let me begin as we approach the deadline with the affordable care act. what will it look like? >> it will look like it looks like today on april 1. what we hope we see is a large number of individuals who are how the joining in march. we will not really know that until april until we have a sense of who coming in. it is a marathon. it has never been a sprint. we expected the healthier people would probably wait until the last bit of time to sign up. we have to see now what happens. we can get a better sense of that to the end of april. >> if you give the white house a grade to get young people to sign up, what would you give it? >> looking at the last several weeks particularly, there is a lot being done to make it clear

what is out there, getting into social media. i think that is very good. we are doing extraordinarily amount of things to meet them where they live, social media, television, counselors that help explain options to people. these are important decisions that people need to look at these options in terms of premiums. you need to do kitchen table tests, what hospitals they like to use. are they in the networks. what their co-pays look like. our plans have played a very important role in helping to work people there all of these questions. >> to follow up on this we will start with julie rovner. >> we have seen some expectations about how many

people will be on the exchanges. how concerned would you be if it only had five and a half million people signing up and only 25% being in the sweet spot, 18-34? >> i am glad you are asking it straight up. it is really not about the overall number. it is about what is the mix of healthy to unhealthy. that is a much more important factor in terms of estimating costs and seeing if the pool will be balanced then age. health is a very important driving factor. we see a number of people who have got into this program in january who are using a number of health care services. that is to be expected. no one in our industry thought it would be different. we thought people who needed it

immediately would be the first to sign up. we taught the people who were healthier would be at the end of the process. we are hoping that will be true. >> are you seeing differences by state? are we focusing too much by the overall number? >> this is a very good question. we are focused on the number. in absolute terms, it does not matter. it is the distribution of healthy too well. we learned that in the states. state did not have insurance. that were balanced and the market lou up. it is very -- blew up. it is very important. you need to look state-by-state. we're looking at a 50 state approach in terms of how the exchange is designed. it is not really matter federal versus state exchange. what was the decision of

transition coverage. for a lot of people watching it will not mean a lot. in november the decision was made to decide that people who were in the old market could stay in their coverage so they would make the change to the exchange. for the state that allows that, we see a very significant reason for concern. they had expected all of the individuals would be in the exchange. they are not in the exchange. they are in the old policies. when you look at the exchange risk and the balance between sick and well, then you have reason for concern. we will not know as much about that until we see the final numbers. i do think what we can say in the transition state is there is

not enough people out there coming into balance the pool. how do you address that problem? it was unexpected. there have been some important policy decisions made. probably more needs to be done. >> let's talk a little bit about the backend functions of the website. kathleen sebelius was asked repeatedly last week how many are involved. -- enrolled. we do not know. it is still being built. can you tell us a little bit about where that construction is at this point? how much needs to be done? >> the front door of the website is working much better than it was in october. there has been terrific work so

that seniors and individuals that are looking, individuals who are seniors are thinking there was a time when the enrollment for medicare advantage overlaps with the enrollment for the exchange. they were able to see that is not where we belong. we belong in this other arena. it has an important that people can easily get that information. the front door is working well. compared to where it was in october. that is crucial. that story that is part of the website we are involved in, consumers do not really see. that part has had challenges. they are better than they were at the first of the year without a doubt. there are still some challenges. in terms of what is left, the whole finance package is left to be built. how do the plans receive the premium subsidies for the

individuals who are eligible for them? how do we reconcile with the exchange in terms of the people they think we have and the people we really have. we have to get the processes tested, implemented. it will be some months before that happened. >> it is hard to know exactly. the new contractor has been brought in to work on the financial package. the plans will be involved in testing. we will get a sense of how that is working. then we will be able to answer the question of how long that will be. it gives them a great deal of credit. they will be testing this before it is implemented. it is going to take some months before it is wrapped up. >> with so many exemptions, is

this the affordable care act an incentive to sign up? >> there are two issues. they are separable in terms of the penalty on the employer side. this is where you are looking for an answer. >> that was designed in the legislation. we made the argument three years ago when the legislation was being developed in terms of that architecture that we needed to have a penalty that was robust enough to make sure it worked as intended. the penalty is that without a participation requirement and market reforms do not work. all we know is what happened at the state level. that is the issue around the penalty. in terms of the decisions that

have been made, to the people outside of the exchange, i think that is the one that had the most significant impact. we know that people were healthier compared to people who had come into the exchange. it is crucial. to the extent you're making a decision, it creates consequences. that is what we have been looking at. we have some of the best policy and operations people throughout the country that have been mobilized to give the regulators a look at what is going on in the ground so we can reasonably make thoughtful suggestions. we have done that. we have tried to address some of those issues.

we're trying to process whether that is enough. >> you mentioned what some members are doing to educate themselves. a lot of them have very high cost sharing. what are your members doing to educate people about the cost sharing? are you worried about a backlash of people paying higher premiums and realizing there have to dole out thousands of dollars before they get anything covered? >> it is important terms of how people are looking at this. what i think is really important is the front door and having an area where they come at the cost sharing, deductibles and coinsurance and having that very transparent. we have been fully supportive of that.

that is why it is so important the front door is working to get people clarity. i am glad you asked the question. our customer services and social media and special community centers are being developed all over the country. it gives people a helping hand and make sure they understand their choices. this is where brokers lay a very -- play very important role with families with whom they have a very long relationship. how will this play for you? there are some families that want to minimize their monthly out-of-pocket in terms of premiums. others want to minimize their deductibles and coinsurance at the point of service. you have to understand what the priority is for the family and make sure that you are helping them be aware of what their options are. the brokers play a very important role here.

>> i would like to shift just a minute to medicare advantage. it provides coverage to medicare beneficiaries. the health law will reduce medicare advantage reimbursements. there are other changes that are affecting your industry. this will be devastating. seniors will lose choices. they will pay more. when they present this issue they prevent a different view of this. premiums are down nearly 10%. plan choices are robust. with that in mind, why is this an issue that it will be reduced? >> this is a great question. 10 years ago i watched this

program for all the headlines saying everything was fine. after the balanced budget act of 1997, we said there was going to be trouble and problems. everyone said things were going to be fine until it wasn't. last year there is a 6% cut in the program. we know from data that has been reported that individuals have had reductions in choices. we know they have increases in their out-of-pocket. if you are a senior on a fixed income, your out-of-pocket costs are very important. you want them to be predictable. you also want to take advantage of this is the reason why they are joining these plans.

it is coordinated care to have a network of practitioners working in interest to make sure the stay well. not just treating you when you are sick. 6% last year. we know it has benefit consequences. >> it is from a variety of factors. >> without a doubt. can they use their tools to adjust this so we do not see the problem that we sell 10 years ago? 10 years ago we saw a very large number of seniors completely lose their choices. we saw people who were priced out of the market and cannot afford the care. we are working hard to make sure that does not happen again. everything was fine until it wasn't. we want to sound the alarm that

we want to sound the alarm that it may look right on the service you've had a reduction in choices. that is a very big deal. we want to make sure that does not happen in the fall of this year. >> this is coming from a higher base. you were given extra payments. >> we were given extra payments because of the devastation in the program and how many people were affected. it was the usual political reaction to large numbers of seniors losing their choices and having a significant increase in costs. we do not want to see that happen to seniors. we believe the agency has tools. we have been very careful not to relitigate the aca in making this in terms of turning to the tools the agency has to protect seniors. >> aren't these adjustments are

to get medicare advantage payment equal to what the government pays for a beneficiary fee? >> stocks of several insurance companies have a heavy position in medicare advantage. they all went up. it looks like the market is not worried. >> the ratio is coming down. the data shows that in terms of the relationship of medicare advantage. we started from a different base several years ago. medicare advantage also offers a number of benefits and services. we are roughly at 106. we offer coordinated care. we offer a range of other benefits. that is the important thing in

terms of apples to apples and some we are being paid 95% of medicare. that is what the data looks like. in terms of market reaction, and focused on the seniors. i'm seeing a 6% cut last year with the idea in the political arena that will not make you different for seniors. without a doubt it will. that is why congress members have sent letters to the administration to say do something about this. prevent disruption. >> the aca have not rolled out the way anybody would like for it to have. congress has been mostly unable to do technical corrections. if they could, what would be the top two during -- three things you like to see them address?

>> the premium tax, there is essentially a federal sales tax on the cost of health insurance. three years ago we raise a concern to that. it adds to the cost of the project when the entire effort should be about reducing the cost. we are proud that the cbo has said for this year are premiums are less than what cbo estimated for this year. that is a significant accomplishment. that is very important in terms of thinking what a consumer sees. the premium tax is going up by 40% next year. the revenue that is being raised as a result of the legislation will have an implication on how people look at the cost of their project. now that people are beginning to

focus on how you build the premium, this is something that will get a significant amount of community. individuals are purchasing. it adds the cost of medicare advantage. $20 per member per month is going to this. it adds to the cost of medicaid. states are having to subsidize the cost. i would say i want to go back to this whole transition area. it was allowed to say because there was a plan being expressed about the categories of coverage. in general the market has very high deductibles. that is what people prefer to buy because they want to keep their premiums low.

if you have a giant step up, that is a bridge too far for some individuals. that was being telecast -- telegraphed pretty clearly. i would create it lower so people can gradually get into the program. so they can be part of the risk pool. so the process can be working the way it was designed. doing things gradually just from human nature cost perspective makes more sense. >> would all the healthy people congregate? >> we are not seeing that right now. i think you would have expected an extraordinary amount of people to buy bronfman they have bronze and they have

chosen more silver. they are willing to pay a little bit more. people are choosing. i would give people more choices. human nature suggests that people like that. they are in control. i would do that. >> let me follow up on the process. if the targets are not met, it is so important to the implementation of the law. what are the options? what is next? what you have several options in terms of the cost? you use your tools. this is an issue that relates to the states looking at how the processes going. will they pass regulations to limit the use of our tools that will have a limited consequence for consumers? without a doubt, we have to look at that mix. how do you price the pool?

there have been some help with that. is it enough? we are trying to get a handle. we are concerned about that. we're continuing to look at it. we're looking at the data, trying to make sure we can make things as affordable as also possible. we have it working great hard to do it. we have had a very good track record. there is reason for concern. the premium taxes going up by 40%. it is a major factor you have to figure out. >> i want to make sure i understand about the employer delay. talked about folks being able to stay in their individual market policies. and also about some of the early entrants using services. you're hoping healthier folks come in. do you see a spike in premiums next year?

>> it's too early to say, we have to go through the open enrollment process. you have to look at all the data. we have to look out how we're positioned in the states. who is coming in? who is not? how do you put all of this together? our goal -- we have been nothing but boringly consistent. our goal is to create affordable health care choices for consumers. we are doing everything we can. that is how we are evaluating architecture. that is how we are trying to be very constructive and thoughtful to address the issues. as we think ahead, that is why we have been focusing so much particularly on the states where they have been held outside of the pool.

you didn't have to look at who is in the pool? >> any ideas you think are better? >> i think it is early now. i think the republican alternative is just beginning to be exposed. i look forward to seeing all of the details of that. i am focusing in one way or another on whether we're here now because of the regulatory horizon. we have been working very hard to try to provide the best advice from the front lines about regulatory policy. we have been very focused on what do they think they are seeing? how are they looking at the future? we have been trying to work with mobilizing the very best plans to try to address these issues that you are probing.

>> your plans will not have a lot of time. would you like to see that extended at all? you keep saying we're going to need to know and look at all of this. it is really just a matter of weeks. >> it is. there has been a moving back of the deadline. that was a very thoughtful decision. i think that helps. the actuaries are already hard at work. some require them to submit did -- bids prior to the federal exchange. the end of may through june. that gives a little more space. hopefully these states will look at that and decide probably a little more space is needed at the state level as well. you need to understand who is in. how are services being used to create the most effective premiums? our goal is to create affordable premiums.

that is why we are trying to point to anything in the architecture of the legislation or the regulatory side that can help achieve that goal. >> the president and ceo of america's health insurance plans, thank you very much for being with us. >> thank you. i want to begin on this new tier we have talked about. what did it mean? >> there are basically four medal tears. for people under 30 there is a catastrophic plan available. except for the catastrophic, the tiers has separate categories of benefits. perhaps there should be another tier that offers less comprehensive benefits with a lower premium. there were a lot of complaints last year with people saying they have a higher deductible

plan. this would be a big change. one of the things they suggest is that people really have comprehensive benefits. she suggested maybe there should be an opportunity to buy coverage that would not be so comprehensive. that would be a fundamental shift. >> this is something new? >> yes. >> let me ask you about the premium question. she does not have the information. are you looking for premiums hikes? >> she said several things are interesting. they're using a lot of services. they hope that they came in to balance it out. it talks about the will and an

individual market that are allowed to keep this for another two years. people tend to be healthier. they're coming into the exchanges and getting policies. they may cover more services. she seemed to suggest you look at those changes plus the taxes of the industry and some of the other employer mandate delays, possibly we might see a rate increase next year. kathleen sebelius was asked this on premiums. they will go up at a lower rate than if we did not have the affordable care act. this is a key unanswered question. >> you both asked questions about what the law will look like after the implementation after the process is completed. she made reference to the political noise behind all of this. what are your thoughts? >> what impact has this have on people signing up? there is a lot of confusion.

there are a lot of people that do not know that they do not have insurance. they're supposed to sign up. if they do not, they could be subject to a penalty. there's still a lot of ignorance. there has been so much political noise about this. the message has not come through. there are people who still think that there been some a repeal votes that it has been repealed. people don't know that it is still the law. they don't understand it at the end of the sign up, you can't buy insurance until next year. this is not the same kind of insurance that we used to have her you could buy insurance anytime you needed it. there is one open enrollment and when it is over you can't sign up until the next open

enrollment. it is a big issue for the insurance industry. >> there are delays for penalties. >> you have to qualify for a hardship. your policy was canceled and you find one and you can find one that is affordable, you can go through a process to get the hardship exemption a. it is unclear if that will be diligent. the hardship exemption, they are too wide open and people can simply use them if they need to to get out of getting health insurance. >> a small and declining population, it is only about 1.5 million people. it becomes a smaller and smaller group of people who don't go off and find other coverage for other reasons. they get jobs or go into the job market.