respect to the nongovernmental half of healthcare spending. medicare cannot pursue policies , thethe long run challenge facing medicare will depend on our ability to adhere to the discipline that has been contained in the affordable care act which in turn will require a significant transformation of the existing payment and delivery systems. dividers will have to improve -- providers will have to improve productivity and there has to be a willingness among employers, unions, insurers, and other private sector players to join forces with medicare and demand systematic change. the big question for the future is whether initiatives in the private sector will complement and reinforce or undermine the

fiscal restraints that medicare is attempting to introduce on health care costs. even with a unified and concerted effort, further mages -- major legislative initiatives will be required and the sick checker -- the secretary has pointed that out and put for the administration's proposals. this will be required if we are putting medicare on a sustainable, long-run path path. let me close by saying as someone and probably the only one here on the platform who has been up close and personal with medicare now for 10 months and with social security for a bit longer, i can attest to the critical importance of these programs and the need to ensure that they are made sustainable for current as well as future generations and beneficiaries and taxpayers. thank you.

>> [inaudible] >> it is on. can we discuss the recent slowdown and the role it has played in recent projections that whether it is a permanent if wet for medicare and could hear from secretary sibelius. lex i think that there are some recent reports, economists who have looked at now what is the third year of significant slowdown in health care costs not only in medicare but in medicaid and the private health the most common interpretation is that while was of the early slowdown

thought to be contributing -- contributed to our the recession, that as these costs -- cost reductions are sustained and if you look at the publicist your -- if you look at the public sector which is list -- less influenced i recession, the framework is having a significant shift in cost. the lastspending over couple of years since the affordable care act was passed and now at 1.7% growth per beneficiary significantly below dp. medicaid spending over the last year is down almost 2% which is almost unheard of. in both of the sectors what we're seeing is some sustained cost-reduction.

the president has put forward some additional suggestions about cost-reduction and i think more exciting in the future is there is significant transformation going on in the delivery system. you heard that we wait to see if the private sector mirrors the public sector and i think what we're finding is that there is a significant reform nation of the private and public sector in terms of how payments are going to be made. accountable care measurements -- organizations, measurements around hospital readmissions, medical him -- medical home models, changes in delivery that could make sure that there are significant continued decreases in the underlying health care costs. >> just to reaffirm what the

secretary said. there is growing literature on this question and it shows that andwhere between one third 75% of the slowdown is attributable to the economic difficulties of the last few years. i think the most careful analyses are those that get a smaller number. somewhere between one third and one half of the slowdown. for us should not be looking in the rearview mirror and saying, let's explain the past, but what does the future look like, and because of the restraints included in the affordable care act, which will build over time, and the structural reforms that that act is encouraging, there is

reasons i think to be quite optimistic. the question was, how much of this is built into the forecast and projections that we have produced in these reports? the answer is that less than expected amount of spending in 2012 and 2011 clearly is a reflection of what has happened in the affordable care act and the small effect that the economic down turn has had in demand by individuals who are disabled over elderly. it is hopeful that going forward this is going to build the important thing -- this is going to build. the important thing for my perspective is what is going on in the private sector.

that there is not a hospital or physician group or an insurance company that does not have a lot of initiatives going on. what isit is applying low hanging fruit such as was reported in the article yesterday in the new york times --ut hospital employer hospital acquired infections and what one can do to reduce him. there is a lot of interventions that are being experimented with, many will fail but some of them will be successful and i think will have significant impact. it would be inappropriate for us to build our projections on hopes and expectations in a very uncertain world and so relative to what was built in

when the affordable care act was passed, my judgment is we have been very cautious and modest with respect to the changes that seem to be going on. >> thank you. >> can you tell us about the disability program area does the administration have a strategy to solve insolvency by possibly combining it with an old-age survivor program? >> this is consistent with what we have seen in the past trade we have proposals in our budgets that would put in place program integrity. we hope those are adopted and i would go back to 1990 -- the 1990s when we had a similar experience and policy choices were made in time and there is a bipartisan approach that

addresses it going forward. >> i have a question for secretary lou and secretary sibelius. how will the slowdown in spending affect the budget debate we are having now? >> the slowdown in healthcare spending is important in terms of our health care system. our public health care systems and the overall health economy. i think in terms of budget debates whatever happens that reduces the rate of spending and makes the goals that we have set more achievable, and the past it has made it easier to reach the budget goals and i would hope that continues to be true in the future. >> i would just add that there is a certain irony in the continued approach to appeal the

affordable care act and capture the savings that are part of the structure of the affordable care act. ism hoping that as it demonstrated that some of that structure is not only benefiting the public health programs but in concerteding complement on the private side that there will be a more significant embrace of the framework to transform the underlying delivery system and use the payment levers as part of that transformation. shift dramatically and more quickly from the fee-for-service model to a more quality outcome which has been embraced by the private sector significantly before the public sector. by think in terms of impact on the overall budget, health is around 17% of gdp. certainly lowering overall

health costs and improving health outcomes is important for the economy. it is important for the rosperity of americans. >> >> is this the top irony for the president? >> the president has made clear for a number of years now that it very important to do with both social security and medicare. he has put a framework, a set of principles in place as to how to engage on social security. he has very specific proposals that would address medicare. our challenge is going to be the path -- to find the path to have this conversation in a bipartisan way. i remain hopeful that we will do that because at -- the comments that have been made earlier

about doing it sooner rather than later gives us more choices. and and him -- a very important one. we have the maximum range of options the sooner we address it. there is time but it is not free to wait. getting on with the discussion and -- in as close to a bipartisan way as possible would be very important. bank you. >> -- thank you. 2013me of the spring commencement speeches. and president obama talking about is a student loan interest rates. student loanout interest rates. >> what would the wor world be e if the confederacy was on the southern border of the united states of america? the united states from baltimore all the way down through around florida, down

around the golf coast and the end of texas, that would be a foreign territory. it would not be part of the united states. in fact to my the united states would have no real access to either the atlantic or the caribbean next that -- except for a narrow path from baltimore north as far as boston. they are not very good harbors anyway. the great coastal -- the atlantic coast is narrowed down to a point where it could be automated -- blockaded. everything has to be funneled through. the united states would no longer have anywhere near the presence in the western hemisphere in terms of healing with british intervention or french intervention. >> more what-ifs with author roger ransom. the history and literary life of palm springs, california. saturday at noon eastern on c- span2 and book tv.

and on american history tv. and american enterprise institute discussion on the cost of long-term healthcare. a panel of scholars discuss whether the government should finance long-term care or individuals should get coverage through the private marketplace. this is two hours. >> good morning. i want to welcome everyone here this morning. a discussion of long-term care. congress in passing the affordable care act including a

long-term care provision calls the class act. the class act was fiscally unsound. at least it measured over 75 years, and was put on the shelf and then at the beginning of january, the class act was repealed, and in its place in the classic washington tradition, a commission was formed, the long-term care commission. let me read some things from a political article that is interesting.

to set the mood here, the political mood. according to this article, the fiscal cliff law gave the commission six months to push together regulations for approving financing and delivery of long-term care services. the committee has not named a chair or vice chair. no one knows yet who is staffing it. it is not clear when it will meet. but there are some more interesting things here. the legislation, according to this article, and i thought this is true, the legislation does not provide any funding for the commission. i guess they found some money somewhere. but not a lot. it does not require congress to act -- that focuses the mind of commission. there is one other little problem with the commission, according to this article. this is a quote. there is also a question about

whether one member of the commission will have to be replaced. louisiana health secretary, selected by the senate minority leader o'connell, is stepping down or step down from his post amid questions about his possible role in helping his former company win a medicaid contract. it is interesting, the commission took three months to be formed, to be named, has not met yet, and quite possibly could be losing a member for it even sits down. this demonstrates the wisdom of will rogers who once said we slow down the aging process if we could have it work its way through congress. there is the light humor part of its presentation. the real reason we are here is that mark warshawsky, who agreed to serve on the commission on an unpaid capacity, a spirited

citizen, has written a nice paper raising issues, questions, and some facts about long-term care, what is it, who is affected by it, and how is it paid for. very useful paper. i highly recommend it. after mark presents his report, which i might add does not draw conclusions. it is very important to emphasize. mark is a member of the commission. he is not representing the commission, cannot, they have not met yet, and he is certainly not going to give you policy recommendations that reflect the

commission's views, whatever they might turn out to be. then we will have a panel. you have the bios available to you, but a quick introduction, howard gleckman, josh wiener, matt salo, the national association of medicare directors, and then stephen moses with a long-term care center -- >> center for long-term care reform. >> take it away. >> let's try to get the slide. ok, very good. thank you very much. i very much appreciate the opportunity to talk with you,

and i want to thank joe antos and aei for hosting me and the panel. i look forward to the discussion and hopefully this will be in the spirit in which i wrote the paper, which is really to as preparation for the commission and my role in the commission and perhaps am helped to the members to try to identify what are the issues and what are the questions, what oath we know, do we know, does the evidence indicate a direction we should look further into, or what do we not know at all about this very complex area of long-term care, the financing of long-term care, the provision of services, to a lot of different types of populations, disabled, elderly, and so that is when i was appointed as commissioner, i

want to think about these things and was moved to write the paper. i will share that with you today. the first place to start is looking at the aggregate data, and when i was looking for sources of both the spending on long-term care and also the sources of financing for long- term care, i was surprised that there really is not a source. you have to piece it together yourself. if it analysts do it in different ways, and this is the way that i found it most to do it. the source is from the national health expenditure accounts, and i basically had two numbers together. one is spending on nursing homes and the other is on home health care.

there is a clear delineation of where the sources of funding are. if you are to look at the latest data, 2011, the total amount that we spend on long-term care in the united states is about $225 billion, which represents about 1.5% of gdp. that number is a little low. i will state that off the bat because it does not include hospital affiliated nursing home expenditures. i did not include the hospital affiliated expenditures because i was not able to get sources of funding for that. this is a low number, it is probably more like $300 billion, and probably more like two percent of gdp. here i think at least we do get a sense of rate of growth and also in the next slide you will see the sources of spending. the rate of increase, you saw some very rapid increases in spending in the 1970's, 1980's,

through the 1990's, double-digit growth, 14%, 15%, at a rapid rise of gdp. one thing which i found interesting in looking at the date is the share of home health care that is represented by this data, and that shows also a very rapid increase from about 5% of total spending to about 1/3 of spending. the reason why i was motivated by that, and i was appointed commissioner, a lot of groups have come to me and i am sure my fellow commission members, even before the commission meets, the

people you can say our lobbying us, and one group which represents home healthcare providers said we need to spend more on home health care, and that would save us money. nonetheless, we see that there has been a rapid increase, and that is something we can look further into. the other day that i have put is the payment sources for the spending, and divided that into out a public and what the individual or the family spends out of their own resources, private insurance, and this is a residual in the data, and it is unclear to what is meant. you might think that is private long-term care insurance, but it is more than that. it also is any sort of medigap or other health insurance that might spend some money on long- term care, but we do not know,

and that is another source of something which i think is worth looking into. exactly what is represented by private long-term care insurance and what is other sources question mark and other major programs, medicare, medicaid, and other payers, and other pairs, in the past, before creation of medicare and medicaid, was some state and local and federal government programs, but also a in the amount was charity care, money from endowments and charitable sources of payments. as you can see that latter part, even putting aside the creation of medicare and medicaid, the source of charitable care has declined quite a bit. it is less than 5%. out-of-pocket has declined. i have not looked at overall healthcare spending, but that is in the ballpark, even what we spend on health care, out of park it is 15%, 20%, so it is an

interesting detail. more is paid for medicare and medicaid. until basically about 1/3, 1/3, and then there are other sources. it is worth spending just a second on medicare. there is a point of controversy about whether medicare should be included here or not, because some people say that is not really long-term care, it is short term care, and maybe for a very severely disabled people, people who are very frail and so on, but not truly long-term care. i find that not persuasive in two regards. number one is somebody could go into a nursing home and be there for two months, and either leave before they passed away or they

find some other source of care, and two months is short term care, but that is long-term care. nobody should doubt that is the case. i am not persuaded by this argument. the other thing is some people said the law said that medicare cannot cover people with permanent disabilities if they are not expected to get better. there is a lawsuit brought against the government on this point, and the government acquiesced, so it is currently the law that if you do not expect to get better, medicare will pay for your care. and up to the provisions of what medicare will allow. there, it is not a matter of short or long-term, it is a matter of that he care is paying for care for people who are permanently disabled.

so this is the data, and these are the questions which i have just looking at the data. what causes the rapid increase? it has come down, but it is still very rapid growth, so what has caused it? some people have said because the population is getting older. i think that is probably not true, but it is worth looking into. the reason why i have a doubt as to whether it is true is every study on the book will say people are less likely to be disabled, that the rates of disability have gone down, particularly among the elderly. as a demographic explanation -- perhaps looking at the timing, was it the fact there was the introduction of these new social insurance programs. is that what caused the rapid

increase in spending? the reason why i think it is relevant, it is an academic interest, people talk about converting this whole thing into another social insurance program, and we need to be realistic in terms of what economists and actuaries call moral hazard. the fact that you are in short, you are likely to spend, if you are covered for that spending, you are more likely to use it. it is an incontrovertible fact. it is worth understanding what the causes of growth are. as we look forward to what is the prospect in this area? what is likely to occur? in the year term, next two to five years, even looking into a

75-year-and-beyond horizon, it is worth considering what are the likely projections, the likely spending patterns. the reason why it is important to do this is because i think there is an aspect here of demographics, as a population ages, so we need to consider that factor as we consider this problem, as well as the mechanics of the provision of care. we need to look into that question as well in terms of is this a type of spending which economists call subject to the [indiscernible] disease, which is the notion that productivity in this area is much lower, because it is care provided primarily by labor, and there is very little capital involved in providing care of a long-term care nature.

does that mean that costs will rise faster, than other costs? and it plays out, and more important consideration over time. those are questions which the commission would be well served to look into. then there is the interesting part of spending, as i found home healthcare. it of motivation for looking carefully into that is that some people say that this is part of the solution to the long-term care problem, that we need to spend more on home healthcare, but i think -- and i am not an expert -- but from my reading of news accounts, there seems to be significant issues and terms of outright fraud in spending on home healthcare that there is no care being provided.

is that a significant part of the explanation for the increased? is this really a possibility for replacing expensive nursing home care? nursing home care is expensive, but the question is, is it a reasonable comparison to compare nursing home care for the same type of individuals and the same type of care, which is in fact going to be more or less expensive, because presumably, in nursing homes, they are economies of scale, by the nation of the congregation of people needing care in one location? you would think there would be some economies of scale. it is figuring that out will be an important issue for the commission. ok at the most, the porous, and severely disabled, there are experiments being tried that try to coordinate those sources of care, the home care and medical healthcare, it is called managed

medicaid, and what evidence is there that that it either saves money or provides better care? here there are significant dollars at stake. and then as i indicated, looking at that line in the accounts, called private insurance, what is behind that? is a private long-term care insurance or other types? that leads us into as we explore long-term care insurance, private long-term care insurance, and what that provides, and the nature of that insurance that leads me to my next big topic, which is the interaction of public and private insurance. there are many studies and in formal evidence in this area which i think again is worthy of further exploration, and further study.

the first is a study by economists, a series of studies come and a very carefully done simulation studies using the best techniques of public finance, economics. these economists are of the top of their game in terms of this work. they come up with a very strong conclusion. it is not empirical evidence, it is theoretical evidence, but they come up with a very strong conclusion, and they say the existence of medicaid crowds out the vast majority of population that purchase private long-term care insurance. they would say that that would occur in terms of [indiscernible] of income distribution through the eighth and ninth [indiscernible] of income distribution. that would say despite the best efforts of insurance companies,

marketers, so on, they are fighting an uphill battle in terms of the private provision of resources for long-term care, because of the existence of medicaid. because medicaid is a type of public insurance and it is insurance, even though it people think of it as a welfare program. in this instance it is clear it is insurance. there is baggage that comes along with it. you can only pay for nursing and home healthcare that is medicaid associated. some providers will not take the cake, so there is a limitation. this is a very murky area. there is a notion you have to spend down in order to become

eligible for medicaid, and steve moses will have a few things to say about that. i am learning literally day by day about this, but that is the reason why i bring it up, because the academic viewpoint, many people's viewpoint is that wealthy people, middle-class people do not go on medicaid until they become impoverished. so that is one very major point of view and thought. this is the second bullet here, not a study, it was one of my own little fooling around, and i just was on the internet and googled medicaid planning. you hear all about the notion of medicaid. when i googled medicaid planning, i got thousands of hits. there were lawyers and others who are offering their services telling people they can get onto medicaid. but there were no details, but it indicates that there is something to this, there is less

than one might think. the other day my parents are in an assisted living facility, and i am proud to say they are spending their own money for it. i was listening to tv with my mother and from the side of my head i heard the resident had him a medicaid planning. it is not just the internet, it is some of these spending a lot of resources, marketing to put an ad on the television. there's something that commission would be well served by looking into. there is another study which is a fascinating result. this is an empirical study by a couple of economists at the federal reserve bank of chicago,

and a colleague at the university of albany. if followed people and found who was to go onto medicaid, and they came up with an almost startling finding. that was that the wealthiest group got as much in terms of dollars from medicaid as the poorest. i mean, if spend down works, you would think that would be impossible, but that seems to be the finding. it is not a peer-reviewed paper and it may be revised, but looking at face value, it is a remarkable finding, and i think it is worthy -- the commission could invite the authors in and they could explain their methodology and the reasons for the finding. it could be that the spend down

does not occur in the way we think, or maybe that people do spend down, even wealthy people, and it is the case, another finding in the literature, that wealthier people live longer than poor people. maybe it is they do not have longevity coverage sufficiently, and because they live well into their 90's, they do impoverish themselves. this is something that we need to know more about. there have been many surveys done and they are currently being done by jeff brown, also somebody at the harvard law school, basically knowledge surveys. there's the notion of planning, or check only in putting working age population aside, looking at the retired population, do people have a good understanding of what the government will cover and what it will not cover, what the roles are, and there is seemingly mixed evidence about this. this is an important point because whatever the commission has recommended, the question is will it be well understood and well it the filtered appropriately.

knowledge is an important question. one study, which i will take the private authorship on, is an innovation in long-term care insurance, and it is what i call the like care annuity, which is accommodation of long-term care insurance, payments, combined with an immediate life annuity, and it is meant to solve a couple of problems with private long-term care insurance. one is that there is extensive underwriting for long-term care insurance so that people who are in poor health are likely not to be able to get coverage, and at the same time people are not

well covered for longevity risk, so the notion is if you combined the two types of insurance, you are actually, because of the nature of what you are hopeful will be the pulling of populations, and offer the insurance at a more reasonable rate as well as almost entirely eliminating any underwriting. so people who would need long- term care insurance cannot get it because they are in poor health would be able to buy this life care annuity and because of that, they get the long-term care coverage and bring down the price of the whole project because they're longevity is lower than others in the pool. could that play a role in this problem of financing long-term care? wrong button. here are the questions which are motivated by the studies and empirical work. brown and finkelstein have a

strong resolve, but it is a strong result. the commission might want to look in to the problem is not private long-term care insurance among which some people might want to blame, but maybe the problem is the government provision of insurance crowding out the purchase of private insurance. everyone would agree that what we really need to do here is provide -- get more private resources to pay for care. what is the evidence on medicaid planning? what explains this smoky area? is it asset shifting?

i want to know how states enforce the spend down, and i am very curious and it is a very confusing area in terms of one asset excluded is the home, but then the state and attach the estate of the decedent. how does the state get that money? the commission would be well served to study that. is it a problem of the wealthy getting on a medicaid a problem, a lack of longevity insurance? here i do not have time to go into the details on long-term care insurance, but there is some types of insurance which are called partnership policies, which is a partnership between the state and medicare and private insurance to those policies in terms of saving the government money? does it [indiscernible]

that would part use private resources to save medicaid money? i think we need to look into what are the current conditions in long-term care insurance. the market has evolved, has had some successes. some people will say it has had problems. we need to look into that. are there other combination thoughts out there? are they part of the possible solution? i am a fan of a life care annuity, and here is an idea, and it is the one idea that i will put today, and the rest are questions. i have a booklet which i do not know if you recognize, it is an aei publication from 1996, what should be the government's role?

i got this book on amazon. it had some interesting discussion and ideas, and mark's idea was it is almost an you will pay me a subsidy. the government save some money but there is an incentive to buy the private insurance. now there was some criticism from this proposal, mark's criticism, maybe josh's criticism, which said, private, long-term care insurance is an annual policy. what prevents somebody going on and saying that and dropping the policy the next year and pleading poverty and going on medicaid anyway? how could this be prevented? well, you know, 15 years later,

i have a solution to that problem and that is life care annuity because that is a one- time purchase and it's meant to be a lifetime coverage. maybe that idea could work or you know, we could try that as an experiment to see whether that would insent people to get these resources and not get onto medicaid. so then there's other evidence which is do more mt. policy and political arena. and that is, i'll mention two. joe did mention the whole class act, the class program, and it's a little bit of its history. i'll mention two more things about why it was such a failureful but nonetheless, even though i think many people recognized as it was being worked on that it would be a failure, nonetheless, it was included in the law. i want to talk a lit bit about that. the reason why it was a pail your as an insurance program is

that it was guaranteed issue, in other words, you didn't have to pass underwriting, and there were certain subsities in the program which were meant to, you know, basically encourage people who are already december abled to buy the insurance. you had to have very little attachment to the work force and so it was -- and also the benefit was less than most private long-term care. certainly less than the cost of care would be. it's basically, it was from $50 to $75 a day which anyone would say would not be an adequate benefit so it was not good insurance. so why were we even thinking about this program? the reason why it wasn't included in law in my opinion, maybe a little cynical, is that it raised, quote-unquote, $70 billion, according to the congressional budget office. and that was on the mechanics of the program were that you weren't getting benefits until you paid into the policy for five years. so a lot of money was supposed

to come in before money was being paid out and then the 10- year budget window, that was a net $70 billion according to c.b.o. but, and here's my criticism, that presumes that i want to buy,, $7 billion in our economy, in government budgeting, is a lot of money. you're talking millions and millions of policies being sold. is that a reasonable assumption? they were saying 6% of the working population would purchase this insurance. i.b.m. sells -- provides long- term care insurance to its employees at cost. no subsidy. they get 5% of their work force to buy very fine insurance.andto buy very fine insurance.

which, you know, i.b.m. does a good job as an employer of, you know, say tags good, fine policy. and i.b.m. employees are generally pretty well paid. many of them may be in the 80'sth -- 0th and 90 president percentiles of the income distribution. it's still a mystery to me as to why they came up with $70 billion but that's the reason why it was included in health care legislation because $70 billion was about 7% of the financing of the health care and it therefore kept tax increases and health care cuts that needed that would be need to made to finance tough reform lower than it would be otherwise. so you might say, why are we

talking about this? it's history. in washington we like to say, what happened three months ago is history. this is already two years ago, you know, it's ancient history. the reason why it's relevant is because the c.b.o. still scores legislation around town and are they going to be any better at anything that the commission might come up with in terms of scoring than they were two or throw years ago? i think this ecommission really needs to be quite wide eyed about that in terms of perhaps other sources of information on the scoring nature of that could be helpful to that commission. the other source of experience which i want to sort of introduce is the social security disability insurance program. again, in my paper, i go through this in more detail. i don't think i have time to go through all the details. but i think it's the closest analogy in the current program that there would be if there were sort of a social insurance program for long-term care. there are -- it's not a perfect fit but there are certain

analogies that i think are relevant. and therefore i think it's worth looking into what is the experience with the s.d.i. program. one thing is it's going bankrupt. today the trustees' report is going to be issued, i'm going to be curious as to whether last year, it was 2016, maybe this year it's 2015. it's going bankrupt, even in washington time, very soon. there's an explosion of spending on ssdi way beyond what the actuaries predicted, part of that is because i think there's strong evidence that the adjudication process, the very convoluted appeals process through the administrative law judges, seems to fare favor, there's a bias in favor of granting the claim and you know, i mean, that's a government process that presumably would be would need to be put into place for any long-term care social

insurance program. and then there are other regulations and so on which all lead to basically providing incentives for claiming disability in terms of making it easier for people who are above 50 to claim the incentive is to get onto disability insurance as opposed to claiming early retirement benefits and the relevance of this is, this is typical experience with government insurance programs. they always cost more than we think, than we project. it's hard to rein in spending when it does -- rapid spending when it does occur and i think again we need to be realistic about that. so the questions are -- that are elicited from this information, what are the sources of government expertise, scoring analysis in this area? you know, are there ways of solving this ssdi type of

problem or is it endemic to these type of programs. and then two other things which are not in the evidence but i think are important for the commission to consider, that is, another failing of classes is that it -- of class is it bined two different types of populations. one were severely december abled working age population and the other were the elderly, the retired elderly and people who are clearly not going back into the work force. my question is, do you have the same program cover these two very disparate populations, does that make policy, logical, sense? there may have been political reasons for doing that, but does it make sense in any other way and i think the commission would be well served to discuss that. and we started off almost joking abouter mission, i'm already --ying to reform it, on one ho

horizon. we have six months, i think the clock is ticking, i mean, it's, i think it's almost ludicrous to think we can even begin to have a discussion on one issue as opposed to all the questions i've posed within the four months remaining. so how do we get the commission the time it needed to really discuss and study these issues? there's also a question of how is the commission going to be run?

is it going to be run on a bipartisan basis? the way the law reads is that the recommendations of the commission are a simple majority. that is not to be partisan about it, but nine are democrats and six are republicans. maybe five. sol is that the way we want to run a commission and is that the way that is most likely for sustainable success in this area to be? i would say that no, it's not. we really want to run on consensus and i don't know if you want to formally say, indeed, 11 votes, 12 votes tombing a report or it's just a good understanding. then fenally, the staff i think is very important that the commission be staffed by nonideological and expert people and in that -- hopefully we can accomplish that. so that's my paper, i very much appreciate your attention. >> thank you very much, mark. i want to add a little addendum to your slide on long-term care spending. that only counts spending that goes through the marketplace. that's dollars. it does not include the unknown but substantial amount of personal support that people get from their families and other people. and this -- this is -- this raises some interesting problems

when you try to create a financing program. what happens to that personal support? i don't think it disappears but you do worry about the direction that it might take. let's not -- let's turn it over to howard. >> thank you joe, for having this panel and for helping to raise the pro file of an is -- the profile of an issue that is too often ignored. mark talked about a lot of things, i'm going to focus on three. i'm going to talk about something he doesn't mention much in his paper, the perspective of care givers. i'm going to talk about the state of long-term insurance industry, and opportunities for managed care, something he alludes to and may require a little more thought. as we go forward. i'd like to start, if i can, by telling a story. i spend a lot of time visiting hospitals and nursing homes and this is a story i heard a couple of years ago at a hospital, it's really stuck with me. because it's, frankly, it's so typical. a gentleman is in his late 80's,

6 years old, we'll call him mr. smith. he's got congestive heart failure, the most common disease of the elderly. as a result of that, he's been in and out of his local hospital. they know him well. he lives at home in an apartment, he doesn't own it. living in an apartment with his wife who is in her mid 80's who is frail and has cognitive issues and she's his caregiver, his only caregiver. one morning mr. smith is taking a shower and as you might expect, he falls. they take him to the emergency department where they diagnose a hip fracture. but they also see he's dehydrated and malnourished and has hot spots on his skin that are probably the beginnings of ulcers. the orthopedic surgeon looks, says, i can repair the hip, that's what orthopedic surgeons

do, but he is so debilitated he needs to spend a week in hospital before he can have the surgery. they do the surgery and the surgery, by the definition of the orthopedic surgeon, is a success. the hip is repaired. unfortunately, he's in the hospital for three more weeks recovering from the surgery. finally they get him healthy enough to send him out to a skilled nursing facility for rehab. he last there is one night when he begins to crash, he gos back to the hospital, everybody does everything that hospitals do, after seven more days he finally get a palliative care consult and ties a few hours later. that is a story i hear over and over and over again. there are a lot of lessons but i'd like to focus realy on the long-term care aspects of this. mark refers to care provided by family members as free. joe sort of alluded to this as

well. it may be free in that it is not directly compensated but there are a tremendous financial, emotional and physical costs to care givers. and while they're hidden and not well understood, some of these costs may be borne by the rest of us already as taxpayers and as buyers of medical insurance. there are several issues about care givers in those costs. the first one is foregone income. the typical kir givers is a 50-something daughter caring for a parent. a recent study found that the lost income to that woman who takes time off to care for that parent over her lifetime is $300,000. that's money she loses in retirement because she wasn't able to contribute to a 401k because she wasn't able to contribute for social security

but over her lifetime, that will cost her a substantial amount of money and could very well prolong the cycle that we so worry about and so want to stop this woman herself could end up in medicaid, long-term care recipient or is more likely to as a result of the time she's taking off to care for a parent. the second issue involves the lack of skills. this is an issue that almost no one focuses on but it's important to keep in mind that probably 80 or 85% of long-term care is provided by family members. and nearly all of it is by family members who are untrained. care giving requires some very highly specialized skills. you wouldn't know it from the $9 an hour we pay aides but anyone who has tried to to transfer a loved one from a bed to a chair or tried to give them a bath realizes exactly how much skill that requires and what the catastrophic cost is if you

don't do it right. and the cost actually is not only borne by the providers of care but it's borne by the recipients of care as well. in terms of the providers of care, it's interesting to note that the injury rate of paid aides is among the highest in america. it is actually more dangerous to be a certified nursing assistant than it is to be a coal miner in the united states. those jers are back injuries, it's also depression. those are paid aides who have some training. there's reasons to believe, although no real studies, that family aides suffer injury at least the same rate and probably higher. this is especially true when the

care givers are not taurs but spouses. think about the story i told at the beginning. you have a woman who is in her mid 80's, already debilitated, the chances of her hurting herself caring for her husband are quite high. that will land her in the hospital where the system will be paying. so there is cost there. and then of course there is the cost to the recipient of care. in this gentleman's case, you know, we'll never know, would he have had that fall if he had an aide to help him bathe? we can't know. would he was had the bed sores or the malnutrition or dehydration? again, we don't know. but it stands to reason that if there were aides engaged in his care or if there was a trained family member, that may not happen. however, because it did happen, think about the costs, the financial costs, to the system of what happened to this gentleman. it's not an overstatement to say

that it cost the system 2e7bs of tens of thousands of dollars to kill this man, actually. a little bit more about the effect on care recipients and care givers. a recent report by aarp was very illuminating. it talks about the kind of care that family care givers are provoiding. interestingly enough, it is very often not the kind of care that nurses' aides provide. it's the sort of care that registered nurses provide. they're required to operate medical equipment, change dressings, manage medications

and of course in the case of someone with multiple chronic disease, you're often talking about managing 10 or 15 medications a day. this is also done with no training and again, the consequence of this is hospitalizations, skilled nursing facility admissions and the like. so all of this, i think, very much increases cost to the system. it is real costs and it should not be ignored by the commission or by others who are analyzing this subject. let me switch gears for a minute, and let me talk about private long-term care insurance, what mark was talking about. unlike what steve moses probably thinks, i don't hate long-term care insurance. i think it provides a useful service. however, as a policy solution, i think it's quite limited. because of its cost and because of the state of the industry at the moment. the industry is facing some severe, not just demand side problems which we've known about for a long time, mark has talked about this fact that no one wants to buy, but also supply side problems. you think about it, potential market for this insurance is

growing tremendously. sales are collapsing. in the last 10 years, sales of private long-term care insurance have fallen by 2/3. from 750,000 individual policies to about 250,000 a year. group insurance which was once thought to be the savior of the market has basically disappeared. almost no one is selling group insurance because they're having so much trouble managing the risk of insurances. although it is underwritten, it's underwritten by what's called short form underwriting and it creates serious problems. so think about this. you have an environment where people are not buying and the response to that is the following. the industry is raising premiums, not just overall but raising premiums for women, eliminating spousal discounts, it's cutting benefits for -- benefits were becoming more and more generous, now benefits, particularly inflation adjustment and the overall benefit, the daily benefit and

the time during which benefits are available, are also being reduced in an effort to keep premiums affordable. mark was talking about how $50 or $ 5 a day is a bad policy, there are companies out there trying to sell that because people can't afford the $100 tissue the $150 or $200 a day policies many people would want to buy. they're tightening underwriting. as mark noted in his paper, previously 20% of people who wanned to buy long-term care insurance couldn't because they wouldn't pass underwriting. those underwriting standards are being made more strict so what's happening is even fewer people

who want to buy the insurance will be able to buy it. so what you have is a situation where you have little demand and the response to low demand is to make the product less attractive. in fact, i think what's happening is most private long- term care insurance carriers are subsidiaries of larger life insurance companies and for two reasons that i'll explain in a second, those parents would just as soon their subsidiaries not actually sell many policies right now. almost everyone is withdrawing from the market, there are probably only about a dozen companies selling, gen it is worth dom nays the market, a few mutual companies and basically that's it for now. there are two problems, two reasons why companies are leaving the market and two perfectly good one. one is that they're having a lot of trouble managing risks. and the other one is a low interest rate environment. the business model for long-term care insurance companies is relatively simple one, they

collect premiums over a long period of time, 20 or 30 years, invest the premiums and pay claims from those premium investments. fairly standard model. the problem is the long-term care insurance companies are required by state regulation to invest in very safe, very low yielding securities. and the business model doesn't work. particularly it doesn't work because many policy -- policies are carrying 5% inflation riders. you have to raise -- if you have 1% inflation riders and have to raise benefits by 5%, it doesn't work. mark's idea of about combining an annuity product is a terrific one. there are other variations of this, the so-called combo products that the industry is offering. i think they do have some potential, absolutely. but again, for relatively small market. unless they can figure out a way to get prices much lower. you think about who can afford

to buy an annuity, $100,000 for a decent annuity, that's the -- more than the median financial assets of a typical 64-year-old. i don't think any financial planner would recommend that anyone put all of their assets into an annuity. let me switch gears one more time and that's to talk about managed care. i think this is a tremendous opportunity but it's one that also carries with it some great risk. as you think about this, people with chronic disease, who are by definition people who require long-term supports and services, are the people who most need some level of care coordination, care integration, care management, whatever word you want to use, managed care became a dirty word in some circles in the 1990's. i think unfairly. and it now, i think, provides a tremendous opportunity for this population.

we are seeing, you know, mark talked about this as he was presenting the data about what's long-term care and what is medical care? and the data to some degree are confounded by this line. policy analysts live with this bright line in mind. it's critical to understand that recipients of this care, this means nothing to them. the gentleman that i talked about at the beginning of the presentation, he doesn't know which is long-term care and which is medical care. he just knows that he's got heart failure and he needs care. the system we have now has separate payers and it is the most uncoordinated, disorganized type of care you can possibly imagine. managed care has the potential for doing something about this. we are seeing, and matt may talk about this some more, but we're

seeing just a tremendous move toward managed care for the dual eligibles. by the states. they're doing this in many different ways. many different experiments. we have no idea if it's going to work. josh and r.c.i. have the contract with h.h.s. to assess this all. i suppose maybe in three years we'll know what happened. but as we learn about it, i think it's very important to keep in mind some of the risks and some of the possibilities here. the risk of course is, do people know how to do this? do managed care companies that have a great deal of experience working with people with higher levels of acuity, young people who may not have many physical problems, they do that pretty well. but can they do this with people with multiple chronic disease, people with cognitive issue, we

don't know. we'll see. the experiments are being done with duels, those eligible for medicare and medicaid. i think there's some interesting questions. if it turns out that these can in fact reduce costs and improve outcomes, if this can also be used for the general medicare population, imagine a medicare advantage plan that included some level of personal assistance. you might want to top that up with an additional policy. at least provide some measure of long-term supports and services along with your health care. and it maybe even could be sold as a commercial product, i shouldn't say this in front of joe, but on a health exchange. you know, it may be an element of a product. now would people buy it? it would cost a little more, leave it to the actuaries to tell us how much more. would people buy it? i don't know. but in terms of health delivery, i think there's potential there. so i think there's some interesting things out there, some interesting issues that the commission can focus on, i wish mark all the best, i thank him for his service. and i hope the commission can come up with some recommendations in a few months. thank you.

>> thank you, howard. we're going to see if josh paid close attention to your presentation. josh told me howard was going to lay out some assumptions and so, josh, take it away and we'll be fwrading you later on whether you actually met the task. >> thans to mark for writing this paper and -- thanks to mark for writing this paper and joe and the a.e.i. for hosting this event to discuss this important issue which is going to be with us for a very long time regardless of what happens to this particular commission. so i've titled my response to mark's paper, which raises a lot

of questions about what we don't know about long-term care, i titled my talk, "what we already know about long-term care and should tell the commission.? i've been doing research and policy analysis on long-term care for over 35 years. and i'm happy to say that over the -- over this time, it's been there's been an explosion of research and data on long-term care and so we in fact have the answers to many of the questions that mark posed. and i don't have time to answer all of them but i want to focus on four major points which allude to some of the areas that mark raised. and so i think what the research literature shows is really four things.

first, that long-term care expenditures are likely to increase substantially in percentage terms as percents of g.d.p. but even under very conservative assumptions in terms of things, it's going to be -- going to remain a fairly low percentage of total health care expenditures and a percentage of the economy. the second thing is, this is where i paid attention to howard's point, given what is happening to the private, long- term care insurance market, the other part of the equation is what about being policy -- what about the policy omingses to try to promote it. the second thing is, this is

where i paid attention to howard's point, given what is happening to the private long- term care insurance market, the other part of the equation is what about the policy options to try to promote it. i think the research is pretty conclusive that a lot of the incentives and other approaches to try to promote the market are not going to work. the bottom-line is that private long-term care insurance is going to account for a fairly small percentage of long-term care expenditures, not only now, but in the future. the third is that people with spend down, i just completed a major piece of analysis for the scan foundation on spend down, and the findings are very clear that the people who spend down don't have much in the way of income and assets. they are disproportionately lower income populations. finally, the transfer of assets, which marked -- mark talked a lot about, is that there is substantial research literature that shows that it doesn't occur all that often, and the total expenditures associated with it are small. so, let's start with the first point, that long-term expenditures will increase

substantially, but will remain a modest portion of gdp. this is some data from a recent study. on the left, the percentage of gdp in the u.s. and other countries. it is all around one percent of gdp. in this study, basically, and all of those countries, the percentage of public lansing over the next 50 years increases by 2-3 percentage points. three percentage points on the slide. in the sensitivity analysis they do, it is between 2-3%.

this is a rorschach test as to whether or not you are an optimist or a pacifist. if you're a pacifist, i'm sure matt will be that, and steve will, you look at that and you say, oh my god, doubling and tripling the percentage of the economy. there is no possible way we can do that. if you are an optimist, you say, given that population is aging, and the number of people with disabilities is likely to increase by three fold, this is not so bad. that is particularly the case because if you think about it, if you look at the data that mark was showing earlier, total health expenditures in the u.s. increased by four percentage points between 2002 and 2010. while no one celebrates of that, it did bring the end -- it did not bring the end of society as we know it. the second point is that private long-term care insurance is in big trouble.

it is unlikely to school -- play a major role in financing in the future. you really shouldn't be spending a lot of time trying to find ways to promote it. the slide basically gets the points that howard made. long-term care is in trouble now, not only on the demand side but on the slide side. one of the major issues has always been that this is a very expensive product. studies that i have done, and others have done, have found that a relatively small percentage of the population can afford it. there are a number of initiatives on the tax side to try to subsidize long-term care insurance premiums, to make it cheaper on the internet in terms of net cost.

there are substantial research literature on the effect of tax incentives. i have done some. david nixon, a number of studies, all of which basically find that basically, unless you

have a very large subsidy, which is going to cost a lot of money, then you are not likely to get much impact in terms of increasing the demand for long- term care insurance. so, the other issue related to that is that one of the reasons that people will have two procure long-term care insurance is this notion that we have provided financial coverage for middle-class elderly people to spend down to medicaid, then if they have the insurance, they would not spend down. you would save money for medicaid. unfortunately, the research literature tends to show that the subsidy would be more costly than the medicaid savings. the benefits would go primarily to people who are offer -- upper income and have a lot of assets.

mark talked about the partnership for long-term care, which is the other major approach to trying to encourage people to purchase long-term care insurance. under this policy, people who buy a state approved private long-term care insurance policy can keep more of their assets, and so qualify for medicaid. if you buy a policy that pays $100,000 in benefits, and you run through the insurance benefits, you can keep $102,000 and assets, and still qualify for medicaid. the point here is to try to provide lifetime access to --

latin accent protection -- lifetime asset protection. basically ensuring to stop selling. the findings of research tend to suggest that these policies don't in fact encourage people to buy long-term care insurance. we have experience for four states 11 doing this for 20 years. only three percent of the elderly population in those states have private longhair -- long-term care insurance. with the general accountability office, they have done studies that most people who buy these policies have a lot in the way of assets. $380,000 or more, and that is far more than most people have.

finally, a new study out by people at boston college that find that this will increase medicaid expenditures, not reduce medicaid expenditures. primarily, the people who would buy these policies would have bought a regular private longhair -- long-term care policy. giving them the extra banish it giving them a in -- the cost going up. the third point is that most people who spend down have very

modest amounts of income and assets. this medicaid spend down issue is an important one. as i said, we are to -- we have recently done a study using the help and retirement study, and our findings are that we -- the people who spend down have generally less in the way of income and assets that people who do not spend down. in 1996, only 15% of a spend down population a total assets greater than $112,000. versus 56% of people who did not spend down. the final issue i want to stress is that the transfer of assets. steve will be talking a lot about it. there is a large substantial research literature on this. there are six studies using

national representative data. that address this issue. basically, they find that uniformly not many people transfer assets. the amount of assets they transfer is not large. if you combine that with my earlier findings about medicaid spend down, part of it is you can transfer large amounts of access if you do not have large amounts of access. that pretty much is the issue we have. any study we did, we found that the spend down rate among people who -- the transfer asset rate

for people who spend down is happy rate it is for people who do not spend down. the best estimates in the research literature on percentage that are lost but people transferring out may be one percent of home and spend insurers. finally, let me include and go beyond the research literature. why anchorage the commission to -- what i encourage the ommission to do is start with the understanding that you can not serve twice as many people with the same financing envelope that we have today. it is not possible. you need to be thinking about additional sources of revenue. while we may want to have private sector initiatives to account for substantial portion of that, all the available data on the supply side and on the demand side suggests that that is not the case. if the private sector can't step into do it, that pretty much

means that the public sector is going to have to step into the gap. here i encourage the commission to think only about this. i would only note that the conservative government in the uk has been looking for ways to save money, and has been cutting social programs in many areas. they have basically come to the conclusion that i public-sector program needs to be expanded in england, and has proposed basically to cap out-of-pocket expenditures for long-term care. as a researcher, i certainly applaud mark, saying more research is needed. i hope the commission will recommend increases in funding in that area. but, solving the problems of

long-term care is not -- there are lots of ways to do that. a lot of countries do and a lot of different ways. we are not talking about trying to find a cure for racism. or a chore for poverty. -- oracle or cure for poverty. they will generally cost money. finally, i just want marked on the commission to remember that this isn't -- long-term care isn't about that. this is about us. this is about our growing older. this is about our parents growing older. and the needs they will have. thank you. [applause] >> thank you, josh. i can assure you, josh, the

commission will dip into the vast coppers and support your research. i suspect you will be a public spirited and citizen in volunteering to speak to the commission if they do meet. let's turn to matt sallow, who will give a state perspective. >> thanks. good morning. i get to be the testament role here. i think i'm going to call the realist role. my members, the state medicaid or's, -- directors, i have worked for state medicaid directors or governors trade these are pragmatic people. these are realistic people. there is a political element of course. there is a lot of pragmatism.

this is important. one thing i do agree with josh on is that we are going to have to spend more. there is no question about that. this is not a debate preview question is, how much. who does it come from? how does he get spent. the commission will figure that out. it is important to talk about why exactly i am here, why this perspective is important. it is good to come up on panel i hear people talking but medicaid's role in long-term care. that isn't very well known.

it is not very briefly talked about. one of our frustrations as to the extent that people understand what medicaid is, and that is not very often enough. medicaid hasn't -- has had an image of a welfare program of the property program, and in fact, most of the 62 million people that we cover are low income. the vast majority of the people we cover, pregnant women, kids, low-income working families, 40% of the births in this country. that is not where the money in medicaid is. medicaid spends about $420 billion, and the majority is not for pregnant women, kids, and low-income working families. it is for long-term care. it is for other types of care for people who are elderly, or have a broad spectrum of this abilities. we didn't talk much about those others. that is really important. we need to talk about it when we talk about the future of long- term care financing.

it is not just a frail elderly issue. it is not a spend down issue. josh and stephen will this fight over whether the and that is a problem or not. it is bigger than just that. medicaid's role, it is the payer of long-term care in this country. why is that the case? i think the primary reason was back to my earlier point about pragmatism. 30 years ago, medicaid didn't do much in the way of long-term

care. medicaid basically paid for nursing home coverage. and only the people with no income and very serious facilities. nobody wants to be a nursing home. nursing homes are very expensive. since about 1981-1982, with the advent of waivers, states have been reforming the medicaid program to say people don't want to be in nursing homes. we do not want to be spending $70,000 a year for people to be where they do not want to be. for 30 years, medicaid has been creating and financing home and community-based alternatives to nursing homes. it takes a million different forms. on the spectrum from assisted living to group homes, to care in the home, to consumer directed personal care attendants. there has been an absolute explosion of that's in 30 years. i think that has been a very good thing for all the people who have benefited rummage. -- from it. in terms of their quality of life, in terms of the health care.

what we have been able to do over the past 30 years is because, for most people, character and, can the community is going to be not just better, but cheaper than care in institution, we have been able to provide coverage for a lot of people. what we have seen is that after we d institutionalized, we are covering lots of people. this is when governors see a problem, there is a problem

here. let's fix it. in the short term, those fixes always make sainsbury does a very good things for people for the system. the part of the challenge is that what you take a step back and say what have you accomplished, we have a, which important things. we have rebalanced the long-term care system. what we have also done is we have effectively created a medicaid program that people want. what medicaid covered nursing care, no one wants that. that is your option, you're going to figure out how to leverage your family, your neighbors, your church, your community to stay out if you can. medicaid create something that sends a person carried to your home, the is great. howard's point, maybe that is a really good thing, because that relieves the burden on a family who may not be trained or paid to do this read that may be good. these may be good things. what we have done is we have no it. havehave come.-- we

built it and they have come. we have a system where there is so little awareness of the need for finance of long-term care because medicaid is doing it behind the scenes. most people don't think they are ever going to need it. those who think they do just assume medicare will cover. these people are by and large wrong. medicaid is doing it. i can guarantee that medicaid cannot continue to it at the rate we are going great josh was sanguine about and 45 years, the total cost of long-term care will only triple as a portion of gdp. the key point about medicaid that people need to remember is that this is a state-federal program.

the decisions about what medicaid covers, who it covers, and how care is delivered is driven by state financial capacity. state financial capacity is not going to triple. we are going have very serious challenges in terms of state revenue. quite frankly, having a long term care system in this country that is essentially predicated on a welfare-based program is not what we need, is now in the deserve. it is not what we should have.-- is not what we deserve. is not what we should have. we can do better than this. i think it is really important to think much bigger picture but some of these issues. we are excited about the commission. we do have one of our current members who is going down the commission with mark, dr. julian harris. when you figure out your staffing, and your financing, hopefully we get a lot of good

things done here. let me just sort of make a couple of points, and then i will wrap up. joe pose questions at the outside. is this markets are mandates? i think practically, it is both. i think this cannot be a purely government solution. it's early cannot be a purely medicaid solution.

i think we do need the markets to play a role in this as much as possible. i do think that markets are markets. markets behave according to the incentives that are built into them, and in many cases the incentives do not make sense. you are going to need some kind of interaction between government, between mandates and markets. we're going to have to figure out if people, if the take-up of long-term care insurance, which i'm not saying is the answer, but the take-up is seven percent total, a it is declining, the market is not there for this. people are doing it. we are going to have to figure something else out. that may involve some kind of mandate. that may be scary to some

people. there is no other way to do this predict it can be scary mandate, or could be metal -- malevolent mandate. there is a lot west is looking into in terms of what other kinds of resources are out there. people have look at reverse mortgages. that is a lot of promise pre- people are stunning to look at monetizing life-insurance. that has a lot of promise. there is got to be some kind of bland of these two things. the pure market on its own is not going to work in this. i also think we need to think about this in terms of the role of the personal versus the role of government. that is related. there is a lot of unfunded,

informal caregiving going on. it is going to be really hard to place all of that with government or private funding. we are going to have to do some of that. to howard's point, it is creating a burden on the family to do this, i financial burden. we cannot get rid of it completely. we have to figure out how to supplement it. we have to keep it only as best we can. here is the other thing that is going to be important only think about this. we have to think about long-term care as not just something that may happen to you when you get to be 85 years old and fall in the shower. there is predictable long-term care. we will all get old. we will get the point where we we may live long enough to do that. but disability is a huge component of this. the needs of somebody who has a dramatic rancheria -- brain injury, the needs of a child with extraordinary physical

disabilities, the needs of people with intellectual or development all disabilities, are all very different. they must be thought about very differently. from just frail elderly long- term care. that has got to be part of the answer. one of howard's points was talking about managed care. absolutely on point in that this

has enormous potential if it is done right. but that is clearly the trend. we're seeing that in medicare today. the key is managed-care has a lot of bad connotations for people who remember it from the mid-1990s. that is not where people want to go. that is not where we are driving. when we talk about managed-care, we are talking about a number of different names. the commonality is that it is not on managed-care.

that is really what we have got today. in so much of medicaid, and so much of medicare, you have got what is called fee-for-service. care is delivered around that model. fee-for-service. that is where most of the healthcare is these days. it also stands for than for self then do for self trade as with the old system requires a people who are trying to navigate. to say nothing of medicaid and medicare. we live in a very fractured, fragmented, sideload system -- sideload system. it is a mess. it drives a quality and necessary expenditures. we can spend a couple of hours talking about the medicare do eligibles. -- dual eligibles. long-term has to be a part of that previous got to integrate. we have got to coordinate. the 86-year-old doesn't care if he has great benefits over here with a card. it is all got to be holistic. that is what we are driving for. --think there is a norma's anhink there is a norma's--

promise inount of that. >> thank you. using the term managed-care really puts the conversation back into the medical model. we have defined a new term. it is not just because of the early 1990s. when you say managed-care, you are talking about clinical medicine. the combination of medical care, social services, and other support. >> exactly right. i think it is semantics. you are absolutely right that for the services to this population, there is a concern that what we're going to do is medical lies -- medicalize it.

>> benevolent mandate. i was trying to figure what that is. in my definition it would be as long as you pay for it, it is benevolent. i do not think that was your angle. >> you're paying for it one way or another. >> we are talking a redistribution. we are not going to turn to steve. he is the reason we're actually here. steve, you have impressive billing. i hope you live up to it. >> i will do my best. i am thrilled to be here in washington dc, and i appreciate the invitation to serve on such a distinguished panel. i have some slides, but all they are is reference to some briefing papers that i have done on the subject of how to fix long-term care.

if i trigger your interest at all, you can go to this overview and get a link to the briefing papers that i think will resolve the issue. i have published on my website an article i call let's play long-term care jeopardy. what i'm referencing there is that i think mark has asked all of the right questions. i post the answers. then i ask you readers to imagine what the questions were that the answers supply the solution to. i thought this paper was extremely valuable. i do believe that if you're going to do policy research right, you had better get your premises right and you better ask the right questions.

neither of which do i think much of the peer-reviewed literature in this area does. i praise mark for asking the right questions. i think the solution, the answer to those questions revolves around getting the premises right. that is what i'm going to try to explain today. here is what i think mark's paper asks us to understand. they are all puzzles. if people can't get government financed long-term care without spending down their life savings and the total impoverishment, which is what everything in the peer reviewed literature says, then six questions. how to affluent people qualify for medicaid long-term care, and

is the chicago fed article referenced earlier, get as many or more benefits from it than poor people? a disconnect. why do the national health expenditure accounts show decades of skyrocketing costs, and plummeting out-of-pocket expenditures. disconnect. why does. viewed research show that medicaid crowds out private long-term care insurance. maybe you have to spend out into impoverishment. why the public in denial about cost. why don't public education programs convince people to plan for long-term care, and buy long-term care insurance if the risks and costs are so huge? are people just ignorant?

of the enormous financial risk that they have faced? or stupid? how arrogant to assume that the problem is that the people are just not smart enough to assume they need this. why have the long-term care insurance partnerships had so little impact? why is private financing of home care minimal, while medicare and medicaid only -- home care financing explodes. surely they would be spending it on home and community-based care because they want to stay in their homes. yet we have a very inadequate infrastructure for home and community-based care, the a bias institution care system is trying to retrofit a home care model on.

let me tell you what i think answers these questions. our premise that people can't get government financed long- term care without spending down their life savings into total impoverishment is inaccurate. it isn't true. it is factually wrong. i speak from immediate exposure to state medicaid programs. i've interviewed the medicaid eligibility policy specialists, and dozens of states, and i've been out into the local welfare offices and talk to literally hundreds of medicaid eligibility workers. the people who actually interpret the rules, taken the applications, and make the

decisions about who qualifies and who does not. what they tell me is that they are often extremely frustrated that they can't get poor people onto medicaid for long-term care until their finances are wiped out. when there middle-class or affluent people, custom to dealing on agile miners -- custom to dealing with financial planners, they come in with three inch thick applications filled out by their attorney with every i dotted. the big question is not how many people are doing medicaid planning. only one technique is assayed transfers -- asset transfers. you will find many examples. google it for your own state. you will find thousands. what is really going on here?

he presumption that you have to be low income to paula phifer medicaid applies if you are a poor woman or child. 75% of medicaid recipients are in that category. that accounts for only one third of the cost of medicaid. two thirds of the costs,'s from the 25% that need long-term care. how was it that you can have large income, and qualify for medicaid? if you are over the age of six to five years old, and a medical a medical need, it really doesn't matter much what your income level is. most states start with your

income and subtract the medical expenses you have that medicaid doesn't pay for, and your long- term care costs, and if that get you the opportunity, you are eligible. they told me that in the entire history of the people working there or years, they never once denied medicaid long-term care eligibility based on income. they did twice in four years. even in states that don't do the medical needs system justice grind, there are diversion trusts that allow people to transfer their money into trusts temporary late to get down to the right level. the bottom line, it is the same for everyone in the country. if your expenses approach your income, you are eligible. what about assets? we always hear that you cannot have more than $2000 in assets and qualify. in maine, it happens to be

$10,000 of cash and negotiable securities. everywhere else in the country it is the same. you can have a home and property up to a minimum of $536,000 in most states. in 14 states, it is -- $800,000. that compares to $36,000 of equity exemption, of home care and all other assets in the socialized healthcare system in england. the next time somebody tells you we are a doggy dog impoverishment place, keep that in mind. most people don't understand that. you can have one automobile of unlimited value.

you can buy one mercedes, give it away,. you can have unlimited prepaid burial plans. 90% of all people in long-term care on medicaid have sheltered between $8,000 and $12,000 in prepaid burial plans. this amounts to a subsidy at the expense of medicaid's ability ability to fund quality and long-term care for people in need. you can have unlimited term life insurance. why would a 90-year-old bi and million dollar term life policy when the premium and the benefit would be equal?

instantaneous self impoverished eligibility for medicaid. you avoid the same recovery mandate. the benefit from the life insurance policy goes to your heirs without passing through an estate. my point here is that catastrophic spend on for long- term care is assumed because that is what the law and regulations seem to suggest has to go on. there is no evidence that it actually happens. i would suggest that if we didn't know -- if we deal with long-term care eligibility the way it actually exists, and the way it is observable he described in the adderall -- adderall legislation and regulation that govern this subject, and if maybe somebody would get their nose out of the peer-reviewed literature and go out and see how it actually works out there in the medicaid eligibility offices, we would

then begin to understand the answers to some of these questions. how do affluent people qualify for medicaid and get as many or more benefits than poor people? poor people are wiped out before they know what hit them because they're not accustomed to getting the advice that results in affluent people. most qualify without doing any fancy legal techniques. the rest are able to insult medicaid planners. why are the account skyrocketing or public programs -- why are they skyrocketing? it is obvious. medicaid made nursing care free for all intents and purposes pretty results are trackable. -- purposes. and the results are trackable. anything you make free people are going to use more of.

it had serious consequences beyond the explosive expenditures. by making new string home care free, medicaid crowded out a market for both home and community-based care privately financed, and a private long- term care insurance product that would pay for it. there is one of the main reasons that long-term care insurance markets have not achieved the goals they are originally intended to achieve. the other main one is that also a federal responsibility, the fed drives interest rates to zero, and forces private carriers to raise premiums in order to do the responsible thing and make sure that we pay claims someday. the irony is, medicare and social security in this country have no prayer of being able to meet their obligations.

there is nothing in their trust funds. all that money has been borrowed and spent. medicaid does not have a pony trust fund to pretend that it is financially credible. medicaid is the dominant pair of long-term care. one of public education programs work? people do not believe it. they are right, the people trying to tell them otherwise, are wrong. that is why it doesn't work. you make medicaid what it is always been assumed to be, well for of choirs series spend down before you become eligible. i guarantee the public education will work.

you are not even need them. people are not stupid. they will figure it out for themselves once they see a few families wiped out by the costs of long-term care. by the partnerships had so little impact? simple. why would i buy long-term care insurance to avoid a spin down that doesn't exist in the first place, and it when he hit me 20- 30 years after they are expecting me to buy this policy. it has had marginal effect because it has gotten states and private industry working together, encouraging people to buy. why is private financing minimal? simple. matt referred to it. if all it gives you his nursing home care, you are maybe going to be reluctant to go on medicaid. if they get you a film -- a home and community-based care finance

but the government, you have different incentives. the idea that home care is going to save medicaid money is dead wrong for many reasons. you lose the economy of scale. it is very hard to enforce quality. terrible quality problems in publicly financed home community-based care because the programs cannot afford to pay enough to attract quality caregivers. by funding home care, without controlling the hemorrhage in eligibility, public policy further distance and devises -- disincentive private insurance and the central sources of private financing that would be the system -- feed the system. thank you.

[applause] >> thank you, stephen. thank you for that plug for our event on that phony trust fund. we're going to talk about that monday morning. i'm not sure i complete his degree about that. -- i'm not sure i completely disagree about that. let's of the audience take a crack at us. if there is time left, we can have verbal fisticuffs. >> hello. in looking at the data, what is

striking is the fact that in the period between 1975 and 2009, the percentage of the overpopulation on medicaid actually declined by one third. despite the theoretical inducements that you talked about, and the improvements to medicaid that matt noted, and despite the ways one could gain the system that stephen has described, we have seen a sharp decline in people using that. it seems the commission should be looking at why is that happening? the big story is not the increase in use of medicaid. it is the decrease. we have seen the sharp increase in the per person costs for older relations -- populations.

we have seen increase in younger people disabilities, as well as per person costs going up. for the older population, the insurable group of the group you are concerned about in terms of spend now, we seen a marked increase. the commission should look up what has caused the decrease in use, and how those trends likely to continue, anne hathaway build on that? -- and how can we build on that? >> the one, i would add to that is that what has been driving medicaid expenditures is younger people with disabilities. it is not the older population. since many, most people with disabilities don't have medicare coverage, medicaid is on the hook for the whole piece. both long-term and acute care.

it is those expenditures that are growing so rapidly. it is not the expenditures for the older population. >> i will be curious to find out what you are saying. the data showed that the medicare spending is going up. >> i know, but medicare is part of the spending. we have to consider all the sources of funding. >> i would just say that medicare has been successfully keeping eligible he healthy seniors out of poverty. that has done nothing about the people of high need. the dual eligibles, they are a small portion of the medicaid population. medicare is there primary insurance. they get everything medicare

offers. we spend 40% of our budget on that population. it can be a small number of people. it is not matter. it is very expensive. >> carl? >> thank you. i'm with national central for assisted living association. the nursing homes, interesting that people are talking a disconnect between aggregate data and what is happening in the market. one million licensed homes shifting from care. there is the market altering an alternative. mostly private pay. how does that data show a question mark -- how does the data show up?

on the medicaid side, the data might be misleading because assisted leading -- living is underpaid. there you are only going to see home healthcare or personal care services as a medicaid karen -- medicaid category. the states passion -- patch in, a controversial pastors -- a controversial practice. that is the area we might see housing settlements actually reduce costs to this intermediate care level, to have more of a medicaid uptake. if you look at a great study that has been done -- >> we are running out of time. >> that is my jeopardy question. >> i did off that i did ask about that. indicated that assisted living is included. i do not know how well they do that.

it is an open question. this is aggregate data. to get it from all sources. they claim that there is nursing provided included in the data. >> as carl knows, data finds that 90% -- 19% are medicaid beneficiaries. it is a play the role that it plays in this one. it has significant portions. we did a study a couple of years ago for cms trying to find out what accounted for the large decline in nursing home you sprayed one of the burials we looked at -- nursing homes use. we did by a relation, not a strong one, so we really don't quite know this residential care nursing home interaction. it does not seem to be a straightforward one.

>> i completed a study in maine where i found to my surprise that while only 70% of nursing home residents were on medicaid, it pays only about two thirds of the private pay rates come of that in fact 80% of all assisted living residents in the state of maine are on medicaid. as much more attractive to a lot of people than nursing home care. for assisted living, maine care plays -- pays only 50%. they have serious cost shifting going on that are there encourages eligibility. >> i saw two hands out. i would ask you to ask your questions before we give any

answers. 30 seconds for a question. >> i am a physician and attorney. i would ask -- i would say that the accommodations available for the medicaid rate in nursing homes are not attractive middle- class people. you also may it is tension between social services and medical services. i think perhaps that bright line, you can substitute some social services for medicare services so that people didn't get to the hospital, if there was somebody at home keeping an eye on these people, he might

never have gone to the hospital, and you should credit that medicare. >> my boss wrote letters to the state. he asked for assistance. the question is, should states have flexibility to lower the home equity exemption to ease the budget pressures on medicaid? >> and look like we can discuss whatever we want right now. >> we have one minute. i will do that. i want to thank the panel further discussions. in somewhat candor, i was

disappointed because some of the was discussed struck me as not easily relevant to my questions. we have some evidence here. we need to understand it. some of the was mentioned is it relevant. nonetheless, i do -- i have two specific questions. from matt, how do the states enforce from the state of the decedent the recovery of the value of real estate? could you ask way and that -- could you explain that? you indicated iras are exempt? i'm wondering if that is correct. >> we're out of time. we will have a separate seminar

that will be likely if we are going to understand how states do think. steve's answer is yes. with that, i would like to thank everyone for this traffic event. please join me in thanking them. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2013] >> next, some of this years commencement speeches. >> on the next "washington journal", terry jeffrey on president obama's second term

agenda and recent congressional investigations of the administration. and we will talk with christopher of the true and national security project about providing wireless internet access to rebel groups in syria. also lauren smith on student loan rates which are set to double on july 1 unless congress takes action. "washington journal" is live on c-span everyday at 7:00 a.m. eastern. >> when the attorney general arraigned me in california after the extradition, he indicated that he wanted the death penalty on each of the three charges. he wanted the death penalty three times. that made me realize how serious they were. again it made me realize that it was not about me. first of all, i could not be killed three times. it was about the construction of this imaginary enemy.

i was the embodiment of that enemy. >> she was not that interested in talking about what happened. , the implications, being chased by the fbi. she was not that interested in talking about it. she was one of these people you don't necessarily go to directly. i would try to get to her directly. i figured out there were very important people in her life and i chipped away at the people she knew and trusted. , writeble to get letters, get them involved. slowly, she came around. she agreed to meet me. >> filmmaker shola lynch on the life of angela davis. sunday at 8:00 on c-span's "q&a." fbi director robert mueller traveled to williamsburg, virginia in mid-may to deliver

this years commencement address at the college of william and mary. former defense secretary robert gates is the chancellor of william and mary and introduced the fbi erector. he has been director for 12 years and will step down from that position in september. this is about 25 minutes. [applause] >> thank you, president. i have to say here at the outset that there are two disadvantages to being chancellor of the college. one is that i get to march in behind a senate -- seven foot tall rector. the other is the regalia. [laughter] as a i have described unique blending of academic medieval tradition and lady gaga. [laughter] [applause]

as someone who has served as university president, i know very well the stresses and the man's of the position. the position. take it from me that we are fortunate that taylor took the jobs five years ago under difficult circumstances and then agreed to reenlist last year. [applause] to the class of 2013, having passed the last exam, turned in the last paper, and paid the last parking ticket [laughter] have now survived one of the most rigorous educational experiences in the world, well done. [applause]

in doing so, you have had the experience not only of a first- rate academic education, but the very special opportunity to be part an institution rooted in the earliest history and fundamental governing principles of the united states. it is impossible to be a student here and not feel the weight of that history. i certainly did, walking these grounds more than 50 years ago. i hope that you, as i did then, also feel the weight of responsibility as well. as a graduate of one of the world's premier colleges and universities, and as a citizen of this country. there is probably no greater living example of this principle and its associated virtues, burdens, and rewards, sam the man we honor and hear from next, robert mueller. i choose my words carefully, because it is never a good

thing to get on the wrong side of the fbi director. [laughter] that j edgar hoover had a rule that all fbi memoranda must have very wide margins to allow enough room for his notations. after reading one document he wrote on it, watch the borders. hisater learned that subordinates had sent several hundred agents in the direction of mexico and canada. [laughter] when he had simply been referring to the memo's margins. his staff would not be intimidated into not asking for clarification. i have none of march with bob mueller for more than a decade. i was at texas a&m when in the wake of the september 11 attacks he reached out to university leaders to find more effective ways to conduct investigations while respecting privacy and principles of academic freedom. under president obama, we share the experience of being

holdovers from the previous administration, who kept being asked to stay on. and on. and on some more. [laughter] a constant team of bob mueller 's life has been his willingness, time and again, to forgo more comfortable and limited avenues in order to serve his companies -- his country. as a graduate of princeton, nyu, the university of virginia, he did something quite an usual for a privileged young man of our generation, which was to volunteer for military service at the height of the vietnam war. to set up for the marine corps and later platoon in combat took uncommon courage and patriotism. to be a united states marine with a name like robert swan mueller the third, that took some toughness, two. [laughter] it is telling that after two very successful decades as a lawyer in and out of government,

he gave up a partnership and a blue-chip law firm to work in the criminal division of the u.s. attorneys office in washington d.c. in addition to observing what had to be a massive pay cut, he also agreed to a position with considerably less rank, power, and prestige than the one he had held in the justice department a few years earlier. at the time, too many young men were dying, being killed, in the streets of our nations capital. bob mueller was determined to do something about it. as we all know, after a few days on the job as fbi director, bob was confronted with the horror of 9/11. i know from experience how hard it is to reorient the mission and transform the culture of large, proud, historically successful institutions. on september 12, two thousand one, nobody would have predicted that america would go more than a decade without another major terrorist attack. that we did is of enormous

credit to bob mueller. as he would be first to say, the men and women he meets at the fbi. his life has been one of truly splendid service. we are honored to have him as our 2013 amendment speaker -- commencement speaker. ladies and gentlemen, the honorable robert mueller. [applause] , thank you for that very kind introduction, lady gaga. [laughter] you have not heard the last of that are. [laughter] it is a pleasure for me to be here and be given the opportunity to recruit for the fbi. [laughter] i will say, it is a tremendous

honor to join the graduates today as they move on in their lives. i amook at it you. reminded of my youngest daughter's graduation from college a number of years ago. comedian bill cosby delivered the commencement address, and he opined that a commencement was as much for the parents as for the graduates, for today parents are not only filled with pride but with a newfound sense of freedom. [laughter] [applause] cosby went on to joke that as he goes home from his own daughters commencement, with her following in her car, one thought kept running through his mind. why are you still here, coming back to my house? [laughter] tocollege graduates

maccarthy said, you have hopes and dreams and as parents, we .ave hopes and dreams that part about moving home, not always part of our dream. upon where i have come since i myself graduated, i never would have expected to end up where i have. i consider myself most fortunate to have been given the opportunities i have had over the past 30 years, both personally and professionally. i have been blessed with three families, my family, my wife and her two daughters, my marine corps family, and for the past 11 years, my fbi family. from each of these families i have learned a number of lessons. one lesson is that much of what you do impacts those around you and in turn, those around you shape your life in a number of ways.

today i want to touch on three lessons learned through these relationships. these lessons relate to integrity, service, and to ce and its corollary humility. perhaps my experiences and in some cases, my mistakes, will strike a chord with you. i begin with integrity because it is so essential. -- to what you ultimately will become. pathof you have a career in mind, many of you have no .dea where you'll end up a few of you may be surprised by where life takes you. i certainly was. in the end, it is not only what we do, but how we do it. regardless of your chosen career, you are only as good as your word. , aggressive,art

articulate, and persuasive, but if you are not honest, your onceation will suffer and lost, a good reputation can never be regained. as the saying goes, if you have .ntegrity, nothing else matters if you don't have integrity, nothing else matters. is fidelity,to bravery, and integrity. for the men and women of the bureau, uncompromising integrity, both personal and institutional, is the core value. at same integrity is a hallmark of this institution. william and mary was the first college in the country to have a student run honor system. that honor system and the community of trust it enables rest someone precept, and that is integrity.

your professional and personal success will rest on that same precept. there will come a time when you will be tested. in may find yourself standing alone against those he thought were trusted colleagues. you may stand to lose what you have worked for and the decision will not be an easy call. , william and mary has prepared you for just such a test. indeed, at your thomas jefferson believed that william and mary was the finest school of manners and morals that ever existed in america. you are charged with upholding this legacy of honesty and integrity. today you become the standard bearers. turning to the importance of public service, or service over self, i can say that i did not really choose public service, i

more or less fell into it early on. perhaps not fully appreciating the challenges of such service. the importance of service over self in a myriad of ways, volunteerism, commitment to a particular cause or perhaps by example. as an undergraduate, i had one of the finest role models i could have asked for in an upperclassman by the name of david hackett. david was on our 1965 lacrosse team. he was not necessarily the best on the team, but he was a determined and a natural leader. he graduated later that spring. and a year later -- as we were graduating -- we faced the decision of how to respond to the war in vietnam. we knew that david was in vietnam serving as a platoon commander in the marine corps. in the spring of 1967, he volunteered for a second tour of

duty. but on april 29th, as he led his men against a north vietnamese army contingent, david was killed by a sniper's bullet just south of the dmz. one would have thought that the life of a marine, and david's death in vietnam, would argue strongly against following in his footsteps. but many of us saw in him the person we wanted to be, even before his death. he was a leader and a role model on the fields of princeton. he was a leader and a role model on the fields of battle as well. and a number of his friends and teammates joined the marine corps because of him, as did i. i do consider myself fortunate to have survived my tour in vietnam. there were many -- men such as david hackett --who did not. and perhaps because of that, i have always felt compelled to try to give back in some way.

i have been lucky to spend the better part of my professional life in public service, and to benefit from the intangible rewards that come from such service. the lessons i learned as a marine have stayed with me for more than 40 years. the value of teamwork, sacrifice, and discipline -- life lessons i could not have learned in quite the same way elsewhere. and when i look back on my career, i think of having the opportunity to participate in major investigations, such as the pan am 103 bombing over lockerbie, scotland -- and working shoulder-to-shoulder with homicide detectives in washington, d.c. and i think of my experience over the past 11 years, working with one of the finest institutions in the world -- the fbi. these were opportunities that would have been difficult to replicate in the private sector, and that, for me, has been time

well spent. since its earliest days, the college of william & mary has emphasized service over self. your fellow alumni have served as the nation's highest political officers, attorneys and judges, teachers and doctors, and civic and military leaders. the way in which you choose to serve does not matter -- only that you work to better your country and your community. each of you must determine in what way you can best serve others -- a way that will leave you believing that your time has been time well spent. turning to lessons on patience. writer barbara johnson once defined patience as the ability to idle your motor when you feel like stripping your gears. for those of us who are not inherently patient -- including myself -- it is an acquired skill.

and believe me, it is hard earned -- and people will say that i am still learning. it is also fair to say that true patience is required at precisely the moment you least have time for it. patience includes the ability to listen -- really listen -- to others, and especially those close to you. this is not always easy, particularly for someone like me. in one of my first positions with the department of justice, more than 30 years ago, i found myself head of the criminal division in the u.s. attorney's office in boston. i soon realized that lawyers would come to my office for one of two reasons -- either to"see or be seen" on the one hand, or to obtain a decision on some aspect of their work, on the other hand.

i quickly fell into the habit of asking one question whenever someone walked in the door, and that question was -- "what is the issue?" a word of advice -- this question is not conducive to married life. one evening i came home to my wife, who had had a long day teaching and then coping with our two young daughters. she began to describe her day to me. after just a few moments, i interrupted, and rather peremptorily asked, "what is the issue?" the response, as i should have anticipated, was immediate. "i am your wife," she said. "i am not one of your attorneys. do not ever ask me, 'what is the issue?' you will sit there and you will listen until i am finished." [applause]

a story for mother's day. and, of course, i did just that. that night, i did learn the importance of listening to those around you -- truly listening -- before making judgment, before taking action. i also learned to use that question sparingly, and never, ever with my wife. humility is closely related to patience. there are those who are naturally humble. but for others, humility may come from life experience, it is the result of facing challenges, making mistakes, and overcoming obstacles. i would like to close with a story about one of your own -- lee rawls. lee was an adjunct professor here at william& mary for more than 18 years.

he taught a seminar entitled "congress, the executive, and public policy." lee was naturally humble. he was always the smartest person in the room, and the last one who would ever tout it. lee and i were college classmates, and we served together in a previous administration. when i became director of the fbi, i asked him to join me as a close advisor and remarkably, he agreed. lee knew how to cut through the nonsense and get to the heart of the matter better than anyone. he also knew how to put me in my place. during one particularly heated meeting, everyone was frustrated mostly with me -- and i myself may well have been a wee bit impatient and ill tempered. lee sat silently, and then posed

the following question out of the blue -- "what is the difference between the director of the fbi and a four-year-old child?" the room grew hushed. finally, he said, "height." [laughter] on those days when we were under attack by the news media and being clobbered by congress, when the attorney general was not at all happy with me, i would walk down to lee's office, hoping for a sympathetic ear. i would ask, "how are we doing"" lee would shake his head and say, "you're toast. you're dead meat. you're history." he would continue, "don't take yourself too seriously, because no one else around here does." it was that innate sense of humility -- the idea that the world does not revolve around

you-- that was central to lee's character. he never sought to elevate his own status, to the contrary, he sought to elevate those around him -- the hallmark of the truly humble. as you grow older, you will begin to understand that one's life is a combination of experiences and teachings of those who become your mentors. lee was certainly was a mentor to me, and i am a better person for having had the opportunity to be tutored by him. though he might have suggested that it was rough going for him, having me as one of his students. lee passed away two years ago, and he is greatly missed by family, friends, and colleagues. his was a life of humility --a life of service, a model for many others -- for you and for myself. i encourage each of you to surround yourselves with such mentors over the coming years --

individuals who will make you smarter and better, those who will recognize your potential and challenge you in new ways. and one day, wittingly or unwittingly, you will serve as a mentor to someone in your life. remember -- patience and humility. both are hard to come by, and each will serve you well. the lessons i speak of today are lessons not only for you, but for all of us. we must all find ways to contribute to something bigger than ourselves. we must cultivate patience, each and every day. we must maintain a sense of humility. and most importantly, we must never, ever sacrifice our integrity. if we do each of these things, we will have the best

opportunity to be successful -- personally and professionally -- and our time will indeed have been time well spent. thank you for inviting me to celebrate with you today, and god bless. [applause] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2013] >> federal reserve board chairman ben bernanke gave this year's commencement address at bard college in massachusetts. it is a small, liberal arts "early" college, where students start their studies after completing 10th or 11th grade in high school. mr. bernanke's son graduated from this school in 2006. [applause] >> thank you very much. good morning. congratulations on finally earning your ba

and let me also congratulate, of course, the graduates and their parents. the word graduate comes from the latin for step. graduation is only one step on the journey, but it is a step or taking. i think everyone of you appreciates the uniqueness of attending an institution like this. it is, to my knowledge, the only early college in the united states. many of you came here in search of a different educational experience. with only about 400 students on campus, i'm sure each of you has felt part of a close-knit community. most important though, you have completed a curriculum that emphasizes creativity and independence critical thinking,

habits of mind that i am sure will stay with you. so, what is so important about critical thinking and creativity? there are many answers, but i am an economist, so i will talk about the economic future, your economic future, i should say, because each of you will have many years, i hope, to benefit from an increasingly complex global economy. my emphasis will be on the long run. in particular, i will be looking beyond the very real challenges of the economic recovery we're facing today, challenges i have every confidence we can overcome, but to speak about economic growth as measured in decades, not months or quarters. many factors affect the development of the economy, notably among them the nation's political institutions, but over the long period, no factor is bigger than scientific progress. when the industrial revolution

took hold in europe, the standard of living throughout most of the world changed little from generation to generation. for centuries, many, if not most people, produced what they and their families consumed, and never traveled far from where they were born. by the mid-1700's, a growing scientific and technical knowledge was beginning to find commercial uses. since then, according to standard accounts, the world has experienced at least three major waves of technological application and innovation. the first wave drove the growth of the industrial era, which lasted from the mid-1700's to the mid-1800's. this heiress of the invention of steam engines, cotton spinning period saw the invention of steam engines, cotton spinning machines and railroads. in the process, it greatly increase the productivity of workers and reduce the costs of

basic consumer goods. the second extended wave of invention coincided with the modern industrial era, which lasted from the mid-18 hundreds well into the years after world war ii. this era featured model innovations the radically changed everyday life such as indoor plumbing, electricity in homes and factories, the internal combustion engine, antibiotics, powered flight, telephones, radio, television, and many more. the third era, whose roots go back at least to the 1940's, but which began to enter the popular consciousness in the 1970's and 1980's, as defined by the information technology revolution as well as fields

like biotechnology that improvements in computing helped to make possible. of course, the i.t. revolution is still ongoing in shaping our world today. here is a question, a key question, i imagine, from your perspective. what is the future hold for the working lives of today's graduates? the economic indeed, according to the best available data, output per person in the united states increased by approximately 30 times between 1700 and 1970 or so. growth that has resulted in numerous changes in our society and economy. history suggest that economic prospects in the coming decades

depend on whether the i.t. resolution has economic effects of the previous two. some observers have made the case that the i.t. revolution likely will not generate a transformative economic effects that flow from earlier revolutions. as a result, these observers argue economic growth and change in the coming decades likely will be slower than the pace of which americans have become accustomed. such an outcome would have an important social and political and economic consequence for the country and the world. this provocative assessment of our economic future has attracted plenty of attention among economists and others as well. it does not make sense. here is one way to think for concretely about the argument. 50 years ago in 1963, i was an inaugural growing up in a middle-class home in a small town in south carolina. i was the best speller by the way in south carolina. [laughter]

as a way of getting a handle on economic change, it is interesting to ask how my families everyday life back then different from that of a typical family today. if i think about it, i could quickly come up with the internet, cell phones, and microwave ovens as important convenience that most families have today that my family lack 50 years ago. healthcare has also improved since i was young. let expectancy of birth in the u.s. has risen from 70 years to 78 years today. some improvement is probably due to better nutrition and generally higher levels of income rather than advances in medicine alone. nevertheless, i'm every might be selective -- my memory might be selective. does that seem like the differences are that large.

air-conditioning and sanitation were not that different from today. we had a dishwasher and washing machine and dryer. i family owned a comfortable car with air conditioning and a radio. for entertainment, we do not have the internet or video games. but we have plenty of books and musical recordings and rtv did not have many channels. the comparison of the world's 1963 to that of today suggest substantial change in those years. let's run the six permit back another 50 years to 1913 -- let's run this back another 50 years to 1913. life was simply much harder for most americans. many people work long hours in dangerous and dirty jobs.

many worked up to 60 hours for week. refrigerators and freezers and electric stoves and washing machines were not in general use. most urban households do not yet have electricity. in the entertainment spear, americans did not have access to commercial radio broadcasts and movies would be silent for another decade and a half. some people have telephones come but no long distance service available. in transportation, henry ford was beginning to mass production of the model t automobile. railroads were powered by steam and regular commercial air travel was still decades away.

life expectancy in 1913 was only 53 years. it reflected the state of medical science at the time and infection and dionex and vaccines from deadly diseases would not be developed for several more decades -- and deadly -- and and i'm -- and antibiotics and vaccines from deadly diseases that would not be built for several more decades. the purpose of these comparisons makes concrete argument from some that the transformations of the past 50 years are significant to not match the changes of the previous 50 years or for that matter, the previous 100 years. extrapolating to the conclusion that some have drawn that the pace of economic growth and

change can be associated with improvement in living standards will likely be slower as our most recent technological revolution and computers will not transform our lives dramatically as previous revolutions have. that is sort of depressing. is it true then that the future ain't what it used to be? nobody really knows. it is tough to make predictions about the future. there are some good arguments on the other side of this debate. i assure you i will take the other side. first of all, innovation id. ignition -- by definition involves ideas no one has had get. forecasts of future change and can be and often are widely wrong. human innovation and creativity will continue. it is part of our very nature. another prediction is that

people will continue to forecast the end of innovation. the famous british economist observed as much in the middle of the great depression. 80 years ago he wrote, we are suffering from a bad attack of economics. it is common to hear people say that the epic of congress -- progress is over. the rapid improvement in the standards of life is going to slow down. it sounds familiar. keynes argued that such a view what he called economic us abilities for our grandchildren capabilities for our grandchildren good rice. income per person in the u.s. today is roughly six times what it was back then. the second counterargument is that not only are innovation itself inherently hard to predict, so are the consequences of innovation for our economy and daily lives. indeed, some would say that we are still in the early days of

the i.t. revolution. computer speed and memory has increased many times over in the 30 plus years since the first personal computers came onto the market. it is a biotechnology are dancing rapidly. -- fields like biotechnology are advancing rapidly. the commercial applications of these technologies only scratch the surface. consider the potential for i.t. and biotechnology to improve healthcare. one of the most important sectors of our economy. it would lead to better ordination and more effective care than we have today, including greater responses in the latest findings. robots and lasers are improving surgical outcomes and artificial

intelligence systems are being used to improve diagnoses and chart courses of treatment. perhaps even more revolutionary is a transport that would tailor medical treatment for each patient based on information drawn from that individuals genetic code. taken together, such advances would lead to another jump in life expectancy and improve health. other promising areas and application of new technologies includes the development of cleaner energy and harnessing wind and solar power and the development of electric hybrid vehicles and the potential of future advances. i cannot imagine all of the possibilities. we underestimate the longer term potential.

finally, one more important argument. pessimists might be paying too much attention to the strength of the underlying courses that generate innovation in the modern world. invention was once the province of the isolated scientist or tinkerer. transmission of new ideas and agitation for insights for commercial uses were slow and erratic. but all of that is changing radically. we live on a planet that is becoming richer and more popular and which not only the most advanced economies, but also in emerging markets like china and india. we increasingly see their economic futures. in that context, the number of trained scientists and engineers is increasing rapidly, as are the resources for research being provided by universities and government and the private

sector are. because of the internet collaboration takes place at high speed and little regard for distance. for example, research papers have been critiqued rather than after publication in a journal several years after they were written. importantly, as trade and globalization have increased the size of the potential market, the possible -- it is going rapidly. both humanity's capacity to innovate and incentives to innovate are greater today than in any other time in our history. well, what does this have to do with creativity and critical thinking?

that is where i started. the history of innovation and development teaches us that the only constant is change. during your working lives, you have to reinvent yourself many times. success and satisfaction one outcome from mastering a fixed body of knowledge, but constant agitation and k2 video in a rapidly changing world. engaging with and apply new technology will be a crucial part of that. your work and the electronic show -- and the electric -- and intellectual skills you have are the best to adjust these challenges. it is important that humanity facilitates new and creative thinking and helps us draw meaning that goes beyond the material aspects of our lives. let me end by wishing you the very best in facing the difficult, but exciting challenges that like ahead. congratulations. [applause]

martin o'malley speaking at st. hery's college in maryland. was reelected in 2010. this is just under 13 minutes. >> president and chairwoman, faculty, honored guests, grateful and relieved parents, it is a great pleasure to be able to share this awesome day with you and a humbling honor as well. i love st. mary's. [cheers and applause]

you can feel the history and you can sense of the future as you walk these beautiful grounds. a century ago, this place was settled in the name of religious liberty and freedom. today this college stand as a eakin of free thought and open discourse -- as a beacon of free thought and open discourse. congratulations. you did it. [cheers and applause] in a few moments you are going to join a very select club. in a really diddly short amount of human history, cache in a relatively short amount of human history, 86% of our worlds appellation -- population has access to a mobile phone. get this -- less than seven percent have what you are about to receive. namely, a college diploma. less than 7%.

membership in this club is not free. [laughter] i'm not talking merely about tuition. i'm talking about something deeper. with your diploma comes a responsibility of individual leadership. in our country, every person is needed. so, we commence. our world is changing rapidly. globally cap nominate -- global economic issues and global poverty and global migration and global climate change and global warfare. in your lifetime, the population of our planet will nearly double.

the scientists of our world are certain that we are on the verge of burning up the atmosphere of our planet. anyone who tries to tell you that these challenges are not real is either uninformed or simply not being honest with you. after the same time, anyone who ignores the millions of reasons for optimism in this world simply does not have their eyes open. these things are not happening to us. they are happening for us. life is an evolving story of change and choice. every challenge holds the seat of opportunity. adversity is not our enemy. it is the catalyst. these are some of the most exciting times to be a live. think about it. in that release of instant of

human time, we have gone from manned flight to man walking on the moon. from the human vaccine to the human genome. from the telegraph today internet. at this point of this, always is the effort and imagination it will of individual human spirit. we consider the story of peter burns from montgomery county. [cheers and applause] his legs require a wheelchair, but his spirit knows no limits. his dad moved the family near

campus. together they have attended classes. they have cheered on the seahawks. they have participated in campus life together. today, he graduates with honors. [cheers and applause] there's also the story of britney davis. [cheers and applause] britney lost her father at a young age. her mom had to work hard to support her and each of her five siblings. she had big dreams for her daughter. expectations become behavior. the transition to st. mary's was challenging. there have been starts and stops. there have been struggles and breakthroughs. but she returned to st. mary's. britney davis will be the first member of her family to receive a college diploma. [cheers and applause] these individual stories, these

two, these individual stories are also maryland's story. it is a story of each and every one of you. maryland history and future. we have been placed at the center and the forefront called the american revolution. it is not over. it is ongoing. today it is a revolution of science and technology and healing and discovery and innovation. for the second year in a row, the u.s. chamber of commerce last week named your state the number one state in america for innovation and entrepreneurship.

[applause] in labs and classrooms all across the state, mary landers are revolutionizing the way we see it and fuel our planet. to the discovery taking place, the applied physics lab, the curious and the healing being developed, nih of homes being built confederate, the life sciences, clean tech, green tech, information technology, cybersecurity, space, it aerospace, global trade. our challenges are big and so must our leadership and compassion for one another. innovation is the key. innovation that only in such uncritical thinking, the sort of thinking the have learned here

will bring about. innovation that creates job plans for improving the delivery and accelerating the delivery of higher education and better skills for all of our people. the job for creating innovations that improve the health and security of our people. and innovation that creates jobs and green design. the job creating innovation that is necessary to save humanity from the devastation of climate change. innovation born of a deeper understanding of a relationship between our relationships.

there is a deeper understanding of the system upon which all life depends. the question of 2013 is not whether we move left or right, but whether we move forward or back. no citizen has the option of escaping the answer. good intentions are important, but good intentions are insufficient. a new mindset is required for the new action that our world requires. and we were organizing. this is true in business and in government and in every sector and nonprofit sectors.

a new way of governing is required, more open and more transparent. a new way that is more effect is even as it becomes more personalized. you are among the firstborn of the new information age. people are becoming more powerful than their governments. to becoming interconnected. they are becoming better informed. you are graduating today at the threshold of a new era of american progress. at your fingertips are a rising standard of living and better educated children and more affordable college and the more highly skilled american workforce and safer neighborhoods and a safer and more resilient homeland and help

your -- help your people and a more sustainable living if you choose to make it so. achieving this progress will require a different kind of leadership and the requested from each and everyone you. your parents grew up in a time when leadership was ideological. it was bureaucratic. this new information age calls for a different way. it calls for leadership. leadership that is collaborative. leadership that is accountable and relentlessly interactive. leadership that creates a common platforms. leaders that are willing to have

open-source information order to unlock the information needed on a massive scale. leadership that understands the power of human dignity and the strength of our diversity. i leave you with this prayer. made a gift of leadership away can you as a vocation. keep you in mind of the providence that cause you to serve. mayor imagination continue -- may your imagination continue. may your work be infused with passion and creativity and have the wisdom to balance compassion and challenge. the source that will guide and bless your work. congratulations. [applause]

designs around china and establishes the white house china collection. she is the first to have christmas in the white house, wife of benjamin harrison. we continue our first ladies series monday night at 9:00 eastern on c-span, c-span3, c- span radio, and c-span.org. , some more commencement speeches including florida governor rick scott. attorney general eric holder at uc berkeley. and newton, connecticut, patricia llodra at sacred heart university. >> earlier this month governor rick scott deliver the address at ava maria university. governor scott is serving his

first term in office. this is under 15 minutes. [applause] >> thank you for that introduction. it is wonderful to be back home. this is a great year for my wife and i. we had our 41st anniversary a we will have two more grandkids this year. nothing better than that. [applause] it is an honor to be here. congratulations to every graduate. a great journey -- you have got

a great journey. you will have a great time. i love these speeches. this speech is one of the only few things that is standing in the way of where you are now. you have a great hearty with your family and friends once we get finished. in the words of my pastor, i cannot promise you i will be interesting, but i guarantee you i will be short. my goal is to get you to your celebration on time. i thought a lot about this speech. instead of reading long passages from history or literature, i went to share with you a few things. the few things i would myself if i were in your place today. as a father and grandfather, these are some lessons it to me almost a lifetime to learn. number 10, family is sacred. [applause]

my family had very little growing up. my mom almost gave me up for adoption when she was born because she was going through a divorce from my birth father. she may mired that she remarried. they had a difficult time supporting us five kids. my mom had many challenges and struggles, but she taught me to be fearless. never give up. i could accomplish anything. be an optimist even when times are hard. as you graduate to date, -- today, keep your family close. thank your mom and your dad and everyone else who helped you get to where you are today. there will be a day when you cannot check in with your mom and dad anymore. make your family a priority come even if they end up far away. they will influence your life

for the better if you let them. number nine, your body is the only one you get. my father was a world war ii veteran that survived the invasion and was a prisoner of war. he had a six grade education. he never thought he would come back alive. he came back alive. for a long time, he smoked too ateh and drink too much and 82 too much and drove way too fast.he had surgery and they told him he could not smoke. he quit smoking immediately. he had a beer every saturday night.

he saved up. it is true. my mom was furious. growing up with him, i saw how important health was by learning what not to do. trust me, you have your body until you die. there is no trade-ins are upgrades along the way. treasure your help. number eight, learn to manage money. you always need to make money in some way. you always hear to make money in some way. read a money-management book. save a portion of every paycheck matter how small. stay out of debt. after getting a great education, invest in yourself by understanding the best way to manage your money.

you can give more back to the school, right? [laughter] he didn't put that in the speech, by the way. number seven, it is important to take stock of what you must have in your life. what do you treasure? where your treasure is, there your heart will be also. what do you treasure today? is it making $1 million? is it about having that job you have been dreaming about? living in a house are getting married and having children? take stock of your heart and look at what dream you may have

landed at the center. -- look the job and the money and the success, no matter how much it is, it will never really satisfied. god designed our hearts. number six, enjoy the journey. i once heard someone say that when you know where you came from and know where you're going, it is easy to enjoy the

journey along the way. as a child of god, i know where i am from and where i will be turned. knowing that frees me up to enjoy all of the ups and downs along the way. try the impossible. follow your dreams. i have learned from both. thankfully, god only gives us one day at a time. when you decide to enjoy each day as it comes, you're guaranteed to have much more fun along the way. number five, build relationships. relationships matter. people need to be gone you'd. -- people need to be valued. the number one motivator of your team will not beer salary, but will not be your salary, but how you are appreciated. there is a book how to win friends and influence people. everyone wants to be loved. make everyone around you feel special. be respectful of everyone. love with all of your heart. you will live longer. you will have more friends. you will be happier. you'll be much more successful in your chosen profession. you enjoy your life much more.

take time to appreciate those around you. you cannot do anything truly great by yourself. win-win relationships wherein in the long-term. build relationships every day. number four, travel the world. i have been to all seven continents. i've been to almost 50 countries. there are wonderful people in places all over the world. travel everywhere. number three, trust. the truth is, the world is a scary, unfair place. bad things happen to good people. dreams are not always come true. sometimes life breaks your heart. in a world like this, the logical thing to do is to shut down and close up.

do everything on your own and do not depend on anyone. a trust is one of the most powerful of all human actions. trust is a foundation of great friendships and wonderful marriages and selfless parents a great company. -- angry company. let people enter your life. share with others knowing that you will be disappointed at times. number two, take risk. when you're 80 years old, you want to look back and know that you tried stuff. i tell my daughters to make as many mistakes as i have made in my life. those mistakes were clearly the precursors of future success. when i'm 80, my prayers are i will still be married to the

person i married. i will have great relationship with my daughters and son-in- law's. i like them a lot more this year. [laughter] my grandchildren and a few friends. i want to say that i tried a lot of things with no regrets. change the world a little bit for the better. don't live in fear. don't worry what people might say or think about you. take the shot. number one, forgive. if you're going to be in a family and value relationships and trust people and enjoy the journey even when you make mistakes -- and you will make

mistakes along the way -- you will need forgiveness. forgiveness is a complicated word. who decides when to forgive and what to forgive and how to forgive? i do not have all the answers. i know we are called to forgive as god for dave. an incredible -- as god for dave. an incredible standard. -- as god forgave. an incredible standard. it is supernatural. it requires practice. if there is one thing i hope you will remember from this list today is the challenge -- value your family, your friends, and all the wonderful people you meet along the way. they won't be perfect and neither will you. they will need forgiveness just like me and you.

if you accept this challenge, it will be easy to have fun and you will love the journey that god gave us this opportunity. god bless every one of you. thank you for the opportunity. >> attorney general eric holder gave the address at the university of california berkeley law school. his remarks are about 23 minutes. [applause] >> good afternoon.

good morning, i guess. thank you for those kind words. thank you for a warm welcome. it is true that i am an extraction. it is a place where you have the best beaches in the caribbean and the producer of the best of rom in the history of the world. how many of you have had it? ya, man. >> [inaudible] >> all right. it's a privilege to join all of you today. professor murray, that comment is starting to get on my nerves. we might have to go mano a mano of some sort. to the staff and administration

and so many proud parents and family members and friends and alumni, i want to join in congratulating the staff at 2013 and celebrate your time here at the berkeley law school. i would like to thank javier -- and that is a great mustache. men who have mustaches are people with depth and distinguish and coolness. thank you for the thoughtful remarks. did they have any time to study? apparently they did. they will go on to do wonderful

i would like to think them in the fellow student leaders who have made the ceremony so special. it is an honor to share -- and welcome you to the legal profession. thank you to the musicians who are with us, especially the steel drum players. [applause] they help set up i think an appropriately formal tone for this report and ceremony. it reminds me of what did in columbia in new york. not really. all those type a competitive types are at columbia. most of all, thank you for inviting me to share in this >> no other tool has

this is something you have been working for and waiting for. each of you will accept a diploma signifying their graduation from one of the most prestigious law schools in the united states of america. you will take your leave of this campus, this remarkable community of learning that you have learned to call home. it'll say goodbye to friends that you have made and professors you will never forget. you will fan out around the country and even across the world, seeking to make a living and striving to make your mark and seeking to improve our country and make more peaceful world of despair. to build a brighter future that all people deserve and to advance the promise that must

become your common cause, the promise of equal justice under law. [cheers and applause] of course i realize that these challenges might seem distant or even abstract as we gather on this beautiful morning to celebrate your commencement. your memories of final exams are still fresh. he might have good reason to focus on more immediate concerns. you'll have studying for the bar exam. it is an important milestone. as we reflect on the achievements that have led you to this point i'm a last thing you want to think about is accepting a new mantle of responsibility. today of all days, that is precisely what you must do. your journey of service to the

law and all it protects and the powers is really the beginning. the future you face is far from certain. each of you has been given a rare chance to make a meaningful difference. uncertain times give birth to need opportunities to affect positive change. as i look around this crowd of right young faces, i cannot help but the confident that you're ready and prepared to do exactly that. a class at 2013 has come a long way. 27 countries and 77 different majors and a wide array of religious and ethnic backgrounds. university sets you apart. diversity provides the opportunity for tremendous individual interaction and enhanced institutional strength.

your previous achievements as science, journalist, athletes, parents, and military veterans, musicians, artists are very impressive. the potential is without limit. you come together and have formed a lasting bonds of friendship and fellowship. he had taken part of the same rituals and rites of passage to thursday night bar review. you have helped to strengthen and extend the tradition of collegiality and collaboration that has those made institutions such aa remarkable place. from protesting tuition increase across the state to rallying support for same-sex marriage.

[cheers and applause] you have raised your voice is on some of the most pressing issues facing your peers and your fellow citizens from human trafficking to domestic violence to gaining hands-on experience to combating hainan's crimes in providing assistance to the dems and navigating the complexities of our legal system -- assistance to the victims and navigating the complexities of our legal system. changing the lives of clients. you have done it while coping with academic and taking time to relax and enjoy student life during wine bus trip to napa valley. did that happen? [cheers and applause] i really went to the wrong law school.

[laughter] and weekly gatherings for the wednesday warriors. [cheers and applause] that is that group over there. [laughter] as the whole thing goes, really -- you're only 3l time. this chapter draws to a close. these expenses will stay with you. it will shape your path forward with you envision a future defending the accused or campaigning for elected office for leading incorporation or running a nonprofit board turning your own course, you will find yourself you'll be interested -- you'll find yourself building on service and

advocacy that you produce sisters have established. in that ad is picking the first woman to serve in the u.s. department of justice -- a woman became the first to serve in the u.s. department of justice the great civil rights champion, great lawyer, ted olson. berkeley law alumni have done nothing less than shape and reshape the world in which we live. as we speak, berkeley graduates are continuing this work at every level of government and across today's u.s. department

of justice covered clearly nearby office. where are you? there she is. i was told she graduated i never received her diploma for some reason. all right. we will hook you up. countless others have spoken out and sacrificed and organized in order to advance the singular promise that unites us this morning. we live in an america that our forebears could only dream about. every one of them sat where you sit today. each was called upon to address the threats enter from the novel questions of their time. it is your turn.

it is your solemn responsibility and your humbling opportunity to act with optimism and fidelity to our most treasured as a bulls and live with abiding faith in yourselves and with one another to our most treasured values and live with abiding faith in yourselves and with one another. justice is done. since our country's earliest days, the american legal community has risen to the challenge. you are about to embark in your

an hour of particular consequence. your crossroads in history. our nation confronts grave obstacles and national security threats that demand our constant vigilance and steadfast commit it. -- commitment. as leaders and lawyers and americans, that represents a defining issue of our time. each of you must consider some important questions. how can we uphold the values and remain true to the high ideals of our legal system will keeping pace with the 21st century threats? in what ways can we or should we adapt and adapt to the system? how can we be nimble in our pursuit of justice without sacrificing our values and the rule of law? none of these questions are rhetorical. their answers are being debated everyday in seminars and world-

class institutions. but in the executive branch and the halls of congress as well. the urgency of this discussion has come once again into sharp opus. confiscated and -- has come into sharp focus. it is in such moments of difficulty in crises when cases are most shocking and emotions are running high and fear is at a fever which that our legal system is put to the test. at times of maximum danger, we must restrain the impulse to implement that which we might think to be effective, but is indeed surely inconsistent with our treasured values. [cheers and applause] it is also important to remember in these trying times that

nothing can be taken for granted. oz and outcomes are not preordained -- positive outcomes are not peer deigned. -- positive outcomes are not preordained. many were transported to certain areas. 60% of the interned were americans. a deeply misguided ruling, the u.s. supreme court said it passed constitutional muster. in the aftermath of 9/11 as our nation struggle to cope with on president tragedy and respond to a new kind of threat, fear and uncertainty drove us to abandon our values in pursuit of

information about those who would do us harm. we use techniques that were up to shovel the effectiveness -- please techniques that were of actionable effectiveness. -- we used to techniques that work of actionable effectiveness. and in bringing suspected terrorists to justice, some continue to question the capacity of our federal civilian court system.

many place unwise, uncertain detainees could be housed and prosecuted. in short, and many faith of our founding documents our time- tested affected institutions. in the wake of the boston marathon bombings, renewed calls to deal with terrorist activity are being made it again. every legal professional, every aspiring leader, every graduate in this crowd today must renew that commitment to standing firm in the faith of manufactured controversy and overheated rhetoric to uphold our most sacred values. [applause] let me be very clear. those who claim that the federal courts are incapable of handling terrorism cases are not registering a defensive opinion. they are simply wrong.

their assertion ignores reality. attempting to limit the use of these courts would weaken our ability to punish those who target our people and attempt to terrorize our communities. throughout history, federal courts have proven to be an unparalleled instrument for bringing terrorist to justice. they have enabled us to convict scores of people of terrorism related offenses since september 11. many are safely secured and held in our federal listens and not

prisons and not in guantanamo today. no one has ever escaped custody. no other tool has demonstrated such a robust ability to stop terrorism collect intelligence over a diverse range of circumstances. i defy anyone on the merit to challenge these assertions. our heritage, and our legacy to future generations, lili demands that we demand full faith and confidence in a court system that has distinguished this nation for more than two centuries. our security demands it as well. prosecuting terrorists in federal court is not consistent with our values, it is extraordinarily effective. setting this country apart, different string us from other nations, and serving as a model for others to in the and emulate. -- for others to model and

simulate. especially in moments of crisis, when we are under attack, or a faceless difficulty or danger, our actions, your actions, must be grounded in the bedrock of the constitution. steps for it must be rooted in knowing our protestant addition's, but our highest ideals. including the need to provide law enforcement with the tools and authorities necessary for a gathering of vital intelligence, keeping pace for rapidly changing threats, and protecting public safety. all the while safeguarding rights to due process. just as we are today a nation at war, so too we are a nation of laws.

with all that you possess, and all you have been given, every member of the class of 2013 has a special responsibility to help us meet these challenges, and keep advancing our uniquely american pursuit of a safer, more just, more her faith union. i am encouraged to note that more than 50 of you are already planning to fulfill this obligation by pursuing positions in public interest law and public service. [applause] others have been awarded postgraduate fellowships to perform public interest work.

two of you will be coming to the justice department to work with me. where are those two? there we go. i have my eyes on you. but, in the critical days ahead, no matter how you choose to put your legal training to work, when the public sector, in private industry, or in private rectus, i urge you to keep up the habit of pro bono service you establish year at berkeley you established here at berkeley. never forget that everyone of you is among among the most qualified legal professionals in this country. you are among the best equipped to serve, and to lead, and you are among the most prepared to helping you generation rise to the challenges of the moment, bring about meaningful changes we need, and make this world your world, a better place. i know each of you has the ability and that possibility within you. i implore you to make the most of it.

use your unique skills, your idealism, and the power your law degree of force to better yourselves to improve your communities, and solve the complex problem's that undoubtedly lie ahead. dare to question that which is accepted truth. strive to change that which is unjust. dedicate yourselves above all to creating a world that reflects your aspirations for a brighter future, reaching for the principles that have made our nation great, and fighting to secure and make real the romans of justice not only for your

time, but for all time. as you make your way forward, know that we have faith in you. i have a great deal of faith in you. we are proud, i am proud, of each and every one of you. we are counting on this class of 2013 to make more fair and more just the world that now looks to you for the leadership that you are uniquely qualified to share. congratulations. godspeed. [applause] >> now a speech by the first selectwoman of newtown, connecticut. patricia llodra. she describes what the tragedy has meant to her town as she addressed graduates at sacred heart university. this is 10 minutes. [applause] >> good morning. thank you president patella for addressing me with such comments and welcoming me. i'm humbled and and greatly honored by this recognition.

good morning graduates. congratulations to you for having reached this milestone in life's journey, and --ngratulations all susan mons also to the mom'sand dads, spouses, relatives, and supporters out there who are so proud of your accomplishments. and who so wish you happiness and success as you venture forth. i've had the pleasure of sitting in the audience of the graduations of my own children and grandchildren. those events fill me with satisfaction that i have accomplished one of live schools the shepherding and parenting of those for whom i have down list love -- boundless love. i described my self these days as an accidental politician. i never intended to have this

role, never thought of myself in an elected position. i spent 30 years as a teacher, administrator, consultant with the bureau of education, and that the connecticut association of schools. for the last eight years, i have been involved in local government. for four years, i have worked in the town of newtown, where i lived with my family for more than 42 years. a town that i care for a great deal. i town that i believe is special in many ways. a town that loves children and families, and is proud of its schools. on december 14, 2012, a horrible tragedy into this town. we lost 20 children and six adults to a terrible, violent crime.

the worst school shooting in history. that violence arbitrated upon us by an angry, confused young man, left is fragile beyond words. our sense of self, our confidence, and our surety that we are saved was destroyed in a five-minute halo billets -- five-minute halo bullets. that this one of that would not define us, that this community of newtown would be known for courage. that we would not fall into the emotional of this and rob us further. at the loss of 26 innocent lives is more than we would ever want to sacrifice to hate. that we would allow the killer no more. there is a magnificent sense of resolve. let's the spirit and provides the strength to go on in the face of unspeakable her. i think it is a tool for self- preservation. it was the anchor and lifeline used by many, including me, to get through those first weeks

after the event. the positive spirit was almost palpable and gatherings as we grieved together, set aside differences that we knew mattered little in the face of this new challenge. pledges of perseverance for communicated over and over again. i hear that same resolve and the voices of boston, and those i talk with from aurora, tucson, columbine, and blacksburg. i marvel every day at the convention expressed by those in newtown that we will make something good from that evil act. still today, 140 days after the event, the commitment to do good to do good continues unabated. in fact, i am pleased and proud to witness the great diversity of effort, even if some efforts appear to diverge from the norm. the importance for me is that everyone finds their voice, and

uses their talent, whatever it is to improve the lives of the common good. newtown is a special place. i think that we are basically good and kind. even the choice, i believe that each of us individually and collectively would more often than not choose the good act over the evil act. i believe we do not like it at all when the balance between good and evil is kept -- tipped away from us. our security is at stake when evil grains -- gains too much ground. when that evil happens in a place like sandy hook elementary school, it brings fear to all of us. if a school known to do all the right things to ensure student and staff safety, which was known to be a loving and inclusive place, to be the site

of a mass killing, then none of us are safe. i since runaway on december 14 at the world would be watching, that what we said and did would make a difference on our community would be perceived. it mattered a great deal to me, and still does. i care that newtown and sandy hook are not synonymous with a horrible tragic act. the future viability of our town depends on how we are perceived by those who would become our new residence. school children, families, businessmen, shopkeepers. we are and always have been a good place. we deserve to be seen for that goodness. how to go forward? how am i to lead this cap out of chaos? how to do it in such a way that others watching would recognize our steely resolve to persevere mixed with a strong dose of compassion and acts of kindness.

as i read and hear comments about my town, i think we have done well in this regard. we have had to rely upon our instincts about what is right and good. i recognize quickly that i was to lead with my heart, not just with my head. my role as the town leader was to model the common confidence that we will recover, that our community will be known for its courage and dignity, it's resolve the compassion. that we will move past tragedy, that we will put our arms around each other in love and support for as long as it takes to restore our balance. i pray every day that i will find the courage and the wisdom needed to lead others on this journey of recovery. it helped us in newtown to know that the world was not only watching, but that they cared. the outpouring of love, hope, and prayers, was overwhelming. all corners of the world were represented in that outpouring.

every country, every continent. every major government, and most minor states. messages and more than 20 languages, from churches, schools, families, individuals, and organizations. we learn throughout our experience we are one people the world over. let me leave you with just a few messages from my experience. find time in your life in your busy schedule to perform a service to others. that is one of the greatest rewards you will experience in your adult life. service to others is restorative to the human spirit. embrace every leadership opportunity. make sure that your heart is the most active ingredient in that leadership function. engage at a personal level in social dynamics.

make yourself part of a group. a community of like-minded or diverse individuals, look for that communal resolve. our future as a society will depend on those communities. let me congratulate you on this occasion. i wish you well in your endeavors. a wish for you to embrace and care for our mother earth, and all of its people. i believe that your generation possesses the answers to the questions we have today. i look forward to the future you crave for my grandchildren and their grandchildren. thank you. [applause] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2013]

>> and more speeches. tick hostile low, neat silver, steve wozniak, duncan need are hour, arianna huffington -- dick saturdaynd more night 8:00 30 p.m. eastern here on c-span. 11:30 p.m. funding for long-term health care after president obama's speech on student loans. >> president obama urged parents and college students to call, e-mail, and tweaked representatives demanding action to prevent -- tweet representatives. from the rose garden, this is just under 15 minutes.

>> ladies and gentlemen, the president of the united states. >>good morning, everybody. have a seat. have a seat. welcome to the white house. i know it's a little warm. one of my favorite things about this job is that i get to spend some time with remarkable young people from all across the country. it inspires me. it makes me feel good. those of you who have had to put on suits and ties and show up at the white house first thing on a friday morning may not feel the same way i do -- [laughter] -- but i appreciate all of you being here. you cleaned up very well. and these students and graduates are here to talk about something that matters to millions of young people and their families, and that's the cost of a college education. because this isn't just critical for their futures, but it's also critical for america's future. over the past four and a half years, we've been fighting our way back from a financial crisis

and an incredibly punishing recession -- the worst since the great depression -- and it cost millions of americans their jobs and their homes, the sense of security that they'd spent their lives building up. the good news is, today, our businesses have created nearly 7 million new jobs over the past 38 months. 500,000 of those jobs are in manufacturing. we're producing more of our own energy, we're consuming less energy, and we're importing less from other countries. the stock market has rebounded. our deficits are shrinking at the fastest pace in 50 years. people's retirement savings are growing again. the rise of health care costs are slowing. the american auto industry is back. so we're seeing progress, and the economy is starting to pick up steam. the gears are starting to turn again, and we're getting some

traction. but the thing is, the way we measure our progress as a country is not just where the stock market is; it's not just to how well the folks at the top are doing; it's not just about the aggregate economic numbers. it's about how much progress ordinary families are making. are we creating ladders of opportunity for everybody who's willing to work hard? are we creating not only a growing economy, but also the engine that is critical to long- lasting, sustained economic growth -- and that is a rising, thriving middle class. that's our focus. that's what we've got to be concerned about every single day. that's our north star. and that means there are three questions we have to ask ourselves as a nation. number one: how do we make america a magnet for good jobs in this competitive 21st century economy? number two: how do we make sure that our workers earn the skills

and education they need to do those jobs? and number three: how do we make sure those jobs actually pay a decent wage or salary, so that people can save for retirement, send their kids to college? those are the questions we've got to be asking ourselves every single day. so we're here today to talk about that second question. how do we make sure our workers earn the skills and education they need to do the jobs that companies are hiring for right now, and are going to keep hiring for in the future? we know that the surest path to the middle class is some form of higher education -- a four-year degree, a community college degree, an advanced degree. you're going to need more than just a high school education to succeed in this economy. and the young people here today, they get that. they're working through college;

maybe just graduated. and earning their degree isn't just the best investment that they can make for their future it's the best investment that they can make in america's future. but like a lot of young people all across the country, these students have had to take on more and more and more debt to pay for this investment. since most of today's college students were born, tuition and fees at public universities have more than doubled. and these days, the average student who takes out loans to pay for four years of college graduates owing more than $26,000. how many people are on track here for $26,000? and that doesn't just hold back our young graduates. it holds back our entire middle class, because americans now owe more on our student loans than

we do on our credit cards. and those payments can last for years, even decades, which means that young people are putting off buying their first car, or their first house -- the things that grow our economy and create new jobs. and i've said this before, i know this firsthand -- michelle and i, we did not finish paying off our student loans until about nine years ago. and our student loans cost more than our mortgage. right when we wanted to start saving for sasha and malia's college education, we were still paying off our own college education. and we were lucky. we had more resources than many. so we cannot price the middle class or folks who are willing to work hard to get into the

middle class out of a college education. we can't keep saddling young people with more and more and more debt just as they're starting out in life. now, the good news is over the past four years, my administration has done a lot to address this. working with members of congress, we've expanded student aid. we've reformed the student loan system. we've saved tens of billions of taxpayer dollars that were just going to big banks, and made sure that the money went to helping more young people afford college. we made it easier to pay back those loans by passing a law that says you'll only have to pay 10 percent of your monthly income towards your student -- federal student loans once you graduate. this is important to emphasize, by the way, because a lot of your peers, a lot of young people don't know this. under existing law that we passed, you never have to pay more than 10 percent of your income in paying back your federal student loans, which

means if you want to be a teacher, you want to go into a profession that does not pay a lot of money but gives you a lot of satisfaction, you are still capable of doing that and supporting yourself. we unveiled a new college scorecard that gives parents and students the clear, concise information that you need to shop around for a school with the best value for you. and i've made it clear that those colleges that don't do enough to keep college costs down should get less taxpayer support. so we're doing what we can, but here's the thing: if congress doesn't act by july 1st, federal student loan rates are set to double. and that means that the average student with those loans will rack up an additional $1,000 in debt. that's like a $1,000 tax hike. i assume most of you cannot afford that. anybody here can afford that? no. now, if this sounds like déjà vu all over again, that's because it is. we went through this last summer. some of you were here. it wasn't as hot. [laughter] i don't think we did this event outside. and eventually, congress listened to all the parents and

young people who said "don't double my rate." and because folks made their voices heard, congress acted to keep interest rates low. but they only did it for a year and that year is almost up. so the test here is simple. we've got to make sure that federal student loan rates don't double on july 1st. now, the house of representatives has already passed a student loan bill, and i'm glad that they took action. but unfortunately, their bill does not meet that test. it fails to lock in low rates for students next year. that's not smart. it eliminates safeguards for lower-income families. that's not fair. it could actually cost a freshman starting school this fall more over the next four years than if we did nothing at all and let the interest rates double on july 1st. so the house bill isn't smart and it's not fair. i'm glad the house is paying attention to it, but they didn't do it in the right way.

so i'm asking young people to get involved and make your voices heard once again. last year, you convinced 186 republicans in the house and 24 republicans in the senate to work with democrats to keep student loan rates low. you made something bipartisan happen in this town that is -- that's a powerful thing. you guys were able to get democrats and republicans to vote for something that was important. so this year, if it looks like your representatives have changed their minds, you're going to have to call them up again or email them again or tweet them again and ask them what happened, what changed? you're still taking out these loans. you're still facing challenges. remind them that we're a people who help one another earn an education, because it benefits all of us. during the civil war, lincoln had the foresight to set up a system of land grant colleges. at the end of world war ii, we set up the gi bill so that people like my grandfather could come back from a war and get an

education. all these things created the greatest middle class on earth. my mom, a single mom, was able to get the support that she needed through loans and grants even while she was also working and raising two kids -- to get her degrees. i'm only here, michelle is only right over there in the east wing because we got great educations. we didn't come from privilege. and we want to make sure that the next generation has those same opportunities, because that has been good for the country as a whole. it's up to us now to carry forward that tradition. higher education cannot be a luxury for a privileged few. it is an economic necessity that every family should be able to afford, every young person with dreams and ambition should be able to access. and now is not the time for us to turn back on young people.

now is not the time to slash the investments that help us grow. now is the time to reaffirm our commitment to you and the generation that's coming behind you, and that if we work together to generate more jobs and educate more kids and open up new opportunities for everybody who's willing to work and willing to push through those doors of opportunity, america can't be stopped. so i'm putting my faith in you. let's work together. let's get this done by july 1st. thank you, everybody. god bless you. god bless america. thank you. [applause] stripes forever"] ♪

>> the social security and trustee report shows both programs long-term are on unsustainable fiscal path. in the short term, the report shows that medicare posten and a outlook improved with the trust fund expected to run out six.o thousand 20 treasury secretary jack lew and health and human services -- kathleenck sebelius agree with the assessment. this is 40 minutes.

>> let me begin by welcoming my fellow trustees here in the treasury department. i would like to thank the chief actuaries and their staffs for all their hard work on this year's final reports. the social security and medicare boards of trustees met this morning so we could complete the annual financial review of the programs and transmit the reports to congress. social security and medicare represent a fundamental obligation to provide income and health care security for our fellow citizens. this obligation has stood the test of recession, war, and time. social security and medicare are meeting the commitments today, and will continue to meet their commitments in the years ahead. yet trustee reports have been indicating these programs face long-term challenges. the projections in this year for social security are essentially unchanged from last year. those from medicare improved modestly. as reported last year, considered on a combined basis, the programs have dedicated funds sufficient to cover benefits until 2033.

after that time, it is expected that ongoing flows of tax income will be sufficient to finance about 3/4 of benefits. strengthen medicare's finances by reigning in healthcare costs. the health care has helped extend the life of the hospital insurance trust fund. there will be resources sufficient to cover full benefits until 2026, two years longer than projected last year. what more must be done. the president recognizes how essential reform is, and is determined to work to put social security and medicare on a stronger footing. he has put forward a set of principles for reform. these principles underscore the need to find common ground to extend the life of the program, and while making it clear that changes that involve the benefit

cuts or privatization will be unacceptable. the president has a specific plan to further strengthen medicare. he wants to shrink the cost of spending, reduce subsidies to prescription drug companies, and ask wealthy seniors to contribute a little more. this will help lower future budget deficits. the four i close, let me say that when issuing reports like this, it is easy to get caught up in the numbers, but these reports are not only about numbers. they are about the millions of americans who rely on social security and medicare now, and the millions who will rely on them in the future. protecting social security and it is a challenge we can and must meet. i am pleased now to turn to my colleague and fellow trustee, secretary kathleen sibelius. >> thank you, secretary lew.

the affordable care act is continuing to strengthen medicare, and ensure its solvency for future generations. for nearly half a century, americans have looked to medicare as a sacred trust, a guarantee that no one will have to sell their house or go bankrupt in old age because of hospital bills. it is our duty to keep medicare strong and sustainable, so that our children can look forward to the same security when it comes time for them to retire. back in 2009, that very important mission was in doubt. medicare spending was rising rapidly. the hospital insurance trust fund was projected to be insolvent in just eight years. with the healthcare law, our goal was to put medicare on more stable footing, not by cutting benefits, but by putting reforms in place to ensure that medicare dollars were spent more wisely.

the past few years have borne out that promise. last year, the trustees report projected the life of the trust fund had been extended to 2024. today, we are pleased to announce we have extended the life of the trust fund two more years, to 2026. just as important is the way in which we are doing it. the affordable care act has helped put medicare on more stable ground, without eliminating a single guaranteed benefit. it will eliminate excess payments and crack down on fraud and abuse. thanks in part to those reforms, medicare spending per beneficiary has grown at a historical rate of 1.7% a year between 2010 and 2012. it is projected to remain lower

than the rate of economic growth over the next decade. this is not only putting medicare on a stronger footing for the future. it is benefiting seniors right now. preliminary estimates in today's trustees report project that estimates will not increase from 2014 levels. this report is encouraging because we know that many medicare beneficiaries are on a fixed income. medicare costs are less likely than private insurance costs to be affected by fluctuations in the economy. when medicare spending slows, it is a good sign that real progress is being made. still, we recognize that more work remains to be done. medicare continues to face considerable challenges,

including an aging population. we must continue to build on the progress we have made in the last few years. that is why the president's 2014 budget lays out an additional $317 billion in savings over the next decade. if those proposals are enacted, they will put medicare on an even sounder footing for our children. today's report is the latest demonstration that with smart reforms, we can secure medicare for the future without slashing benefits. going forward, we must continue working to keep strengthening medicare for beneficiaries today, and for future generations. i would like to turn the podium over to acting secretary of labor seth harris. >> good morning.

the 2013 trustees report clearly demonstrates that the social security and medicare programs remain the sturdiest pillars of our retirement, security, and social security systems, and can remain so for the foreseeable future. the challenges faced are real. this year, 58 million people, nearly one in five americans, will receive social security benefits. for nearly 2/3 of beneficiaries 65 and older, their benefits will account for more than half their income. older women, because they live longer on average and earn less on average during their working lives, are particularly reliant on social security. as we approach the 50th anniversary of the signing of the equal pay act next month, it is important to acknowledge that this gender wage gap still exists. as women continue to earn less over their lifetime than their

male counterparts, it also means they have less to save for retirement, and receive smaller social security payments once they have stopped working altogether. with 10,000 baby boomers turning 65 every day, social security is more important than ever for women and men alike. shifts in benefits and the retirement savings landscape also play an important role. this is not your grandfather's retirement. there was a time when most workers walked out of the plant on their last day of work with a reliable, defined benefit pension. they knew how much they would receive each month of their retirement, and they knew the benefits would last for the remainder of their lives. today, most workers who have an employer-provided retirement plan find themselves in the defined contribution system, usually a 401k, that is vulnerable to market volatility. millions of workers on the edge of retirement suffer the consequences of this riskier system during the great

recession. many workers face the even greater risk of no employer- provided retirement plan at all. in this environment of rising risk for workers, social security and medicare remain reliable pillars of retirement and health security for america's working families. one of the most important steps that could be taken to shore up social security and medicare trust funds would be for congress to enact president obama's agenda to create jobs and raise worker wages. social security and medicare financing does not operate in a policy vacuum. we cannot look at them in isolation from the performance of the national economy and the status of american workers. creating more jobs, putting more americans to work with the

skills they need to succeed in those jobs, and raising the wages of american workers means increased revenues for all of the social security and medicare trust funds. the good news is that our economy is doing better. after the worst economic downturn in more than seven decades, the economy is turning the corner, and the labor market is improving. we have seen 38 consecutive months of private sector job growth that added 6.8 million new jobs to our economy, with nearly 2.2 million americans employed today than a year ago. the april unemployment rate was 7.5%, its lowest level since december 2008. we need to accelerate job creation and economic growth, to put more people in work that enables them to support their families, paying for the system that sustains our safety net. we have to do more to complete this recovery. president obama has proposed a plan that will grow the economy from the middle class out, and create half ways into the middle class for millions of american workers.

we need to make america a magnet for jobs, with investments in physical infrastructure, skills infrastructure, and manufacturing innovation. workers must be able to succeed with the right education, skills, and training, beginning with early childhood education, continuing through affordable bachelor's degrees. and we must put more money in the pockets of american workers. that is why the president has proposed an increase in the federal minimum wage to $9 an hour, indexing that wage to inflation. this will also mean expanding america's labor force. we need to do more to bring people with disabilities into the workforce and sustainable

employment. this will bring millions of people out of the shadows and into the system, where they are contributing payroll taxes to the trust funds. all these steps will mean workers are better off when they are working, and more economically secure when they retire. a robust economy means strong social security and medicare systems. it will make our country stronger both today and in the decades to come. i would like to turn the podium over to the active commissioner of the social security administration. >> thank you. good morning. the social security and medicare programs are crucially important for the millions of americans who receive benefits, and for the roughly 95% of our population that is receiving or can expect to receive benefits from the program in the future. as trustees, we are responsible for overseeing and annually reporting on the status of two programs. the defined social security trust fund reserves are projected to become depleted in 2033 if no legislative changes are made between now and then.

at that time, continuing income would be sufficient to support 77% of program costs. this is unchanged from last year's report. lawmakers should act soon to address this imbalance. and phase in necessary changes gradually, and give workers and beneficiaries time to adjust to them. the long-range actuarial status shown in this report, represented by the actuarial deficit, is slightly less favorable than that shown in the 2012 report. the estimated long-range actuarial deficit for the combined social security trust fund over the next 75 years increased from 2.67% of payroll

last year to 2.72% of taxable payroll in this year's report. this change in the deficit can be attributed to the change in the starting year from 2012 to 2013, adding the new projection year of 2087. the updates of data for this report had offsetting effects, producing no additional change in the actuarial deficit. considered alone, the trust fund reserves are in danger of becoming depleted much sooner than the combined social security fund. this report again projects that reserve depletion will occur in 2016, in the absence of legislative changes. at that point, continuing income to the trust fund will be sufficient to support expenditures at 80% of closing costs. the d.i. is important to

americans receiving benefits. people who are not able to work depend on these benefits. in addition, all working americans who are currently insured depend on this program to replace the income they will lose if they become disabled in the future. the social security and medicare programs, as i have indicated, are critical for the millions of americans who receive these benefits. it is our hope that congress will make the necessary legislative changes before we reach the critical point of 2016. thank you very much. let me at this time bring to the podium our public trustee. thank you.

>> i would like to begin by thanking secretary lew, secretary sibelius, acting secretary harris, and acting commissioner colvin for putting together this report. our actuaries offices are indispensable in both the social security administration and the office of the medicare actuary. this is the third report in which i and my co-public trustee have participated. this is a process that is serving while. i continue to be impressed by the professionalism and quality

of work you see behind me. the process of putting together reports is complex. there will be disagreements along the way, but it is striking how these disagreements are matters of analysis. they are not driven by policy views, at least not that i have been able to tell. obviously, only time will tell how accurate or inaccurate our projections turn out to be. but i believe they have been put together in the highest traditions of public service.

: :

>> we're now going to turn to steve. steve is the reason we are here. everyone mention steve's name.

steve, you have an impressive advanced ability. we're looking for it. >> except for the climate, i'm thrilled to be here in washington, d.c. i appreciate the invitation to serve on such a distinguished panel. i have some slides. all they are is reference to some briefing papers that i've done on the subject of how to fix long-term care. if i trigger your interest at all today, you can go to this overview and get a link to the six briefing papers that i think will resolve the issue. i've also published, this morning, on my web site centerltc.com, an article i call "let's play long-term jeopardy." what i'm referencing is i think mark warshawsky has asked all of the right questions.

i pose the answers, then i ask you readers or contestants to imagine what the questions were that the answers supply the solution to. i thought this paper was extremely valuable because i do believe that if you are going to do policy research right, you better get your promises right, and you better ask the right questions. neither of which do i think much of the peer-reviewed literature in this area does. i praise mark for asking the right questions. i think the solution, the answer to those questions resolves around getting the premises right. that's what i'm going to try to explain today. here's what i think mark

warshawsky's paper asks us to understand. and they are all puzzles. if people can't get government-financed, long-term care without spending down their life savings into total impoverishment, which is what everything in the peer-reviewed literature and popular media as well says, then six questions. how do affluent people qualify for medicaid long-term care? as the "chicago fed" article referenced, get as many or more benefits from it than poor people? disconnect; right? why do the national health expenditure accounts show decades of skyrocketing public long-term care costs, and plummeting out-of-pocket expenditures. disconnect. why does peer-reviewed research show that medicaid crowds out

private long-term care insurance? if you have to spend so much, why is it the public is in denial of the long-term risk and cost? why don't public education programs convince people to plan for long-term care and buy long-term care insurance if the risk and costs are so huge? are people just ignorant of the enormous financial risk that they face? or stupid? how arrogant to assume that the problem is that the people are just not smart enough to understand they need this stuff. why have the long-term care insurance partnerships had so little impact? and why is private financing of home care minimal while medicaid and medicare home care financing

explodes. people are spending down to total impoverishment before they get down to government, they'd sure spend it on home care. and yet we have a very inadequate infrastructure that a welfare-financed institutioned-based long-term care system is now trying to retrofit a home-care model on. let me tell you what i think answered these questions. that is that our premise that people can't get government-financed, long-term care without spending down their life savings into total impoverishishment is inning a rat. it isn't true. it's factually wrong. i speak from a immediate

exposure to state medicaid programs. i've interviewed the medicaid eligibility policy specialists in dozens of states, and i've been out into the local welfare offices and talked to literally hundreds of medicaid eligibility workers. the people who actually interpret the rules, take in the applications, and make the decisions about who qualifies and who doesn't. what they tell me is that they are often extremely frustrated that they can't get poor people on to medicaid for long-term care until their finances are wiped out. but when it comes to middle class and affluent people who are accustom to dealing with financial planners, accountants, and indeed sometimes medicaid planners, they come in often with three-inch thick applications filled out by their

attorney with every i dotted and every t crossed. but the big question here is not how many people are doing medicaid planning? only one technique of which is asset transferred. not even the most important one. there are many, many others, such as the reverse half a loaf and life care contracts, and medicare-friendly annuities, and so on and so on. google medicaid planning. like mark, you'll find many examples. google it for your own state, and you'll find thousands. what's really going on here? the presumption that you have to be low income to qualify for medicaid applies if you are a poor woman or child. 75% of all medicaid recipients are in the category. but that accounts for only 1/3 of the cost of the medicaid. 2/3 of the cost comes from the 25% that need long-term care

that are aged, blind, and disabled. how is it that you can have large income and qualify for medicaid? if you are over the age of 65 and you have a medical level of need that qualifies you for it. it really doesn't matter much what your income level is. most states start with your income and subtract all of the medical expenses you have that medicare doesn't pay for, foot care, eye care, dental care, residual pharmaceuticals after part d, and your long-term care costs privately paid. if that gets you down close to a poverty level, you are eligible. they told me in rhode island when i did my study there, in the entire history of the people working there 40 years, they had never once denied medicaid long-care eligibility based on income to -- well, they did

twice in 40 years. even in states that don't do the medically needy system that i just described, there are miller income diversion trusts that allow people to transfer their money into a trust, get down to the right level. it's the same everywhere in the country. if you're expenses approach your income, you are eligible. so out on long island, add $10,000 in income, and you qualify. no problem. what about assets? we always hear is that you can't have more than $2,000 in assets and qualify for medicaid. well, in maine it happens to be $10,000 of cash of negotiable securities. everywhere in the country it is the same. you can have up to a minimum of

$536,000. in 14 states it is $802,000. that compares to $36,000 of equity exemption, home care, and all other assets in the socialized health care system in england. the next time somebody tells you we are a dog-eat-dog, force them into impoverishment place -- keep that in mind. most people don't understand that. you can have one automobile. because it is exempted if you give it away. buy one mercedes. give it away. buy another one. we call that the mercedes rule. 80 to 90% of people on long-term care on medicaid have sheltered between 8-$12,000 in pre-paid burial plans. this amounts to a subsidy at the

funeral industry as the expense of medicaid to fund quality long-term care for people in need. you can have unlimited term life insurance. why would a 90-year-old buy $1 million term life policy when the premium and benefit would be equal? eligibility for medicaid, and you avoid the estate recovery mandate because the benefit from the life insurance policy goes directly to your heirs without passing through an estate. my point here is that catastrophic spend down for long-term care is assumed because that's what the law and regulations seem to suggest has to go on. but there's no empirical evidence that it actually happens. and i would suggest that if we

deal with long-term care eligibility the way it actually exists and the way it is observably described in the federal legislation and regulations that govern this subject and if maybe somebody would get their nose out of the peer-reviewed literature and go out and see how it actually works out there in those medicaid eligibility offices, we would then begin to understand the answers to some of these questions. how do affluently qualify for medicaid and get as many or more benefits as poor people? poor people are wiped out, because they aren't accustom to getting the kind of advice of

affluent people. most of them qualifying without any techniques, the rest able to consult medicaid planners. why are the accounts skyrocketing for public programs and private financing is plummeting? it's pretty obvious. medicaid made nursing care home free for people in 1965 for all intensive purposes. the results are trackable. anything you make free, people are going to use more of. and it had serious consequences well beyond the explosive expenditures. by making nursing home care free, medicaid crowded out a market for both home and community-based care, privately financed, and a private, long-care insurance product that would pay for it. that's one of the main reasons

that long-term care insurance markets have not achieved the goals they are originally intended to -- and expected to achieve. the other main one is also federal responsibility. the fed drives interest rates down to zero. and forces private carriers to raise premiums in order to do the responsible thing and make sure they'll be able to pay claims some day. and the irony is medicaid and social security, the major social insurance programs in this country, have no prayer of being able to meet their obligations. yet there's nothing in their trust funds. all of that money has been borrowed and spent. medicaid doesn't have a phony trust fund to pretend it is financially incredible. and medicaid is the dominant prayer of long-term care. why don't public education

programs work? people just don't believe it when you tell them if they don't buy long-term care insurance they will be wiped out financially. guess what? they are right. the people trying to tell them otherwise are wrong. that's why it doesn't work. you make medicaid what it has always been assumed to be. a means tested, public-tested program that requires serious spenddown before you become eligible. i guarantee you the public educations will work. you won't even need them. people aren't stupid. they will figure it out for themselves once they see a few families wiped out by the cost of long-term care. why of the long-term care partnerships had so little impact? simple. why would i buy long-term care insurance now to avoid a spenddown liability that doesn't exist in the first place? even if it didn't, it wouldn't hit me for 20 or 30 years after

they are expecting me to buy this policy. it's had a marginal effect. it has the state and private industry working together and encouraging people to buy. that's the main reason. why is private financing of home care minimal while medicare and medicaid explodes? simple. math -- matt referred to it. if all it gets you is nursing home care, you are going to be reluctant to go on medicaid. you'll put together and find a way to keep mom at home. if it gets you home in community-based care financed by the government, you have a whole different incentive. so the idea that home care is going to save medicaid money, i think is just dead wrong for many reasons. you lose the economy of scale of

institutional care. it is very, very hard to enforce the quality, terrible quality problems in publicly-financed, home and community-based care because the public programs can't afford to pay enough to attract quality caregivers. and by funding home care without controlling the hemorrhage in eligibility, public policy further disincentivizes personal responsibility, early long-term care planning, private insurance, and all of the other potential sources of private financing that could feed the system with dreadfully needed private financial oxygen. thank you.

[applause] >> thank you, stephen. thank you for that nice plug for our vent and that phony trust fund that medicare trust fund. we're going to be talking about that monday morning. i'm not sure i completely disagree with you about that, by the way. we have to finish on time. we have about 10 minutes left. let's let the audience take a crack at us. then if there's time left we can have a few verbal questions up here too. this gentleman first. wait for the -- >> i'm don with aarp. looking at cms data, what i -- what is striking is the fact that in the period covered by their data between 1975 and 2009 -- 1975 -- the percentage of the older population on medicaid

actually declined by a third. despite the reductions and improvements that matt noted and the ways to game the system that stephen has declined, we see a sharp decline in older people using medicaid. the commission should be looking at why has that happened? the big story here is not the increase in use of medicaid, it is the decrease. we've seen a sharp increase for the per person cost. as matt noted, we've seen a huge increase in the number of younger people with disabilities, as well as per person cost going up for that population. but for the older population where you are really talking about the ensurable group, the group that you are concerned about in terms of spend down, we've seen a marked decrease. it seems to me the commission should be looking at what has caused this sharp decrease in use?

how are those trends likely to continue? and how can we build on that? so the one comment that i would add to that is what has really been driving medicaidics -- medicaid expenditures younger people with disabilities. it's not the older populations. since younger people with disabilities don't have medicare coverage, medicaid is on the hook for the whole piece. both long-term care and acute care. it's those expenditures that are growing so rapidly. it's really not the expenditures for the older population. >> i'll be curious to find out more about what you are saying. what the data showed was that the medicare spending has gone up. i know, but medicare is part of

the spending. so that's -- we have to consider all of the sources of funding. >> yeah. i would say medicare has been successful as keeping relatively healthy seniors out of poverty. that has really done nothing about the people, the very, very high need folks. we talk about the duel eligibility people that are eligible for medicare and medicaid. they are a small, small portion of the medicaid population. and medicare is their primary insurance. they get everything medicare offers. we still spend 40% of our budget on that population. so it could be a small number of people. doesn't matter. very, very expensive. >> okay. carl? >> thanks. carl pulzer with the national health care association. the providers that have the heavy lift are the nursing homes

and assisted livings. lots of people talk about disconnect between aggregate data and what's happening in the market. there's a million beds left. they are shifting to post-acute care. there's almost a million assisted living beds out there. that's the market offering an alternative to a nursing. it overlaps with a nursing home population. mostly private pay. how does that in terms of aggregate data does that show up? how does that show up? it's about a 30-$40 billion industry and 30-$40 million cost on average. but on the medicaid side, the data might be misleading. assisted living is underplayed except in a few states on the medicaid side. there you are going to only see home health care or personal care services as a medicaid category. medicaid doesn't pay for the home for the housing component, the food stuff, or the energy. so the states patch in, the ssi

check, supplement, and then double people up in units. which is now a controversial practice with cms and the proposed rules. that's an area where we might see the housing supplementaries cost to the intermediate kind of care level to have a medicaid update. if you look at the great study -- >> carl, sorry. we're running out of time. >> that's my jeopardy question. >> i did ask about that. some folks that put together the data. they indicated that assisted living is included to the extent that there is nursing care provided. i don't know how well they do that. there's nursing provided, and they are included in the data.

>> the nursing home finds that 19% of people in residential care facilities are medicaid beneficiaries. it doesn't play the kind of role that it plays in nursing homes. it is a significant portion. we did a study a couple of years ago for cms trying to look at what accounted for the large decline in nursing home use in one of the variables that we looked at was the supply of residential care facilities. we did find something about a relationship that doesn't a particularly strong one. there was a lot of new ways in the data. we really don't quite understand the residential care, nursing home interaction, but it doesn't seem to be a simple and straightforward one. >> steve. >> yes. >> i just completed a study in maine where i found to my

surprise and chagrin that while only 70% of nursing home residents there were on medicaid, and they call it maine care, and maine care pays only about 2/3 of the private pay rate that, in fact, 80% of all assisted living residents in the state of maine are on medicaid. that's much more attractive to a lot of people than nursing home care. and for assisted living, maine care pays only 50% of the private pay rates. so have some serious shifting going on that further encouraging eligibility for medicaid. >> okay. i saw two hands up. i'm going to ask you to each ask your question before we give any answers. take 30 seconds for a question. dr. pabla.

>> i'm caroline. i'm a physician and also an attorney. i would ask -- i would say that to mr. moes that the accommodations are not attractive to middle-class people. i think perhaps that's the bright line where it is dimmed or whatever that you would substitute some social services for medicare services so that people didn't get to the hospital like mr. gleckman's example. if there were somebody at home keeping an eye on these two people, he might never have gone to the hospital. you should credit that savings to medicare. medicaid covered some of those services. in the end, we might save money. >> there's a statement.

here's a question. >> mike thompson. my boss recently wrote letters to the states. they asked for state flexibility on the problem mr. moses pointed out, the home equity exemption. should states have flexibility to lower the exemption to ease the budget pressures on medicaid? thanks. >> okay. looks like we can just discuss whatever we want right now. >> well, we have one minute. i will do that. [laughter] >> i want to thank the panel for their discussion. i will say perhaps in some candor, i was disappointed. some of what was discussed struck me as not exactly relevant to the -- to my questions. we have some evidence here. we really need to understand it. some of what was mentioned didn't seem exactly relevant. but nonetheless, i do ask -- i

would have two specific questions. maybe we can get a little stuff from matt. how do you states enforce, from the estate of the decedent, the recovery of the value of real estate and housing? could you explain that? and then my other question -- in 15 seconds. my other question to steve is you have indicated that ira's are exempt. that could be a lot of money. i'm wondering if that's correct. >> we're really out of time. they will have a separate seminar that will be probably pretty likely if we're really going to understand how states do things. and i guess steve's answer is yes. so with that i want to thank everyone -- i want to thank everyone for this terrific event. please join me in thanking the

audience. [captions copyright national cable satellite corp. 201l cable satellite corp. 2012].. >> the young and healthy are going to have big increases. their number is 197. very close. these are sharp premium increases. for others they will get

relative decreases as a result of the framework. you just don't want to rely on an average. there isn't a single number that's going to tell you a story about the aca implementation. some people are going to get quite a bit of impact, and others a lot less. >> this weekend on c-span, the impact of the new health care law on insurance premiums. sunday night at 9:00 eastern. also this weekend on c-span2 book tv, "in depth" live. and on c-span3 a weekly look at presidency with george h.w. bush sunday at 7:30. >> fbi director, robert mueller, traveled to deliver the commencement address. former defense secretary, robert gates, is the chancellor of william and mary. he introduced the fbi director.

mr. mueller has been director for 12 years, and will step down from that position in september. this is about 25 minutes. [applause] >> thank you, president reevly. i have to say here at the outset there are two disadvances to being chancellor of the college. one, i get to march in behind a seven-foot tall rector. [laughter] >> and the other is the regalia. [laughter] >> which i've described as a unique blending of academic, medieval academic tradition, and lady gaga. [laughter] [applause] >> as someone that serves as a