation with durbin he learned they are not interested in cutting spending. they only want to raise taxes. only when you take tax increases off the table, as the republicans -- coburn voted for the correct bill that cuts spending -- he was not trying to do a bad thing. his strategic thinking was flawed. you have to understand where the other team is coming from if you put taxes on the table, they

cannot focus on anything else. they do not even see or hear your conversation about spending. you talked about the obamacare medical tax earlier. we just put this out on our website. obama is now going to tax starting january 1 low-income people who have high medical bills. that is one of the groups paying for obamacare. right now, if your medical bills, out-of-pocket medical bills, are over 7.5% of your income. rich people cannot have this number. the average person who gets whacked by this makes $50,000 per year. you can deduct that from your taxable income when you pay taxes. saves a lot of money. obama is taking that out to 10%, which means millions of americans who are sick and have an extraordinary healthcare bills, are being taxed by

obamacare. it is a hidden tax. nobody saw this tax until january 1. obama did not run ads saying i will tax sick people to pay for my obamacare. as part of my program. and yet, that is what is hitting january 1. add to that, if you are missing a leg, you need a prosthetic, obama has a tax on that. if you need a stent or a pacemaker, there is a tax on that. all medical devices are being hit with an across-the-board tax. this is supposed to reduce the cost of health care? it does not. it raises the cost. he taxes middle income, very ill people with very serious medical bills. and he taxes everything used in a hospital that is a medical device. why did obama and harry reid and nancy pelosi delayed these tax increases until after they safely got reelected? now there are 17 democrats who have sent a letter saying, could

we delay this tax increase? it will kill jobs in my state because we have people who manufacture pacemakers. they voted against it before they wrote the sternly written note. they voted for it before they wrote the sternly written note against. i remember in my john kerry back-and-forth. but this is very damaging. host: republican line. you're on with grover norquist. caller: taxes are never going down. and the people who suffered are the everyday people, the lower class. it seems like the republicans are fighting for the middle class and the rich. and the reason why they lost the election is because of the lower class. you have to start thinking about the 2016 was going to happen. people are not going to change

until you help the lower class to get those votes. obamacare seems to be hoping the ones that --the lower class. also, i sent you a book that was called "let me people go." it is about black economics. a good book to let black folks know where they are in economics. if he did not get the book, i will send you another one. that is my statement. host: i will get it from steve. thank you for that call. any comment? guest: i think when you were talking about obamacare, you need not to read the press releases that obama put out about what it is supposed to do and you need to actually look at the tax increases and at the regulations and at the next -- the next four years are going to be very ugly and terms of economics because all of the ugly parts of obamacare that he did not want you to focus on, those take place over the next four years.

the things he thought the people would appreciate and like, those have happened already. those of the ones they talked about before the election. we are now seeing the tax increases. this is not going to be free. there are massive tax increases that i just talked about. medical devices. on sick people. they raise taxes on six people. average income -- $53,000 per year that get hit by that tax increase on people with high medical bills. it is on our web site -- atr.org corp. -- if you want to see the right up. there are five obamacare taxes that hit january 1. that is the permanent, non moving fiscal cliff abutment that we run into in january. host: joleen, madison wisconsin, a democrat. caller: good morning. i called to thank you and the

republican party for causing the people to rise up and vote. i have never seen so many young people that stood in line to vote. you could not win with all of the pac money would that was spent. your party puts us in this situation under bush. and thanks to you, your party will not occupy the white house for the next 20 years unless you grow up and except that this is a new day. guest: you mentioned we just had an election. a lot of people voted. as you know, speaker boehner was elected with a strong majority. republicans won the house of representatives. they won the house of representatives having voted twice for the ryan plan which reforms entitlements, reduces obama's debt by $6 trillion.

does tax reform, takes the corporate individual rate to 25%. they won a mandate by running on a program. the democrats in the senate have avoided voting on a budget for four years. they have not written a budget for four years. patty murray is supposed to be in charge of writing budgets. he runs the committee. he did not write the budget. she ran the democrat's campaign. it was all politics and no governing. one of the things joe lieberman was complaining about just a few minutes ago. so we did have an election. there are 30 elected republican governments. there are 20 democrat government. there are 24 states. wisconsin is one of the 24 states with the republican governor and republican house and senate. there are not 12 or 13 states that have a democrat governor and a democratic controlled legislature. so we have a pretty strong

endorsement of the republican policy of having less spending and lower taxes. state by state and in the house of representatives. the senate elected a majority of people who hid from the american people what their policies were. harry reid had a policy of not allowing votes on amendments on the floor. as a way to not have the votes. if you can only get elected by hiding your position, it is hard to argue you have a mandate for that position. obama's budget that he wrote for 2013, which he claims he has a mandate for, was put up for a vote in the house and not a single democrat would vote for it. and republicans were able to force a vote on the senate, and every democrat voted against it. this is the policy obama claims he has a mandate for, that every democrat running for office ran away from and physically voted against. so there was a mandate, and it was in the house of representatives. neither the president nor the senate late out a budget or

voted for a budget that actually, as the republicans did. some day, the -- it would be nice if the democrats would design a budget. then they could pass the budget. then we could look at it and have a discussion. i have been an advocate. i am glad to say this again on c-span. these negotiations between speaker boehner, the republican, and obama, the democrat, president obama, need to be on c-span, because what is said in that meeting the american people need to see. it is no good having secret meetings and then press conferences about what happened in the secret meeting. let's have c-span cameras there. and let's have it go on and on. and then when we come to an agreement, when they come to an agreement, put it online. so that every american can read it. seven days. obama promised big things would be done on c-span when he ran

for office in 2008. he was not able to do that. obamacare. now he has an opportunity to make this promise to the american people whole. he also promised he would put things online so you can read them before they got voted on or signed by him. as long as the american people can see the negotiations on c- span and read the bill, i think we will have a fine bill. and i think we will avoid raising taxes on the american people. but we have also have to go after all of the obamacare taxes and get rid of those. from richard, you're up jacksonville, florida. independents line. caller: good morning. i have a question. you are very popular and you can talk to just about anybody -- democrats and republicans. office of management and budget puts out a book every year, mr. coburn has mentioned it.

many democrats and republicans have mentioned it. we could save $900 billion a year getting rid of duplication and fraud which is in this book. did you sit down with these people and tell them, listen, instead of doing all of these taxes and all of this garbage, let's go through this book and let's do our job. it seems like you are the only one they are listening to. i agree with you. we should not have to put out no more taxes. this is in saying. it seems like we give you $1, you still $15. if i ran my house like that -- i would have no home. i would like your opinion. guest: richard 7, a very good points. i'm glad you commended senator coburn for putting together a list of spending restraints of ways to reform government.

cat, the libertarian think tank has made a list. and americans for tax reform has put together a list, has testified for the simpson- bowles committee on a number of ways to reduce spending. we need to focus on making government more effective and more efficient, getting it out of those things that ought not to do. you are right. let's start by focusing on some of these ways to reduce savings. all the conversation about tax increases crowds off the tv screen all efforts to reform government. very good poitns. host: this from the associated press. senator jim demint was on cbs. the leading conservative who is resigning from the senate is predicting the president will win the battle over raising taxes. senator demint called a

political trophy within obama's grasp. the proposal is not a plan, it is not a solution. but he goes on to say that he is going to get his wish. i believe we are. to raise taxes and not just on the top levels. guest: obama appears to boe pushing us over the fiscal cliff. obamacare is baked into the cake, unless obama wants to reduce taxes. obama promised he would not tax the middle class. obamacare is full of taxes on the middle class. he did not exactly say the truth when he ran for office, when he passed obamacare. we also have tax increases, many of them on middle-class americans in live in the alternative minimum tax lapse. politicians say they're going to raise taxes on the rich, and then they raise taxes on everybody. example is the alternative

minimum tax. it h it 155 rich people who invested in municipal-bond. not very smart, but they did. you cannot tax municipal-bond. then that over time crew to where it hits 4 million people. it will hit 30 million families in general. that is how a tax on the rich leads to a tax on 30 million people. obama may imagine there are 30 million billionaires' in the country, but there are not. each of these taxes, when the republicans passed the bush tax cuts, democrats voted against it. now they are lapsing, they are pointing out that 80% of the tax cut goes to the middle class. they will let it lapse. they voted against the middle class tax cuts, but now they want to keep it. we really do need to monitor how this goes.

this january 1 is not the end of the fight. it is beginning of the fight. republicans have three tools. one, the sequester. the democrats fear the sequester more than republicans because it actually rains in spending. obama wants to get rid of it, increase spending $1.20 trillion. second, the debt ceiling, which will have to come up every month or so as obama keeps hitting that ceiling. republicans can raise it a little or a lot. but that gives them discipline as it did in 2011 to require spending restraint. lastly, the continuing resolutions because the senate does not do his job because harry reid plays politics instead of governing, they have not done a budget. the continuing resolution. we will do everything and keep it going. this of the vote to allow that money to be spent. the house of representatives has to agree to continue the budget. what they did in 2011, about a

month or two, is they said we will extend continuing resolution two weeks if you save $4 billion. obama has a list of spending promises, cuts he has said he will do but he does not do them. and republicans forced him to eat his own words and do the things he said he was for. but we got lots of things obama claims to before and we will make -- the republicans in the house and senate -- will make him make those spending restraints in order to get the continuing resolution out a week, two weeks. obama will be on a short leash over the next four years. he may decide to go blow up small countries he cannot pronounce because it will not be any fun to be there because he will not be able to spend the kind of cash he was hoping to. but this fight on the fiscal cliff is a skirmish. the real goal of obama is not to tax the top 2% of americans a little bit here or there. because -- if he got everything

he wanted in this budget that he did for 2013, still $8 trillion short. the only way to get that is to loot the middle class with an energy tax and competitive enterprises to subpoena the documents on carbon tax that they have been discussing at treasury. they are hiding that carried the white house said they might be for a carbon tax if the republicans are. this is a president who promised never to raise taxes on the middle class. in energy tax is a body blow to middle income americans that is the real fight. obama wants carbon tax. and then a vat. that is the only way to get spending up as dramatically -- taxes up as dramatically as he is increased spending. host: colleen, new jersey, republican line. caller: first of all, peter, merry christmas. grover, i cannot tell you how

important are to people, especially to new jersey. i want to let the entire country know what we have to pay here. before that, you need to expose these people on those medical devices that the democrats voted, all voted for and now they are screaming that their constituents are going to lose their jobs because of high taxes that obamacare is going to put on to their constituents. but the debt -- not think of their constituents at the time they voted for obamacare. the taxes are coming. they are going to come in strong light title viii. in new jersey, under 10 years of democrats, this is what our republican governor inherited. we had our property taxes raised 75%. i will give you the numbers so people can figure out -- i do not know how we survive. the homes are $300,000.

our mortis, our taxes are anywhere from $10,000 to $20,000, that is on the low end. so you are paying almost $900 to $1000 a month on top of your mortgage which is another $3000. do the math. my husband and i do not make six figures. how we go to the supermarket under obama, under the last four years. we have seen our irish rebels and double and our gas prices have doubled. you are our last voice. host: colleen, we got to leave it there. grover norquist. guest: you are right. it is not just federal taxes. state taxes and local taxes. we have to be vigilant and fight for reform of government. host: finally, do you know peter berkowitz of the hoover institution.

guest: i'm sure i do. host: a new book, " constitutional conservatism." "the first entranced reality is that big government is here to stay. this is particularly important for libertarians to absorb. over the last 200 years, society and the economy in advanced industrial nations have undergone dramatic transformations. consequently, the u.s. federal government will continue to provide a social safety net, regulate the economy, and shoulder a substantial share of responsibility for safeguarding the social and economic basis of political equality." guest: there are always some conservatives that argue that, let's have big government. let's make it our big government. i'm not sure you can have the government the size we have and not have -- not squeeze people like the caller we have from new jersey.

peter berkowitz should go talk to him, tell them -- tell her she should not mind the government. 200 years of growth during world war room and one, world war ii gave as big government. they didn't fall for that. host: grover norquist is president of americans for tax reform. atr.org. if you would like to read his text pair pledged and see some of the other information may have on their site. and the new release from today. thank you very much for being on "washington journal". >> now a look at how the fiscal cliff the impact medicaid and the proposals being considered for the program. from "washington journal", this is 40 minutes. host: we will continue our look at the so-called fiscal cliff and its impact on taxes on spending. today we focus on the issue of medicare. our guest is mary agnes carey,

senior health correspondent for kaiser health news. how is medicare funded? guest: it is funded by payroll taxes. part b is the outpatient services and funded by premiums and general revenue. host: does it pay for itself? guest: the needs are met and the trustees say the program is funded through 2024 with the reduction in the healthcare law to providers. 50 million people rely on this program. it benefits individuals over the age of 65. a lot of people depend on it.

host: what is the current budget for medicare? guest: about $550 billion for this year. host: does that include the premiums that seniors pay? guest: what they pay it will go to the payments that will go to the doctors that care for the beneficiary. host: how much is coming out of general revenue? guest: the beneficiaries pay 25% of the program in part b. in part d, you have about 32 beneficiaries that are on the program. host: medicare is divided into four parts.

part a is hospital insurance. host: how did the affordable care act change medicare? guest: it will take $716 billion away from medicare providers. the payments will still grow. providers of care will see their reimbursements decrease. beneficiaries receive some new services. they will get some help if they are enrolled in the drug program. they will be helped to close the donut hole. host: how is medicare being

looked at? guest: medicare providers will be cut by 2%. providers will be cut. there was an estimate about a month ago and that medicare would be hit $11 billion next year. the payment reductions would amount to that amount of money. 2% across the board to providers. host: a proposal to raise the medicare eligibility age. guest: the negotiators would lay out perhaps a target number of spending reductions to be

attained in 10 years. one is to increase the eligibility age and this is happening already in social security. there is a rush of baby boomers. there's a lot of opposition from seniors group and democrats and others who say this is simply a shift. the senate on to employers that might keep those employers on their health insurance and that will cost them more. the individuals may have to spend more to get health insurance. those folks may go to that program and get a subsidy. the argument against it is a shift in cost. host: what about means testing?

guest: this is already in current law. if you earn $85,000 as a single, you pay more for your share of the premiums. one idea is the idea of looking at those figures and say how could we adjust the provision to get more revenue? the health law freezes the current threshold. there was a proposal until 25% of beneficiaries are paying for their premiums. this is an area that could be the basis for some bipartisan agreement.

host: medicare spending in 2006, $403 billion. host: if there is no agreement reached on the fiscal cliff, no beneficiary cuts. is that correct? guest: the providers are facing a 2% cut on sequestration will complain to their patients that washington is taking too much from them. host: 202 is the area code if you would like to participate.

202-585-3881 for republicans. 202-585-3880 for democrats. 202-585-3882 for independents. do medicare premiums go up every year automatically? guest: part b is about $99 this year and that will increase to $104 next year. beneficiaries face deductibles and co-payments. things like hearing aids and eyeglasses are not covered. some of those plans do cover those services. for the 75% of beneficiaries, they pay deductibles for their

part b and they have co-pays and are spending a bit of money out of their pockets for health care. host: nancy pelosi had op-ed this morning. saying no increase in eligibility age. is that a nonstarter? >> "how do we protect the vulnerable 66-year-old if we go this route? how can they avoid the premium? how can we protect them?" look at the savings you can achieve.

could the day through a policy -- could they through a policy solution make sure that people get coverage they could afford? host: do you know how the people are using medicare? guest: about 50 million people. host: mary agnes carey, what is your connection to the kaiser foundation? guest: we are a program of the kaiser family foundation. my newsroom is like every other newsroom in washington. we come up with stories and pitched them to our editors. the stories run on our site and we have stories that run on our partner publications, "the new york times," "the washington post."

we can reach a great audience through our website and through our partner publications. i've been covering health care -- i moved to washington and bill clinton had just been elected. i was told to check that out. i learned a lot there uncovered appropriations and the floors. i was hired to cover health care in 1997. it affects millions of people's lives. host: have you thanked that editor? guest: i thanked him. host: first call -- charles in

las vegas. caller: i am on medicare myself. i believe republicans and democrats should have to be on medicare themselves instead of their own friggin' -- i think it is a joke. host: you think medicare is a joke? caller: i think everybody should be on medicare instead of their own -- host: their own plans. guest: many of congress are covered through the program. i think he is making the point if you took a look at the premiums and deductibles and compared them to medicare, would they be -- is the program more generous for seniors?

would members of the staff like to be on the program? that's something people could evaluate and talk about. host: randall, good morning. caller: if on a level playing field all taxes should be raised on all workers, rich or poor. i am a poor person and i receive from medicare. it is something that is needed. i would probably die without it. the jobs act should go back into the fact. do not stop the jobs act.

help america get back on its feet. i guest: i am glad you have medicare coverage. this is a critical point on capitol hill. taxes should be increased and how did you resolve the federal deficit and the debt problem? there's a big split between the democrats and republicans. these are folks making $200,000 as an individual. those tax breaks it should extend for everybody below those thresholds and republicans are very much against that. if you have not thought about this, it might be time to start doing that.

host: a republican of california had an op-ed yesterday in "the washington times." here are some of his proposals. guest: it medicare part a and medicare part b, there are different structures. you combine those deductibles into one. he is talking about capping what seniors pay out of pocket. seniors do not have that now. there is concern that some policies are incentivizing medicare and that they should be pared back. these are areas that could be part of the discussion going into next year. look at the supplementals and say if you want to buy the policy, you have to pay a surcharge.

that is an incentive for you to consume more care. they buy that protection because they want it. half of seniors have incomes of less than $22,000 a year. host: what is the argument against the proposal? guest: the argument would look at -- maybe a broader look at the plan. many republicans want to have a premium support a fixed percentage that the government contributes to you for your medicare coverage. paul ryan advanced this in the house. if you limit medicare spending, what would that spend out of the pocket? combining them is not necessarily something that is purely a democratic or republican idea. host: when does the independent pay but advisory board take

effect? guest: the president gets to appoint them. all of them.

that process has not started. the advisory board is a panel to make recommendations to congress on how to control spending if it goes past a certain target. if there were nominated and confirmed, these targets would not be hit a while. medicare spending is growing. this remains a controversial part of the health law. some democrats do not like the idea of see the power to this board. the secretary has to put those into the fact. host: when it is supposed to take effect?

guest: 2014 and later. host: tim geithner, the labor secretary, kathleen sebelius are on the board of trustees. host: do you know who that gentleman is? that is the only name i am not familiar with. roger, thank you for holding. you're on with mary agnes carey. caller: when is someone going to do something about the doctors and medicare and everything. i have seen it with my own eyes. my brother in law passed away.

i went to the hospital to see him. he said he is coming back from chemo. said, what do you mean? he was supposed to pass away tomorrow. that is a $20,000 treatment. he did pass away the next day. why would they give him a $20,000 chemo treatment? guest: i am sorry for your loss. two point about physicians and care, there is a broad look in the healthcare law to look how health care is delivered through

all sectors. it is leading the payment whether for a physician the quality of the care that is delivered. physicians' right now face a 27% payment cuts in medicare january the first unless congress steps in to intervene. sequestration would add another 2% cut for that. physicians need more money for medicare and not less. host: good morning in california. caller: good morning. i drew early social security, once my medicare kicked in. they want $600 a month. is obamacare going to do

anything to help me with that? guest: i'm curious about figure. i first thought is that that is a high amount, especially if you're living on $771 a month. get some help with the medicaid, asked about the. that would expand medicaid to individuals making up to 138% of poverty. that is an expansion to get more people covered. i am curious about this figure. show them this is the amount of money you're making. i am concerned about that. host: to go back to the op-ed in "the washington times."

is that a point of contention by anybody? guest: everything in medicare is a point of contention. people were not expected to live as long as they do. the amount of new technology and the amount of costs that it remains there and is driving up expenditures. people who agree with that would framed that way. many democrats would say this is an important safety net for people. look at the last caller. she is on a low income. one idea is to take it from 25%

deductible to 35%. for people on fixed income, that increase could be a lot. host: medicare pays 80% and the person is responsible for 20%. guest: you have a copayment of about $1,100. host: and that is the max. sam in woodbridge, virginia. caller: good morning, guys. all i can hear in the conversation is the middle class and people in the higher class.

people worked her own life making minimum wages. despite the caller that mentioned $600, the care payment is $600. these are embarrassing things. [indiscernible] why can you just make hospital payments -- take their checks to the hospital. it is simple. middle, middle and negotiate and they end up with all those bills. take the check to the hospital -- there is not any other income. host: let's get a response from our guest.

guest: the idea that when you go to the hospital, tried to figure out to charge you based on your income is a difficult administrative tasks. things like do you income relate more for higher income folks? how does medicare as a policy program decide how much to collect from people concerned in comes in medicare? in the discussion about income, if you may those premiums too expensive to higher income folks, it brings down the cost for

the risk pool. people have said they doubt somebody 65 or older could get better insurance than medicare. when you make a policy adjustment, something else happens in another place. that is what lawmakers try to do.

host: back to the board of trustees, charles blahous is in member of the board of trustees and work for george w. bush and also worked for senator alan simpson at one. . there is his picture on your screen. pat, a republican, good morning. caller: good morning and joyous noel. i am a senior and veteran of the dirty little asian war. i was having to rely on the potable water we could drink while in the military. that water cost me severe stomach ailments. i had an offer of maalox when i would go for health care. i had to resort to the health

care i could provide myself. i'm a patient in the veterans administration and i'm grateful for that. but it is not enough. i have friends that our seniors, widows and friends that rely on the health-care system and did not get adequate health in their health care because they are at poverty level and they cannot supply their own needs. i would like to ask anyone who can, make your voice heard. if you tax the rich, everybody will go down. i'm going down for the last time.

guest: he makes a valid point that is of deep concern for democrats and others concerned about the medicare program. they do not want anything to impact the most vulnerable seniors. it is more difficult to make ends meet. medicare is a safety net. the program is to protect people. host: mary agnes carey, if sequestration takes effect, is medicate affected? guest: not at all. host: social security? guest: i don't believe so. for veterans, there would not be. host: we have a chart from "the washington times." the red line is medicare spending over taking social security spending. all other spending dropping. medicare going up and up to $1 trillion by 2030 -- 2015.

connie in maryland, a democrat. caller: i was wondering why they do not make everybody pay into medicare and social security. when you get $106,000, you don't have to pay. but everybody uses it. if they would raise the cap and a means test it, i think it would help a lot. i have an idea to get rid of fraud by giving us all pin numbers. i think that would cut it down. guest: the cap applies to social security.

medicare is a continuous. it is about 2.9%. is a slight increase for income over $200,000 for an individual. there is some of that. host: on the first dollar? guest: that starts next year. host: is there any discussion to end the cap on wages? guest: there is an idea about a chain cpi. it is a way to save the government about $200 billion over a decade. cpi is based on a basket of goods and services.

fore isn't any allowance that. that is something you'll hear more about when it comes to social security. democrats did not want a change to social security. host: renee, you're on with mary agnes carey. caller: what are the underlying reasons for the cost of health care rising in the united states? is it overmedication? we want a capitalist system in health care.

hospitals and doctors should post the cost of the procedures so everybody will know before they go into the office or hospital how much it will cost. guest: health care costs are rising for a variety of reasons. people want and used health care in america. it is an increase of utilization. kaiser health news, we had an edge to story who talked about trying to get the price of an m.r.i. try to find out how much it

would cost and she could not get an answer. when she did get an answer, they were all over the map. these providers are cutting -- they have contracts with organizations to be reimbursed at certain levels. if you want to get a procedure and you're not in that plan, it will cost you more. we're used to comparison shopping. why can we do for health care? host: christine in arizona. caller: i have a couple of questions. one is with taxes. i look forward to tax time because i was get three times

the rate of what ever i paid in back. i've gotten older, i don't understand how that's possible for somebody to get back three times what they paid in. host: any comment you want to make? guest: the cult may be talking about the man of money people pay into social security or medicare and the amount of

benefits they receive. there is some discussion of what people pay in and what they receive. something to remember is looking at when there is a discussion about trying to change that. you have to remember the population that you are dealing with. that is somebody that needs that money. what they received was more than they paid in, but what else are you going to do for the person? they need those benefits. the idea of income relating is getting a lot of traction. that have high incomes so should they pay more for their premiums? host: back to the op-ed from yesterday in "the washington times."

host: nancy in milwaukee, democrat. caller: good morning. regarding disability. disability claims are going up. how does that affect the medicare futures? does anyone follow-up on that? is there a single payer program that is medicare for all? guest: people under 65 on disability can get coverage and this will impact - they do qualify for medicare. if more people were allowed to purchase many care, this is an

idea that's been out there. some people call it medicare for all. this is perhaps the more affordable way to provide people coverage. with the pressure of the baby boomers, this might give lawmakers pause to get more people to buy into medicare. we are talking about the fiscal cliff and the january 1 deadline. if an airline is reached on entitlement spending, this discussion will continue well into 2013, perhaps even beyond. we will have more cliffs and more drama about a deal because these decisions are very hard. the discussion about changing

medicare -- have a co-pay structure -- these ideas have been out there. host: we have about a minute left. caller: good morning. one thing that a caller was talking about was to compare the benefits and what the representatives get today and what medicare people get. these people are looking for cuts in benefits. the benefits go up every day. i am a health-care provider. 2% of $100 is $2. guest: the amount of money they make a year increases. it is one of the things that is out there and remains a concern

looking at what federal employees receive and members of congress received and are they getting a generous package? host: mary agnes carey is a senior health correspondent with kaiser health news. how often do you do your web casts? guest: every week or so. host: do expect to be busy with health care? guest: we expect to be a very busy. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012]

>> friday morning, nina olson will discuss with the pending fiscal cliff means. later, a look at how the u.s. population is expected to change over the next 50 years.

live at 7:00 a.m. eastern on c- span. >> coming up, a house hearing on implementation of the healthcare law. then, an update on the fiscal cliff negotiations. then, nancy pelosi. >> tomorrow, live coverage on increasing homeownership and the role of lenders, investors, and government policies in reaching that goal. the conversation with the bank of america ceo will be followed by a panel discussion hosted by the brookings institution. >> punched me, strangle me, take things from me.

beat on me. >> give it to him hard. >> i have been on that bus. they are as good as gold. >> all of us are starting to see people coming out and talking about their experiences, this phenomenon that so many of us have experienced in one way or another and have had no words for other than, adolescence, growing up. people were starting to finally stand back and say, this is not a normal part of growing up. there was a moment where there was a possibility for change. we discarded -- we started the film out of that feeling that voices were coming up to the surface to say, this is not something we can except -- we can accept any more.

>> hear more saturday night at 10:00 on c-span two. find more online. like us on facebook. >> states have until friday to tell the federal government if they plan to be on that -- on their own. they discuss medicare expansion on the healthcare law. >> i called a hearing to order.

this hearing is under the jurisdiction of the commerce committee. the chairman of the subcommittee is ill today. his recovery is well underway. we look forward to his return next week. in the meantime, it has been 1000 days since president obama signed the affordable care act into law. the administration has not provided critical information to members of congress, the states, or the health plan. we know medicaid expansion will happen but we do not know what it will look like. we do not know what will be expected of the plants themselves. will beginnt's loslaw enrollment by october next year.

it asserts they will have a fully functioning, technologically advanced system by which americans will be able to enroll. the administration has yet to explain how it will share information. the administration has yet to explain how it will distribute the income subsidies to the beneficiaries to allow them to purpose -- purchase the exchange or how the state will be able to exchange the administrative cost. the administration has the ability to push back the implementation for federal positions, the states and the plans that are required to meet statutory standards do not have that flexibility. it was not until last week the administration released the proposed rule regarding the state health insurance

exchanges and the health benefits. the latest proposed rules released on the affordable care at fail to address the questions the state and the policy makers have asked since the law was signed. medicaid accounts for a quarter of budgets. governors cannot be expected to plan for major changes and have legislative authority to prepare unless the administration makes clear the basic ground rules. the state legislatures will only meet for a limited time each year. that time will be quickly evaporated wide -- while they await instructions of these rules. there is a lot to be sorted out between now and the end of the year. in congress in general but in this issue in general -- in particular.

the overall lack of response from the department is not encouraging. the states or the health plans to move forward in cooperation with the agency. time is running out. the future of our health-care system, the future of the health becomesca's patients more uncertain every day. we have been asking of the administration for the past 2.5 years. we want them to provide their perspective as they attempt to plan for the unknown effects of the affordable care act. i would like to yield the balance of my time to the member from louisiana. >> thank you. i would like to thank bruce greenstein and all the panelists. it is about how this will affect

the average american family. about 30% of employers will definitely or probably put their employees in the exchange. when i speak to brokers, they tell me most people opt for the bronze, which has a 6% value. then i pull up this from a government agent see -- agency, which shows that 98 percent and -- 98% have values of 80% or more. we put people into exchange in which the value of their policy will decrease from 80% to 60%. just to put this in perspective, we know the value has a $2,000 deductible and a rigid and out- of-pocket -- deductible.

i do not see the value for the american worker. i would love to discuss today how all of this was determined. i yield back. >> 5 minutes. >> thank you. you like dr. better? ok. i am beginning to learn the republican playbook on the affordable care act. first, they spend a year and a half holding repeal vote. when that did not work, the advocated the supreme court would most certainly reverse the law. that did not happen. finally, they hope the president will lose the election. when all else fails, the next move now is to delay the implication under the guise of

lack of infant -- lack of information. implementation will move lower. the law will continue to have a positive effect on millions of peoples' lives. i hope i will be here one day when the republicans realize we did the right thing, the world is not coming to an end, and the nation will be better because of the affordable care act. i wanted to clear some things up for the record. one of the critical goals of the affordable care act was to approve access to health care -- to health care. it is immoral to allow our fellow americans to suffer because they cannot access health insurance. a key feature to accomplish that was expanding medicaid. when the supreme court allowed states to choose whether or not to accept the provision, republican governors became nothing but openly hospital -- hostile.

today, we will hear from two very different states about their own benefits analysis that proves my point. a critical piece is the creation of health insurance exchanges, which, beginning in 2014, will provide a stronger marketplace that provides coverage options for millions of america. -- americans. those states that have not are regulation ashs' an excuse. they exit -- insisted there is enough information. the administration has been working with states, providing flexibility, guidance, and

resources. a lot more work needs to be done. implementation of the affordable care act puts the nation on a path to better help and we must not allow states to play politics, which arsome are doin. i did want to yield initially to the gentleman from michigan. >> i thank my good friend. i commend you for holding this hearing today. in my entire career, i have fought to ensure the affordable quality health care decisions are in need. the upholding of the law brought to fruition a dream that was had by my father. these are two fundamental

provisions. they will achieve our goal of providing affordable health care of high-quality to every american. though the exchange and small businesses will be able to easily shop for health plans that best suits their needs, and the medicaid expansion will provide millions of uninsured americans with access to our nations' --'s -- a nation's healthcare. it is critical we get it right. i hope this hearing will do so. >> the gentleman yield back. the chair recognizes the gentleman from georgia for the purpose of an opening statement. >> i think you. but the distinguished member did not say is -- what the distinguished member did not say

is the obama bill results in increased cost of health care and does not bring it down. i find it remarkable that 33 months after the passage of this bill, a hearing like this is even necessary. we have states still looking for direction on provisions that come into effect next year. this type of uncertainty makes it impossible for states to successfully budget for the future what is more, state officials are left with no good options as arbitrary deadlines are proposed in regard to creation of the exchange's. our governor who served on this committee and was chairman of this committee has rejected the idea of the state of georgia

setting up its own exchange because the restrictions, handcuffs, that are put on the state almost make it prohibited. the same thing in regard to medicaid expansion. our state has taken the option. i think the governor is correct in doing this, and not expanding medicaid because of the bottom- line cost to the state over an extended time. this hearing is very much needed. i hope we are able to find real answers which allows states to plan for the future. with that, if there is anyone on our side who would like to have time yielded, i would be happy to do that. otherwise, i will yield the balance back. >> the chair recognizes the

ranking member for an opening statement. >> thank you. in march 2010, after decades, congress finally passed landmark legislation that extends access to affordable, quality health insurance to all americans. since then, the law has already provided remarkable benefits for american families. it has allowed over 6 million young adults to have their parents' insurance. pre-existing coverage insurance plans to over 90,000 people. it has lower prescription drug costs for seniors and people with disabilities. it has given 86 million people in the private market and in medicare access to preventive health benefits at no cost. it has eliminated lifetime insurance companies limiting coverage for 105 million

individuals. this is an outstanding beginning. now we stand on the threshold a full implementation. despite the law posses many benefits, it has faced united opposition from the republican party since the day it has passed. there have been over 30 votes to repeal this law. there have been numerous court challenges. there are states that have steadfastly refused to move forward to ensure smooth and effective implementation. none of these efforts have been successful. the house votes proved to be partisan, political. the supreme court declared the law constitutional. let's be clear. the affordable care at is the law of the land. we should all be united in seeing its implementation works. as we will hear today, the job

has been done. they have provided a constant stream of assistance and information to those making steps to make this law their own. for some states, no information will ever be enough. that is the tragedy of politicizing a law that will benefit so many americans. other states are acting responsibly. two of those states are here today. there are many others. coverhis week, nevada's -- governor has announced they will move forward with medicaid expansion. the governor of idaho. i look forward to hearing from all of our witnesses. i am interested in testimony from joshua sharfstein and

andrew allison. i would like to thank gary cohen for his work. the affordable care at is a solid law that will improve our nation's health and health system for decades. let's move forward. work together to implement it efficiently and effectively. why do we have to have this political fight over and over again? we have a law that is doing good already. it will do so much more if we make it work as effectively and it is time to stop the fighting about it and work together. i would like to yield the rest of my time and to representative bladwin.

>> thank you. i want to appreciate your help care services. . on the topic for us today, the affordable care at is the law of the land. it is time for all of us to come together and put politics aside and make america's law work for the american people. that includes expanding the coverage through medicaid to those who need it most. that includes creating health insurance exchanges that will provide individuals and small businesses with quality, affordable insurance options. if we all do our part, access to affordable health care will be within reach for all americans and small businesses. , strengthening their economic security. i am pleased to be in the room

with leaders who are in trouble to implementing the affordable care act. -- in trouble -- who are in necessary for implementing the affordable care act. i look forward to your testimony. thank you for being here. i yield back. >> already starting to sound like a senator. the chair was preferential and let you go. i hope the courtesy will be reciprocated. i do want to welcome -- time has expired. i want to welcome our witnesses here today. i want to make the observation there will be a vote on the floor at some point.

i generally try to be pretty flexible. i will ask if you would try to stay within the confines. we have a single panel. it is a large one during our first witness will be gary cohen. we are also joined by cindy mann. i am grateful to acknowledge the presence of mr. dennis smith. we are also joined by mr. bruce greenstein. mr. gary alexander.

dr. joshua sharfstein. we are also fortunate to have dr. andrew allison. gary cohen, we will begin with you. five minutes for your opening statement. >> thank you. for having me here today to speak about implementation. i have the privilege of serving as the director for insurance oversight for medicare and medicaid services. i oversee many of the provisions of the affordable care at that are working to ensure more americans have access to affordable, quality health insurance. i am confident states and the

federal government will be ready in 10 months when consumers will begin to comply private health insurance through the exchange. whether a state chooses to run its own exchange, consumers and small employers in every state will be able to shop for, select, and enroll in high- quality, affordable health insurance beginning oct., 2013. many families will have health care, health insurance for the first time. many people who lost their insurance will have the inch -- assurance of knowing it will be met. states that want to move forward are moving forward.

on monday, we announced six states have already made enough progress that we have conditionally approved their plans. while there is more work to do for open enrollment, these six states have shown they are on track to meet all exchange deadlines. we are pleased many states take the leadership role. that is what the affordable care act is. states taking the lead. we hope every state will take an active role. since the enactment, we have been working hard with states and we began issuing guidance for the states about these exchanges over two years ago in november 2010. since then, we released regulation, guidance, and facts

sheets, including a final establishment, as well as detailed information about the specific's. -- specific processes. we have held hundreds of hours, seminars, teleconferences and meetings. states are helping each other as well. sharing many tools and documents to help each other get the job done. in addition to hands on assistance, we are working for states to have the resources they need. states that were e.g. -- eager to move forward would qualify as early as october 2010. 34 states in the district of columbia have received billions

of dollars in grants. these grants are available through 2014. in addition, states accused of partnering with the federal government may receive these grants to establish state functions that are performed in support of the exchange. many states are moving floor. we are working to support them. at the same time, we are working with states who want to partner with us. we will be ready to operate an exchange in states that choose not to pursue a partnership exchange at this time. if a state telex to have an exchange, it is not a permanent joint. -- joyce.

when operating the federally facilitated exchange, it is our goal to preserve the state role as insurance regulator and not to duplicate state regulatory activity. while also providing health for consumers based on where they live. we have made significant progress in developing the systems needed for the exchange, including eligibility for tax credits, plants, and pro grams which will help -- plans, and programs which will help., we have been working with states on the tactical details on the interactions and have held webinars.

states can apply for federal funding for any state functions they perform and support in the exchange. the hard work is beginning to pay off. six states have already demonstrated their readiness. my office stands ready to assist any states that would like to move lower. thank you. -- move forward. thank you. >> thank you. >> thank you. for medicaid, the implementation of the affordable care act is occurring in a program that is undergoing rapid change, being driven by the broader transportation of the private health-care marketplace, like states focused on the federal

action. we have a clear focus on helping state medicaid programs improve care delivery and reduce cost. there is no one size fits all model. it is run by 56 different jurist fixes -- jurisdictions. with this, let me turn to the initiatives underway to promote implementation of the affordable air -- affordable care at. people are surprised to learn medicaid does not already cover all low income people. both -- most of the spending is coast -- goes to the elderly. other adults were not eligible at any income level before the

law. the affordable care act helps to establish a simplified coverage. it establishes one application, one set of eligibility rules that will apply to the medicaid program, the childrens' health program, and the subsidies available on the extension forms of the tax credit. consumers will be able to apply, be found eligible for the appropriate program, and enrolled without delay. enroll without delay. we have been working to provide guidance and support. in april 2011, we -- 48 states in the district of columbia have received approval

for the funding. in march, 2012, we issued a final regulation covering all of the major new income rules. we did that regulation at the same time my this fall we release comments to the elements of the application and we continue to consult with states and others as we finalize. we issued guidance in which the chip programs will interface with the hud and the exchange as applicable. we issued guidance on the flexibility to the states to construct their medicaid benefits package that will be available. in addition, we have been creating and sharing tools that

help states move forward. we have sent to each state the net income standards that will be applicable in their states that will be converted to the new rules. throughout the years we have had a particular focus on helping states accelerate their system to save time and resources through various venues, we are making our products available to states and facilitated state sharing with each other with cms making direct links based on the vendors they are using. we have conducted more than 20 webinars and established state operational technical assistance team for each state that consists of a multidisciplinary team of cms experts on benefits

and our reach. -- out reach. /we have conducted 200 protocols with states. it is important to say the guidance and tools we have made available and will continue to make available have been created with substantial assistance from states themselves up. we have numerous warning collaborative is on a wide variety of topics. the vast majority of states have participated in one or more of these groups. states have gotten the value, and we appreciate their assistance and contributions. the decision to not alter the importance of any of this work, it left intact the provision other than the penalty provision for the new adult coverage. the court made the decision to take up the medicare expansion for low-income adults voluntary with each state. states are considering this

important question. soon, the secretary wrote to say there were no -- there was no deadline when the states had to make a ruling and it left intact the financial support for the expansion. we confirm not only did they have the decision to come in and if to come in, but if they did decide to adopt expansion they can later dropped it. we noted the invest federal funding would remain available to states without regard to whether a state decides to expand coverage. we issued for the questions and answers -- we issued further questions and answers. the releases continue, as does the on going, intensive technical assistance and support. many states have been able to take the guidance, tools, technical support we are trying -- we are providing and move forward.

we are appreciative of all that needs to get done on the state level. let me assure you we are eager to work with every state no matter what the current stage of development might be. we are confident that every state can be ready in time for open enrollment on october 1. >> let me know the bills are signaling the house is an recess. we will recognize mr. smith for five minutes. >> thank you. it is a pleasure to be with you and all the memb of the subcommittee today. i think senator elect baldwin for being here. we look forward to your service. i really did take my statement from the perspective of implementation. i bring with that two things.

wisconsin already has done much of the work that the nation is going to be catching up to. we have 90% insurance coverage of in the state, over 90% if you add in people already eligible for medicaid. if they showed up and enrolled we would have 93% coverage for the state. we also have been one of the leaders an integrated eligibility systems and which people can apply on the internet as well as by mail, phone, and face to face. we have done a lot of the work of what to expect. i bring experience from implementation at the federal level. i was at the center for medicare and medicaid service shortly after the medicare modernization act of 2003 was passed. i was charged with part of the

responsibility for preparing for implementation of the drug benefit. i would saycms has a much more daunting job today than 2003, and yet 2003 we were adjusting through the very last minute. months into it, we still had state partners assisting the federal government because we could not quite pull it off all at once. at that point in time we had the other system called the social security administration as a major partner that was trusted by our senior citizens. we had many things already in tact. we knew who we were enrolling. we were extending a new benefit to a set group of people. we knew a lot about their health care. cms has a more daunting job and what we were charged with. there were lots of people doing

their best at cms. i do not envy them for the job that they have it. from the perspective i have been looking at this, we take deadlines seriously. the deadline that state's faced was the secretary of hhs was going to start reviewing states january 2013, as in next month, to see if we were going to be ready. we took the deadline very seriously. we decided one year ago that job was too big. i would say today, we still do not know who is eligible, who will get paid, how will cost sharing be transferred between the federal government, state plan to a health plan or to somebody else. again, all of the rules and everything else, we still have some very fundamental things

that at the end of the day, you are trying to connect a buyer to a seller. the fundamental things that are required to do that are not yet in place. we would not have been ready to be -- to have the review. we took the deadline seriously. the wisconsin experience, again, we submitted as part of my statement real life eligibility standards of what is going to be faced of their in converting to modified gross adjusted income. magi has marriage penalties and it. you will have different outcomes for similar households, making the same in comes, whether or not different members of the family will be eligible for medicaid, the tax credit, or not eligible at all. when i think some of the inequities come to life, there will be a lot of unhappy people.

i give some of wisconsin experience in terms of value of what needs to be anticipated. we do not know call centers, who are they going to be for. the idea that you are going to train a whole set of eligibility workers who are going to know wisconsin's medicare eligibility, it is a little hard to accept that given the short period of time. we are 10 months away. finally, affordability, we are with the agreement of partners at the federal government. since july, we have been modeling affordability. we have been applying the percentage of income towards premiums because, again, wisconsin has already expanded eligibility. we have caretakers and adults up to 200% of poverty level. people on medical assistance who

have income well above the poverty level. we have been modeling the premiums. again, that experience needs to give everybody pause for what we have found. people at the lower income level are not thinking in terms of percentage of income. they think a in dollar amount, how much money is this going to cost me on a monthly basis. the lower income levels, we predicted pretty accurately that they were going to be willing to pay on average amounts of $59 a month for their care. this is just the premium, this is not cost sharing that will be applied on top of that. when you get above 200% and that dollar amount has gone beyond -- and beyond $200 a month, individuals have dropped by half. the law does not determine what affordability is. people will determine what

affordability is. >> thank you. >> good morning. thank you for the invitation to testify on the ways and oppose the position. -- to testify on louisiana's position. earlier in my career during the bush and administration, i oversaw medicaid program grants -- programs. in my current role i have broad responsibility over an array of health service areas. before i begin, i would like to

pause to recognize the position that we are in. it feels awkward to be testifying on the implementation of one of the largest expansions of entitlement programs in nearly 50 years. at the same time, the debt ceiling takes place. it is a little bit of a parallel universe. we are here, as you know, louisiana has shared concerns about the practical and policy ramifications. it is not the product of political positioning, but was made after careful analysis of the laws and regulations. beyond the past and ongoing legal challenges of the law, we have broad concerns about the policy. while the concept is a good one, the defined exchanges provide for a rigid federal control over coverage options available to consumers, raising costs, and limiting choice.

the study estimates that premium tax will force policy holders in must pay to pay over $2,000 more for single coverage and $4,500 more for family coverage for individuals for the next 10 years. similar increases are noted for small and large group of employers. this is a burden on individuals and families in louisiana and across the country. there are major practical implementation hurdles. with guidance having been delayed or altogether missing, the october 1, 2013 deadline seems unrealistic considering the scope and complexity of building an exchange. they are certainly helpful, but it is too little and too late. the state's decision to not build an exchange should not be taken as a general unwillingness, but rather the remaining concerns and unanswered questions simply do not give us the needed

confidence. regardless of the type of exchange that will operate, there are five key issues outlined a enter my written testimony that need attention from congress. thank you for the time today. in addition to concerns regarding the exchanges, we have reservations about blanket expansion of the existing medicare program without fundamental reforms to help ockham's and lower costs. while states now have a choice, it is not surprising many remain reluctant, some organizations have called the expansion a great bargain for states. state leaders must be careful before accepting the long-term liabilities of expanding a 1960's era entitlement program. a recent report reveals that expansion creates winners and losers among states. their cost estimates, which we

believe fail to cover the full costs and other impacts, may very wildly among states. the new england and mid-atlantic states combined will save almost $16 billion of interstate funds over 10 years. at the same time, the south atlantic states will be paying $22 billion more. governors of interest it's like massachusetts, new york, maryland, vermont combined will shed $23 million of tax. my state alone is projected to pay nearly $1.8 billion. we want to make sure we are providing individuals to access with coverage that makes sense to them. that is cost effective and gives them access to high-quality services. i believe this administration

and congress begins to engage with states interested in pursuing market-driven, health care reform, we can create a more sustainable and effective program. these discussions should be driven by several tens of medicaid reform that include eligibility, flexibility is that would allow us to keep families together on one coverage product. these points are outlined in my testimony and in more detail in a 31 point report last summer. president obama himself said we cannot put more people into a broken system that does not work. today's model does not give adequate flexibility to approve -- improve outcomes. instead of rushing to expand, they must first engage in earnest discussions with states like louisiana that are eager to further reform programs now rather than spend more money on a rigid expense program that will not work for all states. thank you. that concludes my testimony.

>> good morning, vice chairman. members of the committee, my name is gary alexander and i am the secretary of public welfare for the commonwealth of pennsylvania. thank you for asking me to discuss the implementation impact of the affordable care act on the commonwealth. i encourage you to review my entire testimony. we a denture the commonwealth have never witnessed a loss so vast. the aca is not just above the expansion of medicaid or establishing an insurance exchange, it is about the hundreds of federal mandates and procedural requirements that have the escaped public attention, but to which we by law must obey. the fine print of the legislation is so complex, even the federal government struggles

to understand it. the states cannot fully understand the impact on finances, systems changes, and operations. this law completely overwhelms society's safety net for the needy. there are a few problems in pennsylvania created by the aca. the law mandates that we expand our provider enrollment system to check with their medicare data. medicare databases cannot handle automated changes. we will have to add staff resources to respond to 100,000 inquiries every month. we are mandated to create separate databases to accommodate is exchanges and some databases like the masterfile, we have not been given access to. we adopt past medicaid rules radically changing the tailor- made renewal system that took years to refine and perfect.

the verification system will not be coordinated with other welfare programs creating eligibility verification issues. the mandate says we use the correct coding issues. pennsylvania already performed this task through claim check, a federally approved system that cost pennsylvania $12 million to develop. the new system will be micromanaged by the federal government. the ac man it's we create new transaction methods for verification. our technology is more advanced than what is mandated and nobody will use the outdated method. the law requires us to develop it anyway. the ac a mandates states implement the modified gross income to determine eligibility by 2014. this mandate requires extensive eligibility changes and enhancements. that timeline is too short for large it ystem changes that will

prevent us from developing a system that delivers the best value to taxpayers. this change will cost $250 million. the aca mandates states have an hhs approved single streamline application. pennsylvania already has one. we are struggling to include the changes necessary to incorporate magi rules of federal data. we use medicaid to cover the health care needs of children between the ages of 6 and 18 living in households with incomes between 100 and 133% of the federal poverty level. pennsylvania already provides coverage for these children through chip, a much less costly program. the federal government is mandated we switch to a more costly and less efficient program. we cannot use asset tests, a

welfare eligibility tool. when we remove the asset test we ended up with a lottery winners on the program. we have since reinstituted the asset limit test, but we are precluded from considering this tool for medicaid. the aca allows hospitals to the presumptive eligibility determinations for medicaid. this could create conflicts of interest, as with many other aspects of the law, cms has not provided the requirements. it mandates us to pay primary care physicians medicare rates. the fed will pay the difference through 2014. there after the states will be hit with increased costs. this change will cost pennsylvania $45 million a year. some of the time lines are unrealistic and many of the

mandate to impose unnecessary duplication of efforts. these changes add to our costs and as mandates often do, impose a one-size-fits-all approach making our process less efficient, not more. we are told the federal government will pay 90% of the cost of the aca making this a good deal. it overlooks the magnitude of the cost for the states. 10% of a huge number is still a large number. the magnitude of the federal deficit shakes our confidence that the federal government will be able to fulfil its and of the bargain. the aa will likely have broader impacts that affected the commonwealth. we do not have time to go into this, but we know that businesses are already changing their hiring practices to transfer health care costs to states.

the federal government now dictates to states almost every detail of how to run the program. how is that a partnership? finally, it invites bureaucratic gridlock that works against its goal of securing greater affordable health coverage for more americans. to fix the problem, states and localities must be engaged and viewed as partners to create innovative solutions. there is a great deal of work to be done to make this law more reasonable, and less burdensome for states, businesses, and all americans. thank you. >> thank you. good morning, chairman, members of the subcommittee. in this position i oversee the medicaid program and i also

served as chair of the board of the maryland health benefit exchange. yes are grateful for the opportunity to speak with the about the implementation of the affordable care at in maryland. i am also a pediatrician. i think i am the answer to their sesame street question of which one of these is not like the other. my testimony today will include one background on the key elements of maryland's health care system and improve access to care and cost control to a description of how broad engagement has guided implementation of the affordable care act, 3 details on how maryland is customizing the tools in the new law, and a summarized -- a summary of the health-care implementation in our state. first a little background. maryland has pursued innovation and health care financing to expand access to care, control

costs, and promote growth. a unique approach to a hospital payments, a small group market that serves more than 400,000 marylanders, a high risk pool, health of permission exchange that includes doctors having access to help patience with records. the medicaid and the chip program that covers children up to 300% of the state poverty line and expanded to include parents with incomes up to 116% of poverty. i came on board a couple of years after that expansion, and i met more than 97,000 maryland parents who were covered. it allowed them to get back to work and to get over injuries that had happened. i met one who said that because of coverage, now if i have to

pick up a prescription, if not, i will not have the money -- will have to take it away from groceries. hearing that from somebody were they do not have to take money from groceries to pay for health care is something that we deal with all of the time at the state level. i think it was the legacy of expanding medicaid and having it be positive for the state that overshadows the implementation and what happened right before the affordable care act passed. the second thing i would like to talk about is public engagement. from the day after the affordable care act was signed, maryland has been working with hundreds of interested people from doctors, hospitals,

insurance brokers, businesses, and other carriers to design and think through how the set of tools and work for the state. that is included in early consensus, that it made sense for maryland to operate its own exchange, expand medicaid, and take advantage of other options within the law. there was wide understanding that the various aspects of the law included allowing kids to stay on their parents coverage, including access to prescription drugs, provide greater benefits to the state. there was a major report in 2001 that led to the exchange getting established in the legislative session. there are nine members of the board including six public members. we have had more than six advisory committees with all sorts of representation and engagement across the state. they have met dozens of times. we have had numerous public sessions. that led to a second law that

passed in 2012 that showed how to structure the exchange. we have made multiple decisions to tailor the lot. these include allowing insurance brokers to continue to be paid directly by carriers like they are now selling adult dental plans as an option for participants, designing a consumer portal for access. today marylanders can send a text message to be notified when coverage is available. we have been customizing medicaid including women to become newly eligible for medicaid to stay on their private plans while having medicaid dollars pay for premiums and making all of these decisions, there are many more in my written testimony. we have had tremendous reports as part of the regular process they use with state officials. that is extended across the development of an i.t. system that we have been working on for

the last two years. it will be a leap forward for the state for access to care and coverage. there was an independent analysis from the university of maryland on the impact of health-care implementation in maryland. the study found implementation with been s. -- benefited the state economy by $23 billion per year. benefits the state budget by more than six cinder billion dollars in 2020 through a series of mechanisms that are described in the testimony and what generate more than a hundred million dollars of tax revenue for economic activity. it exceeds the stake cost of medicaid expansion. i go around the state talking about all of the work being done and people do not ask me about the rules and the guidance and our decisions, they ask me about when health is coming. we are excited for this to launch next year.

>> we will vote there is a vote on the floor. i think we have time for a doctor allison to go on with your testimony. >> thank you, mr. chairman. i and the medicaid director in arkansas and the president of the national association for medicaid directors. appreciate the invitation to arkansas and other states represented on the panel to hear about the important issues. my written testimony that i have written addresses the two main challenges medicate faces today. first is the fiscal arrest brought on by long-term rates of growth in the medicaid program, and also by the loss to the tax base suffered as a result to the economic shift that occurred in this country beginning in 2008. the second challenge is really an opportunity. the option for a state created in the affordable care act to

extend health insurance coverage to poverty level adults through the medicaid program. i want to focus my remarks on the decision arkansas faces about whether to take up the option. and the governor expressed his support for the medicaid expansion this summer. it came after cms confirmed the expansion remains optional and can be revoked in the future. his support is driven by the benefits it would still provide to state taxpayers, to the safety net, especially hospitals, and to the beneficiaries of the expansion themselves. arkansas has many low-income, uninsured adults and we know that medicaid saves lives, improves health, and it provides financial protection. the decision on whether to expand medicaid now rests with this general assembly. beginning in january for three months, a super majority of 75%

vote is required to appropriate funds in arkansas regardless of their source. this is a challenge. the decision may rest heavily on the financial implications of expansion for the state. arkansas estimates the size of the expansion used as a starting point, to the estimates arkansas added cost and enrollees. it included some out of private insurance, included the woodwork defect. current eligibles represent 14% of the expected new enrollment. it also includes the added administration cost. it rose cost about $900 billion per year, including federal and state payments. they are also expected savings for the state of arkansas associated with the expansion.

the first stems from our expectation that a number of population is currently served through traditional medicaid will migrate or will transition into the new expansion group of eligibles qualifying for a much higher federal match rates. key examples are individuals enrolled in medicaid because of pregnancy or they have suffered a catastrophic medical event. in the future these populations will already have health insurance, and there will be no reason for them to switch to the old eligibility categories that carry a much lower federal match rate. the second is a reduction in spending on uncompensated care. more than 200,000 additional arkansans will have a pager for their care. -- payer for their care.

finally, because of the unusual nature and size of the optional medicaid expansion, arkansas is making the unusual decision to consider its macroeconomic impact. if the state legislature approved the expansion, medicaid payments to the state will grow by $800 million a year, given the small size versus the federal tax base, ark. assumes federal medicaid payments will come from taxpayers in other states. beansas's economy will larger if they choose to expand medicaid. the difference will have some impact on tax revenue. we estimate the fiscal benefits will outweigh the costs.

the expansion is expected to save or increase state tax dollars by $44 million in fiscal year 2014, $150 million in 2015, and $700 million between now and 2025. thank you. >> there is still over seven minutes left on the vote. we will start with the questions. i would ask members who feel it necessary to leave because they are so slow it takes them over seven minutes to get to the floor that we do leave quietly. the committee will remain a in session and we will recess when there is no time left on the vote. i will start with myself. november 26 of this year, health and human services released a long awaited rules detailing the

essential health benefits that must be covered by any health plan offering a plan in the aca exchange. i understand this has far reaching consequences on premiums. benefits must be provided. according to the notice in the federal register, the rule was approved by administrator on august 1, 2012. that is three months before. yet the role did not receive approval from secretary sebillius until two weeks ago. what did it take two month for the administration staff to review -- and yet the public will have only four weeks to review during the period of public comment on the ruling issued on november 26?

i would note this is a time of year when people's focus is generally on things other than long awaited rules. >> we put a bulletin on the essential health benefits quite some time ago and got comments on the bulletin. the public had an opportunity to provide public comment on essential health benefits before the proposed rule was put out. there were some changes from what had been in the bulletin, but by and large what is in the bulletin is what is a in the proposed rule. i think there has been ample opportunity for the public to comment on the rule. >> it is your opinion that wisconsin, pennsylvania, and

louisiana -- they actually knew what the role was going to be and could be confident that they knew what the rule was going to be and could begin to make plans accordingly? >> ahead the bulletin that lit up the approach using the benchmark approach, which basically said as the law does that the essential health benefits are based on what is in a typical employer plan. they did the state had the option to choose from a range of benchmark plans. >> to tell us wisconsin is confident that what came out on a pamphlet would be sure what the rule would be? what's i think we saw have questions on what the package is. >> i t why.

i accept that as your answer. let me ask you on november 20, the "new york times" posted an article that it had been delayed as the administration tried to avoid stirring up criticism from lobbyists and interest groups in the final weeks of the presidential campaign. if that is accurate there was a presidential election between august 1 of 2012 and november 26, 2012, that is a fair statement. >> yes, i believe president obama was reelected. >> that being the case, was the role delayed as to not to interfere with the happy occasion you just referenced? >> i am not aware of the sources for that and i am not aware that that happen. >> for those of us prepared to lay down the affordable care

act, it did strike us as change that the rule was available for discussions in august, but not published as a rule until after election day. there does seem to be a regulatory push now of a federal agencies to get things moving and up off the deck none of the election is settled. i am not cynical, but there are people of in -- there are people who are. a 33 month delay on the operation of these exchanges does cause some of the people who are cynical and enter this town to ask the question -- what is the hold up? this is an important deal you are doing, and it appears to be it is possible the cynical people could be correct. it was held up for a critical

-- political reasons. i would appreciate -- it has been hard to get information out of your agency. governors had trouble, members of congress had trouble. i would appreciate the expeditious handling of those questions when they come to you. >> we will do the best we can. >> my time has expired. >> the committee was an adventure recess and will convene after the last vote. >> the committee will reconvene.

the committee has reconvened, and the chair recognizes the ranking member of the subcommittee, five minutes for questions. >> thank you. the title of this hearing is, day of uncertainty, and implementation of exchanges and medicaid expansion. i want to say, mr. chairman, i think the title is provocative. i think it does a disservice to the progress of the people with regard to the aca. it has prevailed and it is the law of the land. that means people have already experienced positive changes from the affordable care act whether from the elimination of lifetime limits, the ability to stay on health care plan, coverage with no code-sharing, lower prescription drug costs. the affordable care act is improving the lives of americans already. 30 million americans who otherwise would be uninsured

could have access to health care. millions more will be put in charge of health care as opposed to being at the mercy of insurance companies and the arbitrary limits and fine print of denying coverage for critical services and overly burdensome cost sharing. the states have an option to help make this a reality for their residents, and cms has been working with the states who want to move forward to make this work. my questions are to a mr. cohen. critics have cited a dearth of information, the lack of answers, the inability to move forward -- you have heard that from other panelists. can you talk about the average efforts, the type of assistance you have provided over the past two years? >> thank you. i am happy to do that. in 2012 alone, we have posted

over 115 even for different states that total approximately 215 hours of technical assistance. we have done 69 weibbinars. we have held two in person conferences where people have come in, over 1000 attendees have come to those. we are on the phone literally every day with people from the state's helping them, answering their questions, and enabling them to move forward. >> i appreciate that. >> thank you. i think it has a different experience from past experiences were usually put out that in some regulation and hope for the best. we have been aggressive with our partners to reach out to states and to bring them into parley

our decision making, and certainly their decision making as they are going forward. by topic, by groups of states, and individually. we do reviews on their system development individually with the state's. we are providing coordinated technical assistance and support. we have pulled together workgroups and learning collaborative of groups of similar interests so we can help them think about how to problem solve with respect to the issues that are of most in their minds. we have provided different tools for them so that as they are moving forward looking at our regulations and guidance and thinking how to implement it, they have easier ways of doing it than if they reinvented the wheel and did it on their own. >> can you talk about the interactions you have had with the center for consumer information in preparing your state based exchange for maryland?

>> we have had a terrific interaction. there are opportunities for all states that we have taken advantage of. we have regular consultation. we have been impressed by it. they have really met us where we are on a particular issue. sometimes it is general health. sometimes it is specific. they have been willing to move at the speed we are moving on a particular issue. itm maryland's perspective, has allowed us to customize implementation a denture a way we think work for our state. >> i will try to get a question and to mr. allison. >> if repeal the would actually increase the budget deficit by more the $100 billion. the aca contends cost- containment measures by improving care.

i was interested in arkansas's payment reform efforts. could you tell us a little bit more about the payment reforms and how they would bring down costs? >> we believe the in arkansas the incentives that we face and the activities we are engaged in in our payment and improvement initiative are aligned with the center for medicare and medicaid innovations. we are engaged in moving away from a fee for service to pay for out comes a denture health care instead of the process that we currently paid for. -- outcomes of in health care instead of the process we currently pay for. we are looking for patience centered care. if we look for that, we are going to have to pay for it. we have not done that in the past. we are engaged and dramatic and sweeping changes working with our private health insurance

partners in arkansas. we have worked closely with cms to make the first of these changes, implementing in october for the state plan, not through waiver. it incentivizes for adhd, perinatal care and upper respiratory infection concentrated and incentives for a team based care. that happen very quickly. appreciate cms' support for that. >> thank you, mr. chairman. thank you for being here. when you hear both sides, kind of the jekyll or hide type. the patient protection affordable care act provides

health insurance will be affordable in their exchanges. the claim put forth was that if you like your insurance, you can keep it and health care cost will go down. that is how it was sold to us. some of us read the bill, most of those passing the bill before we could read it. the cms proposed a 3.5% fee on all plans and a federal exchange. are you afraid the fee will get passed on to individuals and families purchasing in your state? this is a question for mr. smith, greensein, and alexander? \ >> to be paid not only to the purchaser, but this also apply to medicaid managed care plans as well. there is a direct impact on the state budget for these new costs. >> it puts them in a competitive

disadvantage as well. we fully expect it costs get passed on rather than absorb with already small margins for the plans that participate in medicaid managed care. >> the short answer is, yes. i would concur with my colleagues. >> i appreciate the shortness of the answers. do you know what the national debt is right now? just the national debt? it is on every website in the world. >> $16 trillion. >> the you know what the deficit spending has been the past four years? you do not know? do you know? >> i do not have that never mission right here. >> i do not know the exact number. >> >> in 2009 it was $1.40

trillion. $1.30 trillion. that is more spending we have taken in. 2012, $1.10 trillion. already this year, the first two month, $292 billion more a in spending that we have taken in. if you push that through to the full year, it is probably $1.70 trillion additional deficit added to the $16 trillion debt. that is part of this debate. because medicare and medicaid our entitlement programs, and that is part of the reason we will be here until christmas and new year's and have all of these battles. let me go again -- this is about the state of illinois. estimates from earlier this year have the state of illinois with unpaid bills growing to $34

billion in five years. that will be $2 billion more than illinois's total projected revenue for the year. the biggest problem -- can you guess with the biggest problem is? >> medicaid. >> medicaid has been on an unsustainable path for years and is expected to increase 40% over five years to $12 billion by 2017. over all this will trade an estimated $21 billion in back pavement backlogs. does not factor in the unknown cost for new medicaid requirements from -- what would you guess? >> from the affordable care act. >> concur. >> would you believe will be the result of these backlogs remain? what do you think? >> we have been looking at what

happens to medicaid rates themselves. i know there is a lot of discussion about the newly eligible, but it also affects the entire program. otherwise we will not have providers that was the medicaid payments unless the rates go up. >> i worry about the participation in medicate from the provider perspective, but also programs like education that it crowded out within the context of the state budget because we continue to consume a greater proportion of the overall budget in health-care costs. >> i concur with the last one. i would like to just add to mr. greenstein. the crowding out of other priorities is extremely important. infrastructure is important for pennsylvania. the growth of these programs growing at 8% to 10% while revenues are growing at 2% keep

crowding out education, transportation, and have a direct impact on jobs. >> thank you very much. i yield back my time. >> mr. chairman, -- >> the chairman recognizes mr. waxman. >> medicaid is an expensive program. we have a lot of people who are very poor in this country. we can save a lot of money if we did not give them health care. i suppose mr. smith, mr. greenstein, and mr. alexander, you think the way to solve it is to put it a danger a block grant? >> yes. >> if given the choice, i would take it. >> absolutely. once you three would like the block grant. that simply shifts the cost.

the states cut back on services for these people, and the disabled and the port will go without health care. your idea is not going to succeed. that was one of the issues of the presidential campaign, and you lost. we have medicaid. let's accept that fact. you are running the programs, you ought to be supporting the program are running. the medicaid expansion of the affordable care act is a step forward for the health-care system that will improve the lives of tens of millions of americans. the expansion will reduce care costs in states around the country and will provide states with extremely generous enhanced match rate from the federal government. we crafted this piece of the affordable care act to ensure medicaid expansion would not only be good for americans health but for the health of state budgets. a new report from the kaiser family foundation shows just how

beneficial the expansion will be two states around the country. the report found over the next decade with the federal government paying for well over 90% of the cost, arkansas will reduce the uninsured population by nearly 150,000, louisiana by 270,000, maryland by 140,000, pennsylvania by 310,000, and wisconsin by nearly 125,000. i blocked -- i doubt that a block grant would accomplish their roles. it would reduce uncompensated care costs through the medicaid expansion, over $25 million savings and arkansas, $180 million in maryland, over $875 million in pennsylvania, nearly $250 million adapter wisconsin. these are big, staggering

impressive numbers. even more impressive is that the report found that given the generous federal match rate expansion medicaid and it dramatically reducing would decrease the overall medicaid budget saving an additional $250 million in wisconsin and 1.7 $5 billion in maryland. i assume you can talk about the importance of engaging in detail of a comprehensive analysis of the medicaid expansion in arkansas and the conclusions it led you to. you think this would be a good deal for your state. " i think it will be a very good financial deal for the state of arkansas. >> these expansions are going to be a good deal, but it seems to me that the three witnesses at the center have an ideological feud that they would like to be

redone. the affordable care act is an important piece of legislation. since your exchange planning as well under way, i understand insurance companies are sending in a great number of letters saying they want to sell insurance in the states. i am curious to know, are you concerned that insurers will not show up, or do you think they will show up? >> we have gotten more insurers interested then serve the market now. we think under the affordable care at the will be drawing new ventures in maryland including plans very focused on better health, improved value. it will be a positive for the market. >> we have more insurance companies willing to offer insurance policies at competitive models for the

consumer choices going to be more successful under the circumstances. i submit that the competitive model that mr. greenstein indicated he would like to see, which is called a consumer market driven health-care reform, is not going to work for medicaid patience. nobody will be vying for the medicaid patience. the aca has been off for nearly three years now. it has an impressive list of accomplishments. basic reforms are still ahead of us. over 30 million uninsured will get quality affordable care, etc. many of us fear the purpose of this hearing is to say we cannot look forward. we cannot implement a lot. somehow we do not have the affirmation needed to do it. that is flat out wrong. it seems to me this is the latest approach to try to undo the affordable care act.

republicans have failed to repeal the law. they did not win the presidential election. they did not find a law was unconstitutional. let's not buy into the next line of attack that the law must be delayed. let's let's -- let's recognize that the lot is a law the land. it has seen a great deal of success already. i think this hearing is a groundhog day congress over and over and over again. we cannot work. we cannot do it. we cannot afford to cover people. our debt is too great. time hasntleman's expired. >> with a second. if we are going to have the witnesses respondent, then i am going to be built respond to them, i presume? my time is expired. i had the opportunity of my time

as i saw fit. i do not think this is an open question to have witnesses respond. i would like to respond to them. you do have other members waiting for you. >> i do think as a matter of courtesy that we ought to allow our witnesses to respond. that has long event -- that has long been the practice of this committee. we will recognize mr. murphy and mr. smith. recognized you're for five minutes. >> thank you mr. chairman. -- thank you, mr. chairman. you recognize that this is the law of the land. am i correct? >> yes. >> are you trying to stop or undo its implementation? >> i do not think anybody is trying to stop anything. we're trying to make sense of it. >> i want to ask about a number

of things you said in your testimony. you identified a number of problems that pennsylvania is having. and number of the queue problems i wanted to ask about, you mentioned that we have the chip program, the children's health insurance program in pennsylvania. you feel that it works in a less costly manner, and it has a good quality in the program. is this something that you're able to ask the waiter to use that instead of the olver program -- the other program? >> i do not know of any waiver to be able to make that change. >> is that something that you recommend that congress would address in terms of implementation at? >> if things are working in the state, it should be kept that way. >> are you aware estates being allowed have waivers if they think they have a program that

is working well? >> there are a wide range of waivers that are available for states. one of the things about the changes in the law that brings the chip kids into the medicaid program, their younger siblings are eligible for medicaid. one of the reasons for the changes is to put families together. right now, we have children's in the family -- in the same families -- >> i know when we did the prescription drug bills for medicare, pennsylvania already had a program. we were able to work in the legislation to make sure it worked smoothly. that might be something we would want to work on in the future. mr. alexander, you said you cannot use an asset test. what do you think is the benefit of having an asset test? >> an asset test is a program integrity tool to be able to ferret out illegal families or

individuals have high incomes or assets -- assets that they should not be on the program. if somebody owned a large home and cars and they had these assets or specific accounts, we would be able to utilize them, in this and we do with food stamps. >> you like those same rules to be able to apply it? >> it should be an option. >> how about presumptive eligibility? >> it is another program integrity measure to be able -- presumptive eligible people presume that people are eligible. we do not have guidance from cms as to who would be on the hook for that money if these individuals leader on are found not eligible. would the state pay the bill?

would the federal government be paying that bill? i do not think anybody should be paying that bill. >> i assume you ask for the same sort of assistance for adoption a passive and medicaid renewals, duplication of efforts, one- size-fits-all -- those are areas, are you asking that one of the things we should do is either find out we are missing something in the law, an absence of that, to look to this committee to pass rules that would help you to that? >> i think that would be very helpful. the more you engage the states, the better. we know how to run these programs. the more information you have from all the states, it would be very important. the purpose of these programs is to provide quality care to low- income individuals, and we at the state level have to be vigilant in terms of being able

to prevent people that have to make -- the ways and means to provide for themselves. >> mr. smith, any comments? >> i would agree with secretary alexander. he summarized it well. >> the other witnesses? >> i would echo that sentiment in that every day with a finite budget, we do not have the option to run up large deficits. we have to balance our budget every year. if there are resource decisions to make and how we allocate those resources, we would like to see the resources focused on the people who need them the most rather than those who have the means to pay for the care of themselves -- pay for the care of themselves. >> mr. chairman, -- i would ask that you would submit in writing some of the

recommendations made by the witnesses? >> the record will remain open for 5 legislative days for witnesses to submit. the chairman -- >> i thank you for your courtesy. i appreciate you being here this morning. i have the following questions to be answered yes or no. recently, we have heard a lot of talk about a $63 aca fee. is it a tax? >> no. >> it is not in the irs code. >> no. >> cms has the authority to set this feat through aca. is that true? >> dez. >> it sets up a total amount to

be raised. is that correct? >> yes. >> this fee will be $63 in 2014, and lower in each year after. is it true that this fee is short term and will be dwindling? >> yes. >> i want to make sure that i understand this correctly. the fee goes into reinsurance fund that will stabilize premium costs in individual insurance markets. is that correct? clacks yes. >> this will help aca to provide money to insurance companies to deal with a large -- to deal with large amounts of global population, those with pre- existing conditions and high health care costs. is that correct? >> yes. >> this fee will lower insurance premiums in the individual market because insurers will not

have to factor in the cost of a disproportionate, high-cost of enrollment of high risk patients? >> yes. >> isn't it true that this will benefit employer plans and employees with stable prices because they blogger have to pay for the cost that occurs when there are people out there without insurance or the means to pay for health care. yes or no? >> yes. >> at the end of the day, our constituents with pre-existing conditions are covered and by so doing we actually lower and stabilize the costs of health care for all of our citizens? >> yes. >> thank you. i want to say a few things. we have the law of the land. i am hearing no end of carping and complaining about it. the hard, simple fact of the

matter is that health care costs in this country are running away from us. they will destitute the nation. we have to do something to get it dealt with. we have to get all the people covered. we have to see to it that we deal with the problems of inadequate health care for our people in the future. this is a very serious matter. it is going to attack almost every single program including medicare and medicaid and the costs that the states are being compelled to meet with regard to medicaid. i find myself very distressed because i feel that i'm in the company of a bunch of people who are looking at the doughnut and seeing only the whole. -- only the hole. we confront a situation where we have to address these situations by making intelligent investment one thing that terrifies me is that allow people in this country who can look and see the

costs of everything, they cannot see the value of anything. the value of what we're trying to do is to see to it that everybody house health care, to see to it that the health care of this nation is affordable and available to all of our people, and to see to it that the people of this country have a system which makes available to the ordinary citizen the right of health care. it is in my view are right. it is not a privilege. there are a lot of people who seem to look at it as a privilege. i am hopeful that we will look at this as an investment in the future of the country. we will try to do something to see to it that health care in this country, which is the greatest in the world, is shared amongst the people and they are

not denied this and they are not dying because they do not have health care. i hope that this hearing will lead us to an understanding of these points. i yield the balance of my time. >> the gentleman yields. i will recognize the gentleman from louisiana, dr. cassidy. >> just so folks know, we have some implied accusations that some of us do not care. i am a doctor who on tuesday and monday will be in the hospital for the uninsured. this includes medicaid. i just want that on the record. i have a lot of questions. clear = =, i'm not mr./ coeh -- mr. cohen, i'm not clear -- will the money of the premiums going to help savings accounts, will that be considered in regards to mor?

medical loss ratio, -- use it i am saying. >> to the extent that it is spent. >> so if somebody does not spend the money, the insurance companies do not get credit for an expenditure? >> that is right. >> if somebody is frugal and does not buy an overpriced good and takes care of themselves, it keeps their weight down, insurance companies would be penalized? >> they are not penalized. >> you are going to take a portion of that. you're going to have them rebate that cost. >> the medical lost provision means that insurance companies have to spend 80 cents of every dollar on health care. >> it is only able the patient spends the money. >> we are trying to hold down

costs, but we are putting in an incentive to spend them the money. it is hard to keep a straight face when mr. wax predicts mr. waxman speaks about access to affordable care. the only thing i have heard about is that premiums have gone up by $2,500. dr. sharfstein, only 65% of doctors in maryland accept medicaid patients. that is a statistic i can give you the source from. how many of those medicare patients are unable to find a primary-care doctor -- how many seek their care in an emergency room? we know -- do we know those statistics? know i have a specific answer. >> i have limited time. i apologize. in maryland medicaid, i assume there is no deductible.

you guys make out like a bandit. if i was a big blue state, i would be all for this expansion. according to kaiser family foundation, you will save hundreds of millions of dollars over 10 years. let me put myself in the role of somebody i might be seeing tuesday morning in the hospital if i work in maryland instead of louisiana. you're making 140% of the federal poverty level. i have a $2,000 deductible. on the exchange. i paying $600 a year. do you think that a family at 140% of federal poverty can afford that $2,000 deductible? >> my perspective, this has a lot to do with, compared to what? 140%, there is no access to medicaid. >> i thought you say -- said -- >> no we do not. they have no access.

we are able to give them affordable access to a subsidy. >> let's take a person at 140%. do you think we will be able to afford that $200,000 deductible? -- $2,000 deductible? do we really think that family at 140% of federal politics federal poverty can afford that deductible? >> we think there is a lot of value for them. we are working with some people in maryland to try to figure out how to develop an average plan that engages. >> even though it will cost them to thousand dollars. it is not a percentage but the dollar amount. when you're at 140%, $2,000, as will be $50. >> it is not every family that pays $2,000. >> only if day except the insurance portion. in your testimony, you stated

that the state of arkansas spent $500 million to implement this plan. >> know, that is not correct. the testimony says that the legislature will have to opt -- will have $500 million for the second half of this year 2014 -- that would include almost all federal funding. >> that will be all federal dollars? >> almost all federal funding. ok, so they have to appropriate federal dollars. >> correct. >> the economic aspect of that -- let me point out, the kaiser family foundation study this. it said it would cost louisiana $1.8 billion over 10 years. arkansas, $1.2 billion. that is assuming that we do not have to raise taxes on the federal or state tax. to pay for this extra money which is an assumption which

seems a little silly. i yield back. >> the chair now recognizes the gentle lady from california. >> thank you, mr. chairman, and to all of our witnesses, thank you for your testimony and availability today. i want to give it mr. kaelin just a minute to respond to the previous questioner. the question about the medical loss ratio. >> what we have said is that 80/20 rule says that insurers have to spend 80 cents of every dollar on a tear. -- on care. >> thank you very much. i want to address some questions. the affordable care act includes a provision that will bump up a

payment for primary care providers in medicaid to the rates we currently paid -- paid to medicare. on average, this will approve reimbursement by 67% on average nationally. my state of california, the increase will be even more important when 113% increase for current -- from the current reimbursement. could you explain ball -- by raising metic -- white raising reimbursement for medicaid providers is so important? >> in the medicaid program, any changes in the health care market more generally, the appreciation of chant -- of primary care -- that is to avoid catastrophic care. people meet regularly primary care. what this boost does is encourage more primary-care

practitioners to enroll in the medicaid program, participate, and to provide a greater share of their hours of service to medicaid beneficiaries. we are very excited about the opportunity to expand and deepen the access, particularly around primary-care. >> a share your belief in that. as i understand it, the research on provider rates shows that faced with higher rates, that has a greater numbers of a provider's accepting new patients. given that, do you think that increasing rates to medicare levels for primary-care physicians will both increase the number of physicians participating in the program and allow some that are already hard as any to increase the number of medicaid patients they see? >> madieu think it will boost participation. i think there is a general agreement that will boost participation.

i think that rates are one of many factors that help us make sure that we have a good provider participation rate. this will go a long way to insure greater participation, particularly in the needed area of primary care. >> as you know, there is a lot talk from some in congress that the medicaid budget should be used to pay for sgr > i have consistently voted to get rid of sgr. this before idea is foolish. this literally incentivize providers to take care of senior citizens rather than the poor. the health care community agrees. >> i appreciate your support for entering the good primary- care in the medicaid program. >> when states expand medicaid, they pull in federal dollars to provide health insurance to millions of people.

right now, these uninsured people are relying on health care. many of our states cannot afford to do this and they're cutting. what states be able to save some significant dollars in their states -- state budgets? the net cost of expanding medicaid could be quite negligible or even a gang? >> i think that is absolutely correct. different states have done their studies. a different organizations have done studies, and it varies by state, but the amount of the increase overall, under the kaiser study that people have been citing today, the medicaid expansion is less than one-half of 1% in terms of the impact on the budgets. then as you say, there are offsetting savings. uncompensated care will be reduced, and governor said of all came out in this week in support of the medicaid

expansion. he cited in nevada the reduction and mental health services. those are funded by the states. that gap will be felt in the medicaid expansion. >> thank you very much. mr. chairman, as a close, i ask unanimous consent to enter the following letters into the record. a letter from the majority of our nation's physicians and a letter from the -- a letter from the california children's hospital. >> without objection. so ordered. i would like to insert into the record a letter from the governor of my state. we have had several states to testify here today. governor perry wrote a letter on the subject. i would like that part of the record as well. so ordered. >> mr. chairman, thank you so much. i want to thank all seven

witnesses for bearing with us. my question is over a concern that i have in regard to the exchange's and the authority of the secretary in regard to will making. i am going to direct my questioning to the secretary of health services in wisconsin, mr. dennis smith, and hopefully we will be able to get all this done in five minutes. the recently released information regarding health care quality for exchanges on november the 27, it specifically mentions a section, 1311 of aca, which directs quality health plan issues and improvement strategies as directed by the secretary, specifically subsection 8 of 1311 would allow the secretary to prevent physicians of treating patients in exchange unless they

implement such mechanisms to improve health care quality the secretary may require. physicians must walt -- must follow quality directives as defined by the secretary or lose their business. mr. smith, are you aware of this provision? >> i am not familiar with that section. >> let me ask you this. in this provision, you may not know this either, but the word quality is not defined in the statute. it is safe to assume that the secretary, not just secretary sebelius, but every sect -- but every sec -- but every secretary to follow, will be able to define for regulation what that word quality means. yes or no? >> i believe that is the correct interpretation. again, we have tried to introduce quality performances

into a variety of parts of our programs, both in managed care, both in the fee-for-service world, and this is another one of our concerns that we will have states with standards, and the federal government with service -- with standards. >> this is a huge concern. i know what quality means with regard to the specialty of gynecology as defined by the american college. it is the same thing for the american college of surgeons. they define quality. if the secretary decided to use this provision in the law under 1311 h, -- she or any secretary could use this provision to determine, for example, mammographies for women under 50

are not helpful. what a physician be able to treat patients in the exchange began a prescribed a mammogram for a 49-year-old woman? can you answer that? >> i do not think i can. >> i can answer it for you. the answer is no. if the secretary decided that physicians who provide abortions were not providing quality health care because they endangered the life of the job, could the secretary ron those who provide abortions a business? i'll answer that for each too. in answer is yes. i believe that this language would allow the secretary to control what physicians prescribe, what health care patients can access. is there a single person in this room who thinks that the secretary should have that kind

of authority, whether it is a republican or democrat? i have a bill, 6320, which repeals this clearly dangerous provision. a plan to reintroduce this bill in the 113th congress. i hope that this committee in a bipartisan fashion can work together in this effort. look, i do not know whether this section was an intentional provision or an unintended consequence. i would rather like to think it was an unintended consequence. this is the thing you get in at 2700-page bill that you have to pass and then finally find out what is in it. maybe you like it, and maybe you will not. this clearly is a provision where any secretary of health and human services can pretty much determined what the quality

of care is for physicians, providers, in one of these exchanges, in the 50 states and territories and the district of colombia. when each specialty society has a clearly defined what is quality care, yet the secretary can now say, well, you're not providing quality care, as determined by me under section 1311, and therefore, you are out of business. you cannot be part of a panel in the exchanges. this is clearly wrong and has to be repealed. mr. chairman, i have probably gone a bit beyond, but i yield back. i would remind my colleagues, my bill repeals that section. hopefully, we can get that done. >> the gentleman yields.

the chair recognizes the gentle lady from wisconsin, miss baldwin. five minutes. >> thank you, mr. chairman. i am very proud of the work we did in this committee to pass the affordable care act because access to affordable health care is an essential pillar of middle-class economic security. many states are making very impressive progress in moving health care reform forward. we heard maryland and arkansas, two great examples of two states who have put politics aside and are doing the very hard work involved in implementation because they know it is the right thing to do for the families and small businesses and others in their state. while the states have moved forward and others have, i have been concerned about my home state of wisconsin and the way it has been holding back.

earlier, wisconsin returned an early innovator federal grant that would have enabled our state to build a wisconsin-run health insurance exchange. building a state-based exchange in my opinion would have provided families and businesses with more courses for the quality coverage that our state has been known for providing to our citizens four years. i am committed to bringing people together and working collectively to make our nation's new health law work for my home state and other states. our state has a strong tradition and history -- the secretary -- the secretary talked about that, about being a national leader in advancing health care reform. it is my hope that we can continue in that proposition by extending our medicaid eligibility so that those who

need health coverage the most have access to it. secretary smith, you mentioned in your testimony, and i read governor walker's comments yesterday, that he has not yet made a decision as of this moment of whether our state will participate in the medicaid expansion. is that correct? >> that is correct. >> i want to tell all looked deeper in terms of the timeline for making that final decision. i know you had some press availability as today in our state. -- yesterday in our state. he made some comments that concerned me. you said the math will not work out, and yet the state has not yet completed its finance -- financial projections. he made comments about still continuing to build a model. yet, you say it is a straightforward calculation. based on those concerns, what is

the timeline that to contemplate for doing that? >> thank you. if i can clarify, my comments about the math were very specific in terms of whether or not the federal government would balance out the childless adult population. we have about 21,700 jobless adults -- even we get 100% for them, that is not going to offset the costs of all the new people who would come in to the program. that is what my comments were about. >> in terms of the timeline for the overall calculation that you need to do, how soon can we expect to hear? >> the governor -- he will include in the governor's budget whether that decision, whether

or not to expand. >> when the governor's budget is released, that is when he will announce the decision. thank you. i just want to repeat that i believe it is crucially important that our state expands the coverage. according to the kaiser commission on medicaid and the uninsured, over 200,000 wisconsin heights -- wisconsinites the game coverage under the expansion. if it is on certainty that we are concerned about, surely those 200,000 people desert the certainty of knowing that quality and affordable care will be there for them. we know the impact for those people. accessing preventive care, that can forestall more expensive and costly and sometimes deadly illnesses. 200,000 people who we hope would be living healthier and more productive lives, they are

better able to manage chronic illnesses that they might experience. with 100% federal funding for the new medicaid population for 2016, then phasing out -- facing down to 90% funding, our state could save one quarter of a billion dollars in medicaid costs. they could say another quarter of a billion, $250 million, in uncompensated care costs. on that topic, although i see i running out of time, i was going to ask director alice and to talk more about some of the other savings that you have realized in your state of arkansas. given that i have run out of time, we will follow up in writing afterwards. thank you. >> we will recognize the gentle lady from illinois.

five minutes for your questions. >> thank you, mr. chairman. first, i want to thank the director for working with cook county on a waiver that will allow for the county to early enroll more than 150,000 individuals who will be eligible for medicaid in 2014. you have given us the opportunity to get a headstart. thank you very much. i want to set the record straight on a couple of things. there was some talk about the costs for illinois. the federal government is going to provide almost $157 million to illinois to support insurance coverage for 898,000 illinoisans. that would reduce our uninsured

population by 50 percent. illinois will save $953 million in uncompensated expenditures, and there'll be some increase in the cost for eleanor, about 1%. look what we are getting. it is a miracle to me. i also wanted to point out that in terms of the overall increase in insurance costs, yes, costs have increased, but less than the for the affordable care act was passed. the aca saved an estimated $2.1 billion in health insurance premiums through the medical loss ratio and rate review provisions. almost 30 million consumers received a check because insurance companies spent too much money. right review saved consumers

about $1 billion, in individual and small group markets. these are victories. a number of people have talked about the problem -- that somehow it's horrible care act messes up your opportunities to get rid of fraud and eligibility requirements, etc.. i wanted to talk about pennsylvania for a minute. my understanding is that in the late summer, the pennsylvania department of welfare began and a fine hundreds of thousands of families by mail that they had 10 days to provide necessary documentation in order to keep their children enrolled in medicaid. if family missed the deadline or even a bill they met the deadline but the department of public welfare failed to process the paperwork, they would drop the medicaid, and in fact, 89,000 children were dropped. here's my point. are some of these problems an

excuse and the opportunity to set up barriers to actually about people from the rolls? i think it is completely unfair. mr. alexander, you have an opportunity to answer. not only do you have 10 days to keep your children on medicaid, but if we cannot process your papers, then we will bump you medicaid, and that happened to 89,000 children. i think it is a fraud to do that to children. what did you think? >> thank you very much for your comments. when we arrived, and i arrived at the department, we had hundreds of thousands of cases

that have not been processed in years. there were left piling up in county assistance offices. it is our duty as a state, where mandated by federal law, to follow the law -- to follow the laws that you passed. >> detente days? >> we went through meticulously to make sure that which every family was eligible was eligible, and whatever family was not eligible was not eligible. this was not about children because we determined that as a family -- we're talking about families and individuals, not just children. >> my understanding is that the 89,000 figure represents only children. >> there were much more than 89,000. let's get to what we did do. we meticulously went through -- we sent them notices through federal law, we followed the

law, and the regulations. >> ten days? >> we sent them notices. if they did not reply, then they were terminated. if they did not reply within the accounted time -- we give them every chance possible. even after that, we had done our reach. >> what if you could not process? my understanding is that if the department failed to process the paperwork within 10 days, they were dropped? >> that is incorrect. by law, it is a 30 day time period. we give them ample time. it was extended past 30 days for them to be able to contact us. we told all of the families that you come in and contact us, we will get you right back on the program. the point of the matter is,

congresswoman, when you come into a department like this and you have hundreds of thousands of cases that have piled up, there is a problem. we have a process that is given to us by congress. we follow those laws. we have state rules and regulations that we need to follow. if somebody tells us not to follow the laws and the pass laws to that effect, then we will do that accordingly. we followed all of the rules and regulations. we reached out to the families. every one that is eligible for medicaid, we want to be on medicaid. if you are not eligible, and we do not want you on the program. there is a difference. we are here to serve as the truly needy, eligible families and children. >> can i just say, with respect, i have different numbers. i would like to submit them for the record.

>> the chair would entertain a glance at those records. >> thank you very much, mr. chairman. i want to talk about two issues. these involve estates and dish payments. a major when crafting the aca that my state, new york, whic is a do-gooder state, was not penalized. also for dish, i wanted to make sure that york city was not penalized. the new york medicaid program already covers most categories of individuals beyond the expansion threshold in the affordable care act. however, it is projected that after the aca is fully

implemented in new york, 10% of our residents will still remain uninsured, which means that dish funding will still remain important. i know you and i spoke about this a few weeks ago. i just want to reiterate how important this is for states that already have a broad -- that are to have broad eligibility for medicaid programs -- already have the eligibility for medicaid programs. as you know, that is a very big concern of mine. let me ask dr. sharfstein and dr. allyson, can you talk about a declining funding for uncompensated care and dish influence your decision to push the medicaid expansion in your states? >> just to give one example from

maryland. we have a unique way of funding uncompensated care, about $1 billion a year in uncompensated care goes into a pool on hospital side. there is about a 7 perce assessment that goes on in every single persons hospital bill in the state for every service that pays for that uncompensated care. when that goes down because more people get covered, everybody benefits. small businesses, individuals, the state, it is one of the factors that we used to see. maryland is very explicit. you can see the specific savings that will accrue across the state. it is eliminating a hidden tax. >> we estimate -- so far, we have found about $90 million per year that the state -- that the state has spent on on medicaid programs for uncompensated care. -- non-medicaid programs for

uncompensated care. we estimate that at least half of that would be diverted to the state general fund as an offset to the medicaid expansion, which is not very different from the urban institute's assumption. >> as i mentioned before, new york has worked hard to ensure that low income and a vulnerable new yorkers have access to health care services by expanded eligibility for medicaid beyond the federal requirement, even prior to the expansion in the aca. i know that federal support for newly eligible populations is incredibly generous and the law includes provisions to benefit these states. the reality is that new york will not see the same federal support as other states. regardless, i am proud of the fact that new york intends to further expand its medicaid program to meet the aca threshold of 138% of the federal

poverty level. it is estimated that new york will save $2.3 billion a year as a result of this enhanced federal medicaid support. with the government providing 100% of the funding, newly eligible populations for the first three years, and providing at least 90% of the funding beyond, i cannot understand why estate would choose not to provide health care coverage for its neediest citizens. let me ask dr. sharfstein and dr. allyson -- you stated, expanding medicaid is the best decision for maryland providers. can you elaborate on the input received from health care stakeholders' regarding the expansion? >> after aca was passed, the was a process that involved hundreds of maryland years -- marylanders, the business community, health care

providers, and there was a consensus that inmates -- that it made sense to expand coverage. it improves health outcomes, and it would have a great impact economy and health system. maryland has moved from that point based on the input we received from across the state. >> dr. allison, what input did you receive from sticklers regarding the expansion in arkansas? >> virtually all stakeholders have come out in favor of the medicaid expansion. they understand the good it would do for their patience. they understand the harm it would do to them if it were not extended. >> ms. mann, did you want to make a comment about what i mentioned before about states not getting punished if they expand their eligibility? >> we have other members that

have been waiting a long time. the gentleman's time has expired. >> thank you, mr. chairman. i appreciate this hearing. with tomorrow being the deadline for states to declare their intentions regarding the aca exchanges, i would like to focus my time on the questions that remain with regard to the functions of these exchanges. my time is limited. [indiscernible] how to provide for uninterrupted coverage for those changes within the course of the year is due to fluctuations in income -- the statute is not clear whether

consumers would be able to maintain existing coverage or if they will be required to move between private coverage in medicaid if their income shifts throughout the year. this potential could place administrative burdens on consumers and plans, but it could also threaten continuity of care as consumers move between plants within different networks. it could lead to adverse health outcomes to the beneficiary. i guess i would direct the question -- could you provide some clarity on this issue of how these individuals would be assessed and how the system can best maintain continuity of coverage for people? >> it is a very important question. the affordable care act and the regulations ensure that there will be continuity of eligible the if income changes. the roles in the law pretty

explicit about ways in which there should be no gap in coverage if somebody's eligibility changes from the medicaid to the exchange or vice versa. there is the issue of continuity of plan and provider. in our recent questions and answers that we released on december 10, we gave three options for states to consider to try and minimize this destruction of care. one of the first things of that state can do it they are running an exchange is that they can have the same plants doing business on the exchange as they're doing business in the medicaid and chip program. families would have the opportunity to stay in the same plant. we also have a premium assistance options that states can use inside their state. this is a way of ensuring continuity of coverage. they can purchase the coverage for medicaid are chip eligible

person by contracting with a qualified health provider that happens to be doing business on an exchange. if that individual's eligibility changes, they would switch to a tax credit for medicaid, but they would not have to switch plants. >> thank you. another question i want to mention -- my home state of utah is one of several states trying to decide which health exchange approach is best for our citizens. our governor has raised questions with how different approaches may operate. if several states should band together for a multistate exchange, what role with state regulators to play in enforcing the law? >> state regulators will have the same role that they do today in terms of revealing -- in terms of reviewing policies to make sure that they are existing -- and compliance with existing

laws. there should not be a change in state regulators in a multistate exchange. >> is that the same for the federal exchanges? >> yes. >> to stick policy makers relinquish any of 40 influence on operating the exchange -- do state policy-makers relinquish any of their influence in operating exchange? >> i think we will be interested in working with states to make the exchange's work best for their state, whether it is a federal exchange or not. i think that there are some important decisions that states get to make themselves if they are in a state exchange or state partnership exchange. for example, one example is just how the thing will be funded. we proposed one funding mechanism which would work in

the federal exchange, but states can use a different funding mechanism. >> dome, mr. chairman. -- thank you, mr. chairman. >> five minutes for your questions. >> i appreciate your being here. i know it has been a long day. mr. chairman, i will yield my time to you for questions that i believe you may have. >> mr. smith, and again everybody on the panel, thank you for your indulgence today. we invite smart people to come and tell us what they think about things. if there is an opinion that needs to be offered, i believe it should be offered. mr. smith, a long time ago, mr. waxman offered some comments to which you wanted to respond. i know we have removed the immediacy of your response, but you have comments, we would love to hear them.

>> i appreciate that greatly. it is great to be with a lot of smart people. the question about the block grants -- i wanted to respond in a couple of different ways. first, chip is a block grant. it was one of the most successful programs that everybody has claimed great credit for. there are different forms of block grants. there is a per capita approach that during clinton's administration, clinton officials supported that type of approach. the block grants themselves for states -- we do believe we can run these programs more efficiently and more effectively than under federal rules. first of all, more than half of medicaid dollars are spent because states have expanded beyond federal requirements.

we have added eligibility, benefits, well beyond what the federal law expands. again, the perspective that if the federal government does not required, the states are not going to do it, the history is actually the opposite. states have expanded beyond what the requirements are. we believe very strongly that states can be trusted. most of the money in the people who are either senior citizens needing long-term care or individuals with disabilities. in wisconsin, we have lowered the cost of care because we have been able to offer waivers but people into private-sector, managed care situations. again, regular medicaid fee-for- service is the most expensive type of care, and in many cases, it is the least prepared because the care is not being provided.

from my perspective, when i look at all of these dollars that are being spent, under the different formulas that have been offered which guarantee federal dollars, growing by population, at least in medical cpi, i say absolutely, i can make that work. if my federal dollars are guaranteed, i become more efficient. therefore, it actually increases the federal match rate. the state match goes down. absolutely, we can make that situation work. again, i go back to the very beginning, before legislation was put out, in december 2008, chairman baucus of the finance committee put out a paper to saying that the $700 billion in excess spending in the health care system -- for medicare and medicaid, government spends almost half of those dollars.

medicare and medicaid and therefore do indeed have to be brought to the table. there is a great deal of order -- of all realization in the system. -- overutilization. we have been going after the excess costs in health care. that is what we have done in wisconsin. >> i was terribly disappointed to hear mr. cohen's response. i sat on this committee with you. the affordable care act was supposed to bring health care costs down. if we want to bring costs down, we would have invited the governor mitch daniels to this committee and asked him how he did that in his state. 11% reduction in two years. he did it withheld savings account for his employes which was voluntary. he found out that when people

spend their own money for health care, something magic happens. it sounds like from your interpretation of the medical loss ratio, that effect will be lost. it is one more failing of this very large lot -- large law. i will yield back my time and recognize the gentle lady for five minutes of questions. >> thank you very much for your patience and being with us today. i am proud of the work this committee has done on an affordable care act. i want to see everyone of the over 30 million people who are going to receive coverage, receive coverage, including the receive coverage, including the 20 or so