>> when you're living in a world you don't have monopolies anywhere and you have multiple companies competing for their options on tv, for example. does not work when the laws were written for monopoly and is why consumers don't have they couldions as have and why the prices are going up for the tv and video services when they should be going down. >> when you're getting internet watching tv, it used to be you watch tv or you had a cable provider. is everything from cellphone companies offering cable services to satellite companies to just doing it over your internet with everybody hulu.ike consumers are at the winners at but we needhe day an an try trust approach and to notablies are mon not participating in these

activity. sure they to make release their information in a manner. we think the agency should be more transparent. focus on what they are doing with spectrum and licensing. that is their core mission. getting offt them in neutrality and trying to have governments of the internet. we don't want them in privacy. those go to the f.t.c. it is time to narrow their focus. telecommunication issues the members of congress that are session.ng in this tonight on communicators on .-span2

>> i was offended at that time. what happened since then? added 170 pages of taxpayer protection to that bill. ofunderstand the gravity this situation. we worked with our colleagues on the other side to make this bill better bill. we made sure there is upsides to happens, so when this when profits come to these stockies, we get their warrants so the first people who get their profit is the american so they get their money back. we made sure there is an makesnce program that sure that wall streets shares in this recovery plan. that theade sure executives of the companies this rescue from recovery plan. we cut the initial cost in half congress will have to

approve the second half next year. this?d we do all of because this wall street crisis a mainstreamcoming crisis. it is quickly becoming a banking crisis. what does that mean? why does that matter to us? does it matter to janesville, wisconsin? if it goes the way it could go, means credit shuts down. businesses can't get money to to pay theirroll, employees. students can't get student loans next semester. people can't get car loans. may not have access to their savings. are we standing at the edge of this abyss? nobody knows but maybe. very probable. principles.fends my but i'm going to vote for this

bill in order to preserve my principles, in order to preserve enterprise system. herbert hoover moment. theade big mistakes during depression and we lived with those motor vehicles for decades. not make those mistakes. is what getting the fear out of the market. issue up to ahis crisis.o, to a all eyes of the world's market is here on congress. a heavy load to bury. bear.s a heavy load the we have to deal with this panic. we have to deal with this fear. the moment.we're in this bill doesn't have anything i want. lot of good things in

it. we're here. we're in this moment. if we fail to do the right us.g, heaven help if we fail to pass this, i fear yet to come. the problem we have here is month away from an election. we're worried about losing our jobs. all of us, most of us say this thing needs to pass but i want not me.ote for it, unfortunately, a majority of us are going to have to vote for this. we're going to have to do that acause we have a chance of resting that crash. work.this will so for me and my own conscious, the can look myself in mirror tonight, so i can go to sleep with a clear conscious. didnt to know that i everything i could to stop it from getting worse, to stop this street problem from

infecting main street. i want to get on my airplane and see my three kids and my wife that i have not seen in a week eye and saym in the i did what i thought was right future.r i believe with all my heart, as is, it could g worse and that is why i think we have to pass this bill. >> find more highlights from 35 years of house coverage on our facebook page. c-span created by america's companies 35 years ago and brought to you by your local provider.atellite >> the american enterprise institute hosted a discussion on the implementation of the health care law. experts discuss the impact of the law and looking attests to change the health care system employers are reacting. to

have the first panel discuss sort of the existing situation with the affordable care act, and for this panel to look at the future. you've already heard a good bit of discussion about the future and so on, but this panel is designed to go into some specific areas of the health care system, states and the

employment sector. we've got some very well-qualified people to discuss this. i'm not going to go over all of their credentials and so on. you have those in front of you. with one exception. i wanted to mention that alan weil has now been selected as new editor of health affairs which he will start in june, june the first we hope. anyway, let me just say this briefly. this is -- they're sort of a common statement, that nobody can predict the future. well, i think what people really mean by that statement is that nobody can be assured that the prediction is actually going to occur, but i've always said, predicting the future is easy. people do it all the time. the tough part is for you and me

to decide which of these many predictions we want to believe. now, there are ways that people go about talking about the future, you know. some people just casual remarks, but other people use lots of data, sophisticated actuarial economic models and so on. but in all of these cases i think it's important for whoever is talking about what's going to happen, in this case, that they come with a sort of sense of history, that they are aware that lots of predictions in the past haven't worked out as people thought. so the important thing i think for you in terms of thinking about what's can do happened in this sector is to sort of what's the probability of these unexpected things that might affect these predictions. so i know that sort of abstract but i wanted to say. we have decided to go in the order listed.

so jeff, we will start with you. >> thank you very much. there is. good morning, everyone. it's great to be here. i don't get to washington very much, and i'm here on this panel as a representative of the groups that have benefited the most from health reform process so much, which is a health care consulting community. [laughter] the people who build all the defective exchange, the people are advising, the person does consulting. the people are helping hospitals build acos, sort of in and out of my managed care. those are consultants. this has been the golden age for our industry and we are delighted to be here to talk to you. if you spend your entire career in washington you think that medicare policy, you are sort of running the health system, i think that's an illusion.

medicare represents maybe 22% of total health spending in the country at max, at full funding the affordable care act will be putting about $250 billion a year into the health care system that by the time we get to 2023 will probably be $5 trillion in scale, maybe 5% of the total thing. so from a standpoint of just the sheer scale of the enterprise i think people who work in washington to realize we are dealing with something that is the size of a nation. our health care system is bigger than france, it's bigger than russia. i am confident that we will defeat germany to $4 trillion. 16 million people work in it. seven out of the 10 smartest kids in the high school graduating class work and our health care system somewhere. so when people in washington bravely talk about reforming the health care system, the degrees

of difficulty or its magnitude, this is way harder than iraq. is like invading a country the size of germany, and i think that's a little bit what is happening now. the main feature of this health economy for most of the last five years has been disinflation. frankly, something no one, including the futurists predicted, in 2009 our health system arrived at a rate of increase in health spending that we haven't seen in this country since dwight eisenhower was president of the united states. five years before medicare, and we stayed at that level of maybe 3.8, 3.9% increase in spending for five long years. the economists who believe this was a product of the recession will have trouble explaining why per capita medicare spending has trended down towards zero during the same period of time, 85% of the beneficiary population

protected from costs by supplement insurance and medicaid or employer coverage, and why medicaid spending has trended down towards zero where people have essentially free care. so clearly something larger is going on than merely a macroeconomic response to slow down in our economy. i think the two big things that have brought this aircraft carrier enterprise to a slow glide, mark pauly over to one of them, which was this industry doesn't have a lot of new products to sell the public. if you look at the hospital of 2013, technologically it's pretty much identical to the hospital of 1998. device innovation, new technologies for ambulatory. there really aren't a lot of new technologies in the hospital sector. and this recent reacceleration of cost i think a lot of people really point to the fact that, i

me, only in health care is that somehow bad news. okay, or something to really worry about, we have effectively cured hepatitis c, arguably our third most significant chronic disease risk after diabetes and alzheimer's disease. but, you know, when you look at the deflection points in spending for the fairest sectors in the health system, they go back in some cases as far as 15 years. pharmaceutical spending went downward in 1990. imaging spending, $200 billion business that was growing at 15% a year didn't downward and almost came to a halt starting in 2006. hospital outpatient volume trended downwards started in 1995 and was only growing at about 1% a year by 2010 or 2011. hospital inpatient utilization

trended downward 11 years ago in 2003. as you follow the industry, i hear all this stuff about the reacceleration of cost and hospital cost. according to my friends at citigroup, hospitals lost about 4% of their admissions last year and there's some and investor owned firms that lost more than 11% of their admissions in a single year. and, finally, physician visits were bent downwards in 2005 and have since fallen about 12% according to imf health, maybe 3% growth and physician visits in the last six months. but i think the other factor that has contributed to the slow down in cost in addition to the fact that there just aren't a lot of new products is the question of affordability. think about this, add up these numbers. 48 million plus or minus to this last january uninsured, maybe

30-40 million more people who, while there are number of injured, don't have any cash. so they don't really have that money to pay the co-payments that are required on a high deductible plan. they tried to avoid using the health care system, and just mark alluded to, and when they do use it they don't pay their bills. than 53 million people on medicaid. you add up those three numbers, it's half the country. half the country cannot afford to use our health system without massive public subsidies. it's not bullish short or long term for any industry if half the nation's citizens can't afford to use its products. that issue of affordability really hasn't gone away at all. we are going to give people access to health care but for the significant number of people who get it through private exchanges, they're facing a deductible of anywhere from 2500-$5000. i heard paul at mckinsey talk

yesterday, every penny of that $5000 is going to have to be paid before there's a single dollar of insurance coverage for the emergency room visit for that hospitalization. so very significant barriers to increasing demand, even with the advance -- advent of this new coverage. the hospital interest is the largest single piece over health care systems infrastructure, roughly $900 billion industry. and the most interesting thing going on in this space, two things, there's a wave of merger and acquisition activity. the most fortunate beneficiaries of this new regime have been the investment bankers and dealmakers better after brokering a lot of mergers and creation of large health care enterprises. the theory is that they will have market power that will enable them to extract the rent from the health insurers in the communities and get higher rates

from health plans. and yet a wave of layoffs has hit our hospital industry, and the pattern is absolutely fascinating. because as is the market-leading institution, that allegedly had achieved that a mass in the scale and, therefore, bargaining leverage with health plans they are laying people off. the list is impressive. vanderbilt university in nashville, the cleveland clinic, the closest thing we have to a machine in health care delivery. offered buyouts to 3000 of its workers and over 300 of its physicians staff. indiana university in indianapolis, the two dominant players in health system, thousand person layoff. wake forest baptist university hospital in north carolina just announced what's going to in the thing about 1000 person live but it's a very long list. portland, maine, the washington

hospital center here in washington, sort of dominant actors. evanston northwestern. avastin northshore in chicago. all of these folks are laying off people. when you talk to their ceos, what they are seeing is an double-digit revenue growth. it's like three, four, 5% revenue growth. they're spending is growing faster and so they're trying to adjust to this uncertainty and that's what i think this lies principally brought to the health system. this massive cloud of confusion and this threat that the world is going to change to respond to uncertainty by trying to reduce the momentum in their own spending and lay off workers. someone alluded in the question period on the first day of the physician sector. i spent most of the last three years studying the physician business and sort o of the futue medical practice in this country. i don't think there's any question but that a hidden

effect, not only of the law, but of the regulatory regime that preceded the law is to drive the independent medical practitioner out of business and into the hands of corporate owners. the principle movement in this space has been at the hospital employment which has grown by roughly 15% in the last decade. it's actually, the numbers you've seen in the generals are probably wrong. maybe 120,000 of the 700,000 practicing physicians in the country, if you don't count the interns and residents have been all along are now hospital employees. and i think, and the economics of that employment is will be interesting. if you believe the medical group that reference most of those hospital sponsored groups, the average hospital employee doctor is losing the hospital. about $206,000 a year.

that is the difference between what they collecting fees for the services and what they pay out in salary and what they spend to support their practice. why are hospitals doing that? well, it's because they are able thereby to redirect all the diagnostic activity to laboratories, the radiology person, the high-tech imaging like mri and ct scans as well as the ambulatory surgery, from much lower cost freestanding institutions to the hospital which may charge anywhere from three to five times as much as the organizations that are losing the patronage of those employed doctors. so if there is an underlying driving force ocean costs up in addition to chairing hepatitis c, i believe movement of doctors to salary employer is certainly one of them. and, of course, that is being supported by medicare policy

that enables the hospital to charge a technical feat for positions visit in addition to the professional fee that that position would've gotten in office practice. so from a policy standpoint i think we're making a mistake. we are sort of lighting a fire under our toes here by giving hospitals and incentive to employ docks and making the implication that physician services are worth more in the hospital setting than they are in private practice. as for the institutional analysts that follow our business, i really kind of conflicted about the impact of this law in the health care system. for example, my friend gary taylor at citigroup believes the trend for will be earnings for the publicly traded care system, hospital systems, the physician group, et cetera because of a large number of folks that are present we not going to be able to afford their care.

and in the cases of some of these institutions, like tenet healthcare, for example, $30 million a year income gain as a result of the affordable care act, i'm not so sure. i think the combination of the deductible since, the fact that there is a very significant break for that, 12 to 15 million people that will have exchange coverage, the fact they're going to be facing anywhere from 2500-$5000 or perhaps even more in front and cost before they get a dime's worth of benefit i think is going to dampen demand. .. the front end costs the cost of the care that a lot of us

keep it fromd crashing in the first place, covered.ot going to be the percentage of people with a $5,000 deductible that use it up in a year, is 3%-4% of the population. small number that spend enough to get to a point where are in the benefit itself. i guess i'm, you know, i guess i'm a little bit less bullish investmentf my analyst friends. i think right now, certain in the affordable care act flow negative because they gave updates and they took a huge hit from the sequester. i think it will probably be 2016 or maybe 2017 before we reach of crossover where the additional demand created by the affordable care act generates revenues to company for the

front-end payment they made to cover the cost of this act that began in 2011. ath the physician's, it is heard thing to say. again, i think the thing we able to get't been our hands on is the breath of network thation are covered by the exchange plans, how many are covered.at mystery.ll a in many cases, physicians are allegedlied to be covered by the not covered.e i think there is going to be an period of shaking out when people use the benefits able to getthey are access to fission practices or be i think is going to another question. there is no question in my mind industry's bad debts for the big bills will go down. a good thing.

if you talk to hospital and medical group finance people, will tell you is the majority of their bad debt fiveh during the last years hasn't been from people without health care. from people with health care that don't pay the patient bill.n of the that number is going to continue to increase. thehen you think about three groups of people you talk about earlier, the uninsured, the 48 million uninsured. the 38 million who don't have the 53 on medicaid. in macro terms what the law does is move maybe 25 million people from the first group into one or of the second or third grows. thathave trouble believing this act is going to generate the increasing demand for that most people are expecting. we saw in massachusetts, there was a lot of people flooding

into emergency rooms. there is a good deal on emphasis medicaidy covered folks see a spike in emergency room demand. work in a hospital, the biggest battlefield is over the admit the patient interest the emergency room to the hospital where there has regulatoryicant complication in the last two to three yeas and the creation of this limbo called observation status. is sort of like purgatory. nobody wants to take care of you. not acute care. both private insurers and the program have been increasingly stringent about define ar not to person's illness about sufficiently acute that it justified admission to the hospital a medical necessary event. i think we're going to see that populationmedicaid

comes in through the emergency room. from clear how much volume or demand growth we're of this see as a result law. >> thank you, jeff. go to tracy. >> thank you. i appreciate being here. i always enjoy being invited to data.our survey i'm from mercer. i lead our efforts around health i partner very closely with research department to gatherto time information on what employers doing, have already done and thinking about doing. i'm going to do is share with you some of our survey data collected at the offends the end of january

and february of this year. survey wee seventh have done focused on health care reform. you're probably most familiar large survey that we do about 3,000 employers every year just on general health care practices. special on health care reform. as you can see, a nice cross section by size. into 2014 is going what impact the individual theire would have on enrollment. they offer benefits to their employees but some people decline coverage. some go without. we think most of them have coverage elsewhere.

to see what the impact mandate.e individual the moren imagine, people that come back in, the bigger impact it has on the overall budget. what we found in our survey was that the impact on el rollment was practically zero. thesked questions about eligible population and who took percentage of the eligible population. increased in 2014 and projected increase for 2015. now one of the questions around maybe they were offering benefits to everybody with.hey needed to begin

the next thing we asked about was the three really big sharedons of responsibilities to employers. we asked how many of you are providing coverage to everybody who works 30 hours or more today? can see from the graphic, extend eligibility under the criteria, 10% went ahead and expanded their eligibility to get to that point in 2014. another 31%we have that will do that going forward. that is probably the most challenging aspect of the law for a smaller group of employers. again, that is the biggest challenge. minimal get into the value plan, over 80% of benefits who offer easily meet those criteria. problem.t a the affordable contribution category, those who did not

currently have a plan for individual coverage, many of plan.dded a lower option reach then easily requirement. that was one of the big questions going into 2014, what is the situation and how are employers dealing with that? ofdo have just a little bit industry data on whose the most affected by the 30-hour workweek. one of the things that is interesting is everybody assumes retail and hospitality. i will tell you from the cases i with, it is a huge issue across other secretariers as well. we have the issue with adjunct professors and students and students who work there at the university. we have issues with nurses that care.n health so this is not just a retail, issue.lity nonetheless, sharing with you by industry on those

most affected. another thing that i thought interesting to this group when i looked at the speakersd the other today would be what employers perceive happened with the enrollment of those not currently enrolled in their plans. we asked if they believe some their employees enrolled in the public exchange or gone to medicaid. 25% thought they had employees formerly waived into it hast came the individual mandate. thought their employees went to medicaid or the public exchange. say this is scientific data. this is their perception. solid data on that. given the fact that they provide of their care to most

employees, we thought this would interesting. thesk questions about average value of the plans. theanted to know now that 60% plan is the new benchmark for employers, i would say prior to this law being passed most the valuedid not know of their medical plans. recent phenomenon of the affordable care act. wanted to gather information on what is the value of your medical plan? plan is offered, it is reported that the average value is 79%. or more plans offered, the average value of the lower cost is 77% and the higher plan 83%. first of all, the average value i wouldlan is provided,

suspect if you had historical data on this, that has been a slight decline every year. we have seen deductibles and out maximums increase each year even before the affordable passed. was ah ha was the difference between the lowest cost plan and the higher cost plan. i thought it would be lower than 77%. i think that is yet to come. wasother thing we looked at the lower cost plan was close to value and only 11% inthe 700 who participated this survey say they have a plan 65%.is less than nobody is working the low end of value.ge per plan i think we'll see movement there but this is a good benchmark.

is the starting out point, if you will. since the law was passed, we've been asking employers their greatest areas of concern. from the first survey we did in 2010, the excise tax was the number one issue for employers. continued to be the number one issue for employers until this survey in january the increased administrative burden outpaced excised tax on the plans. we're at a point where w all of requirements. it is not just do you design to costly.nges that are it is figuring out and filing and paying the fee. the temporary reinsures fee and we have the top of that, the summeries of coverage and the we had to do in the fall. now, we're getting into how are

hourlyg to measure our 30-hours for the requirement. i think we got employers to the sayinghere they are enough. as a >> we have employers to the point where they say, enough. have seen since the beginning and continue to be an issue for employers. i want to just spend a couple of minutes on the excise tax because, as i mentioned, it has been the number one issue from employers since the very beginning. an interesting finding from a survey that we did last summer, we had about 900 employers that participate inside that survey. a third of them told us, you know, last summer that they were already making changes to their benefit plans for 2014 in anticipation of the excise tax in 2018. so they know. they've done the projections, they know, and they're planning

for it. and the thing that's interesting to me, we had the pleasure yesterday of meeting with economists and lawyers at both labor and treasury to share survey data and have a discussion around the data, and everybody seems to think that not that many employers are going to hit the excise tax and even seemed to be a bit of a theme in the prior panel. when we take our survey data and we project it out to 2018, about half of the employers that participate in our 3,000-employer survey have a plan. their highest cost plan is going to hit the threshold in 2018. now, i will say it assumes that they don't make any changes to the current plan, and that is not a true assumption. we know that they will make changes. it assumes a trend around 6%. that might be a little high for some, but for some it's not too high. and so, you know, i think that this is a real issue, and employers are taking action,

and, you know, the very first thing that they did was to decouple tear dental plan from their -- their dental plan from their medical plan if they had those packaged together. the next thing that's been the most popular strategy has been to resurrect a consumer-based plan. from our survey we know that they cost on average about 20% less than a ppo plan. and so even if you only get a portion of your population to enroll in that plan, you're bringing costs down. so consumer-directed plans have been a very significant parking lot of that strategy. part of that strategy. the thing i think that is interesting when you look at this graphic is that the new focus in terms of greater employer attention is adding or improving wellness programs. and as i listened to your remarks about the decline in demand, you know, all that kept going through my head was maybe we're getting healthier, you know? and we're trying to. i don't think that the data suggests that we're getting healthier, unfortunately, but there is a very strong employer

commitment to wellness and to helping improve the overall health of their population. i would even go back to in 2008 when we, you know, really saw a huge recession and financial impact on what employers were able to do with their benefit plans, and there was still a very strong commitment to wellness programs. and so just to put that out there as something that is very much core to the framework of employer-sponsored coverage today. the last thing i want to comment on on this slide is the use of private health exchanges. and i'm not going to spend a lot of time talking about this, but you'll see that 2% of those who participated in our survey said that they were offering coverage through a private health exchange in order to help bring their costs down in anticipation of the excise tax. we, mercer, launched a private health care exchange in january.

we had 35 employers that signed up for it, and they ranged in size from, you know, a couple of hundred employees to 30,000 employees. one of the things i want to share with you just in terms of the ability of the private exchange to do that, you know, everybody always assumes that for a private exchange that it's a defined contribution model. so it's the employer saying, here's, you know, a bucket of money, $5,000. here's the exchange, you know, go spend the money on your health care, kind of peace be with you. and, you know, when you think about it that way, you're, you know, you automatically kind of get to the conclusion that they probably can't buy as much on the private exchange as what they were previously getting. and we did a bunch of things with the design of ours to try to prevent that from happening. one of the things that needs to happen and that makes this work successfully is giving people a easy-to-understand decision support tool so that they make a smart decision about the plan that they buy. most people who have

employer-sponsored coverage today are overinsured, and they buy the richest plan, the most expensive plan because they're scared that something's going to happen to their health, and they want to be sure that they have access to the very pest health care. so we -- the very best health care. we rely heavily on a decision support tool. i want to share a couple of facts. for these 30 employers, we did a summary of the enrollment results. what did people have prior to going into the private exchange, and what did they sign up for. and i will tell you, you know, when you log on to our exchange platform, you are immediately asked five questions to answer, and they're very basic questions about your economic value and your health situation so that it can help guide you as you go through the enrollment process. so the average value of plans that people were involved in prior to enrolling was 80%. once they went through the enrollment process, the average value of the plan that they enrolled in was 71.9%. and the difference in, you know,

the financial impact of that was an $800-per-employee savings as a result of right-sizing the benefits to better address what that person's need was for purchasing health care. and so i just put that out there as an example. i'm sure that we'll see a lot more data on how these are working, but i think that initially, you know, that's a really good story to tell and to think about. i want to, the last thing i want to talk about are the wellness incentives. so a really nice the thing for employers that happened through the aca provisions was the expansion of wellness incentives from 20% to 30%. and so we asked questions in the january survey in terms of whether or not employers had expanded the use of incentives for their wellness programs. and i'll also add, as you know, in addition to the expansion from the 20% to 30%, it could be up to 50% for incentives around

non-tobacco use. and so we wanted to know was anybody used the full 50%, you know, for non-tobacco use, and only 2% said that they were. but you'll see from the data on here that there was a increase in the incentive around tobacco use, 8 percent for all respondents, 14 percent in those that were larger employers. and really strong interest in increasing rewards and penalties around wellness. you'll see, you know, over a third for both all of responsibilities and the larger employers -- respondents and the largest employers to be able to take advantage of that. and back to the point that it's such a core part of their programs. i want to just wrap up with data from a totally different survey. our administration business does a survey called what's working. it's a workplace survey. and they survey actual employs. and -- employees. and i will start off by saying

that the employees that get surveyed do have access to benefit, a medical plan and a 401(k) plan. so it's not representative of every person that is employed in the u.s. but we ask a question about whether or not getting health benefits through work is just as important as getting a salary. and what i'm sharing with you on this slide is the percent of employees who agree or strongly or somewhat agree with that statement, that getting benefits through work is just as important to me as getting a salary. and what i think is interesting about these data is that we saw an increase from 90% saying that in 2012 to 93% saying that in 2013. and this is at a time when employers are making pretty dramatic changes to their health care benefits, big movements to consumer-directed health plans, big increases in deductibles, you know, incentives to do things in order to even be able to enroll in your health care benefit plans or tie today what your contributions are -- tied to what your contributions are. so i think it just underscores

how important health care benefits are in the employment equation that employers have with their employees and that it will continue to drive keen employee interest in being able to provide benefits for their employees. >> okay, thank you very much. let's now take a look at the stage with alan. alan? >> got to turn it on. it's on the side. >> there we go. okay. i'm going to offer some perspective on where the states are in implementing the affordable care act and mostly do it through a series of maps that will be hard to read but are designed primarily to give you an impression, and then we can go deeper if you want. and cover sort of three topics in trying to capture the state of implementation at the state level.

beginning with the story that is almost certainly the most familiar and definitely the most reported which has to do with the coverage elements of the law, this is a map my organization prepared, but you've seen others about the state choices around building the health insurance exchange, half the states deferring entirely to the federal government, the other half, many building their own, some doing so this partnership with the federal government, some brokering a little deal. but the division of the country between those states that have taken in this on and those that have not is well reported. and this is a map, the this one comes from the advisory board company, they update regularly about medicaid expansion not required due to the supreme court's decision, and again, we see half the states now are -- we've just passed the halfway mark in states that have decided to go ahead with the expansion

in the haw and the other half -- law and the other half choosing not to do so. in the shorthand, i often hear people talk about states that embrace the law and states that don't, and i think at this point in implementation it might be a little more accurate when it comes to the coverage provisions to think of four categories of states rather than two. so i'll begin with the happy embracers. tease are the states that said they want -- these are the states that said they want to do the covering positionses, and they're basically happy with having made that decision and view that things are going well. but we do have a second category that was not anticipated a few months ago which is what i'll call the uncomfortable embracers, these are the states that said they want to do it and found particularly when it comes to the insurance exchange that this was a little more complicated than they thought, and they are now looking at the mistakes they made and trying to figure out what their path forward is. i should point out, though, that

despite the lack of comfort, in none of those states do i see a wholesale interest in stepping away from the coverage elements of the law. it's more trying to understand how to deal with the operational challenges. a third category of states is what i would call the happy rejecters, these are the states that had no interest in the medicaid expansion or building an insurance exchange, and that's fairly settled policy within the state. there's relatively little controversy in some states about that set of choices. but we do also have a fourth category which i would call the up comfortable rejecters which is -- uncomfortable rejecters which is states that due to a variety of circumstances over the past couple of years made certain decisions but are not sure that that's the long-term path they want to be on, particularly you could show an evolving slide of the medicaid expansion be choice, and each month we get another state or

two that is in the no column starting to have a discussion about what might it take to get into the yes column, what negotiations do they want to have with the federal government about terms that would make a medicaid expansion more appealing to them. in many instances you have disagreement between the governor and the legislative leadership about whether or not to move forward. and so in some states the discussion is quite quiet, but there is a category of states that have not done the expansion elements, but i would not consider that to be settled. so this is sort of the standard what's happening at the state level exchanges medicaid, and i don't actually think there's a lot more to say, and you've probably heard it before. what i want to do is spend more time in the second and third elements and show you some maps that are you are less -- that you are less likely to have seen although if you've bounced around our web site, you have. but i'm not going to assume that everyone in the room has done

so. so let's start with sort of the garden variety state efforts to build a patient-centered medical homes. this is a map we keep, and all the states in the two shades of yellow/orange are doing something around the financing models, some that are more mature than others, to encourage primary care practices, to expand their purview to improve their infrastructure so that they are able to meet the tenants of the patient-centered medical home. this is activity that a began about a decade ago and has accelerated and spread throughout the country. in the affordable care act, there are many, but this focuses on two initiatives designed to build out the primary care infrastructure beyond the patient-centered medical home which is one model, but this reflects states, and one of these initiatives has localities. but between the comprehensive

primary care initiative and the multicare primary care practice program, these are two federal initiatives designed to move beyond the core patient-centered medical home, the building out primary care capacity to meet more patient needs and to integrate a with a larger swath of the health care system. i move into section 123 of a the affordable care act, this is a section that gave states enhanced federal funding to work with people with chronic conditions, and many of the states led with efforts to work with people with chronic mental health conditions to, again, build out our capacity in the health care system, in the health care sector to meet the needs in a more comprehensive way of people with chronic health care needs, and the states in the various shades of blue are at various stages in

seeking and obtaining funding for that kind of transformation. and, of course, a lot of discussion about medicare's use of accountable care models. we keep a map p of states -- a map of states that are working on their own versions of accountable care os. so taking -- organizations. so taking the medicare design and trying to figure out how might it apply to a medicaid population can which in many instances is very different. how would you think about the funding flows within those models for a different population. and we see a large number of states trying to figure out, and particularly based on providers saying we're reengineering to meet the medicare design elements of an aco if. if we're going to do that, we'd like to see payment model that is match it by other payers, and so they're trying the -- trying to figure out these kinds of questions. and although somewhat separate from many of these other programs, i do think it's

important to remind everyone if you're interested in where states are focused that where the affordable care act's also created a whole new set of models for coordinate nights between, for people who are both on tulle eligibles, these are the highest cost enrollees in both programs. we have a long history of poor integration between these two large national programs when it comes to people who are served by both, and again, states around the country are figuring out how to realign financing and delivery models for this very complex population. now, i did not intend and i know i didn't succeed in explaining all of these initiatives, but what i want to try to do is capture why i think it's important to look at these maps and not just the first two that are the ones that are usually brought up in a discussion about what's going on at the state level. and there are a few things i want to say about this

constellation of initiatives. the first and from my perspective the most important given the work i do with states on health policy is that there is a tendency in washington to think of the affordable care act as sort of the beginning of health policy or the only thing that's happened in health policy in a really long time. and at state level the aca really enters a historical stream of transition, and interest in the evolving delivery system and evolving delivery models, evolving models of accountability, evolving models of payment. and the view i hear from state officials around the country is that the aca offered them a whole bunch of tools, some of them they like, some of them they don't like, some of them in some states they like metropolitan in other states. -- more than in other states. some are shaped like a hammer when they need a claw.

but it is still a tool box, and they are state by state trying to figure out how these tools fit into a stream of health policy evolution that long predates the aca and will continue after mark is successful in getting the aca treated as just a pure accuratic morass and nobody's -- bureaucratic morass and nobody's paying attention to it anymore. the second reason for, the second reason for showing you all of these maps is to note that the party divisions that are so apparent on the coverage provisions are largely absent or at least significantly less apparent when it comes to these delivery system models. that the polarization around the aca is felt in all areas but is a lot easier to overcome when you're talking about trying to make the health care system more efficient. when you're the payers, the businesses in your state are

saying we can't afford the health care system we have, we need to be a part of reengineering it to one that delivers us better results and is more affordable and higher quality and these are tools we want to use to do so, that's a very different conversation than whether you are doing obamacare or you love or hate the law. and so the party divisions are much, are much less apparent in these delivery system-oriented programs than they are in the coverage. and the final thing that, the final observation i want to make is that most of these are actually a whole lot harder than coverage because with they involve -- pause they involve the complexities of care, organization, delivery and finance which, belief it or not to, is a whole lot tougher than figuring out whether or not someone should get a card and getting it to them at the right place, at the right time although we've learned that can sometimes be hard as well. but this is a multiyear, more

like multidecade endeavor. these are tools and pieces. but they are -- what you have to understand is the sector you have to work with and the interests you have to work with are actually far more complex and, therefore, federal support for these initiatives and state efforts to do these kinds of things has a very different timeline and trajectory than the timeline of bringing up an exchange or bringing up a medicaid expansion. so these are slides and maps that most of america hasn't seen, and most of the policy debate around the law tends to forget even exists. but again, they demonstrate, i think, that state health policy has been active long before the aca, that these kinds of activities don't necessarily divide along the same partisan dimensions as much as the law and that they offer a level of -- they require work at a level of complexity that many

people don't want to take on. and, frankly, for reporters it's very hard to describe this stuff which is part of why people don't know about it. which leads me to the final segment which is to make sure in any discussion right now about where states are that people are aware of initiative of the centers for medicare and medicaid innovation called the state innovation models program which is the federal government's largest investment that i can think of ever in state efforts to improve the organization delivery of care with the goal of achieving the triple aim. and these awards and, again, i won't go into huge detail, but these awards were made a little bit more than a year ago. states were divided into different categories, but basically, we have a small number of states that were far enough along in their thinking about where they wanted to go that they were given funds to implement. a larger group of states that

were given funds to design the models they want to use. and for a couple of months now, we have heard that any week now the federal government will announce a second round of this competition, but we're still waiting for it. so what is, why is it so important that i, that i make sure you're aware of the, of this program? because of the attributes of what states are trying to do under it. because it has, in my mind, become much more of a catalyst for state thinking about health care reform than i would have imagined when it was first released. so one element of these models, of the approaches states are taking -- and the states take very different approaches -- but one element is multipayer payment reform. so we hear all the time about how the payment models are broken, and fee for service encourages fragmentation ask overuse, but it's very hard to get those who actually deliver care to change how they think

about care delivery if different payers are paying them for different things. and so medicare criticized when it doesn't change from its current model, but is also criticized when it changes from its current model because those who are delivering care have difficulty understanding how to respond to these variable signals. and a key feature of the state models is to bring million billion pay -- multiple payers together; medicaid, private pairs, but also the ability to bring in medicare to think differently about payment. the second attribute of these models that is such a critical component of them is efforts to integrate across systems that have built up as silos. so there's a tremendous amount of work right now going on trying to figure out how to integrate mental health into the delivery system that's focused so much around physical health when we know that the interactions between these are

profound and that poor mental health and poor management of mental health conditions is a huge drive of physical health care costs. so there's a lot of work going on at the state level to do this, around oral health, even efforts to integrate in the social services systems. there's just a tremendous amount of discussion about bringing systems together that is not, to my knowledge, occurring anywhere else. and i think one of the particularly interesting elements of many of these models is their interest in building a community infrastructure to support the health of communities without regard to the insurance coverage that the people in those communities might have. and so while we have a lot of plans and in many instances providers trying to build infrastructure to reduce unnecessary readmissions or help people with their chronic conditions not have those conditions deteriorate, those --

when you build that infrastructure inside a health plan whenever someone changes coverage, they lose that support. and increasingly, states are realizing that if they want to achieve longitudinal improvement in population outcomes, they need to take some of that infrastructure and put it in the community where people actually live so that they're able to access it even as other parts of their lives go through transitions. these are just a few examples of the kinds of things states are trying to do under these models. so let me just close with, as bob said, the admonition that we look forward, and i want to close by circling back to the first two slides, although i won't show them to you again. which is i think the most interesting dynamic that i'm observing in the evolution of state implementation of the affordable care act is that we're now starting to see this part of the curve, the delivery system reform efforts, feeding

back in to this decision about the coverage elements, meaning medicaid and the exchange. and that, basically, as states are getting more mature in their thinking about what it takes for multiple payers to come together and demand a more, a higher functioning, more efficient delivery system, some of the important tools that you want to use in sending that signal to the health care system are your medicaid contracting rules and your exchange plan certification rules. and if you don't do a medicaid expansion and if you leave the exchange to the federal government, you've left those tools on the table. and so the less idealogically fraught elements of the law that have to do with improving delivery -- they're very complicated, but they're not as ideological -- i believe are beginning to drive reexamination

of the coverage elements in those states that are starting to see these tools as critical for delivering better value for their citizens which is something that is embraced by political leaders of both parties. and so i think over the next few years what we're going the start to see is that if there is a sense that these models are successful in improving health care systems, it is a going to lead to a revisiting of some of the state coverage decisions as they realize that in order to achieve these outcomes, they have to have these tools at their disposal. >> okay. thank you very much. we've got a few minutes. i'd like to, i promised to give you a cannes to wrap up and so on -- a chance to wrap up and so on, but i want to go to the audience and see if we've got some questions. i know you, mayorty, asked -- morty, asked one. so i want to go to doug. >> quick question for tracy.

one strategy that i've heard about that employers might consider is offering what are called bare bones policies since phobe knows what minimum essential coverage is, so they avoid the $2,000 penalty, but maybe almost worthless, but it's there. but not worry about -- but pay the $3,000 penalty. are you seeing employers thinking about that? >> we are aware of some employers who have very large variable hour work forces that have implemented something less than a 60% plan. they go under several tame -- names. i think the one that's most commonly used is a skinny medical plan which tends to be 100% coverage for preventive care packaged with the hospital indemnity type coverage that was spoken about earlier that kind of replaces the mini med plan. they are relatively inexpensive, and for somebody that previously had a limited medical plan, attractive.

it, you know, it insulates them from being subject to the tax for the individual mandate, so it is actually a bonus to the employee if that's something that they want to protect against. and it does meet, you know, the offer of coverage requirement to avoid the initial, the $2,000 penalty. there are also employers that are considering those in addition to a plan that woulda 60% plan -- that would be a 60 percent plan and have contributions as a way to offer a more affordable option for somebody that doesn't think that they can afford that minimum 60 percent plan. if you're using the safe harbor for the affordable contribution so it's somewhere around $90 a month, for some people, you know, the idea of paying $90 a month for a 60% plan that has, you know, a $3,000 deductible doesn't really seem like a good

economic decision for them. but paying less than that for something where you get preventive care and if you have to be hospitalized, at least you get that daily payment or, you know, however it's designed, you know, maybe is a better financial decision for them. so, yes, we are seeing them. >> any idea of the percentage? >> yeah, actually, i do know that. [laughter] so we asked a question in our survey about offering finish we just said offering a plan that's less than 60% minimum value. and so we asked who's doing it and who is considering doing it. and i want to say -- i thought i had that piece of paper -- that, here we go, 8% are currently offering a plan that has a value of less than 60. and another 15% said that they are considering doing that. when we offer up a spectrum of strategies for employers to consider, we have sort of a third category that we call

alternative strategies. and they are ideas around offering even like a ppo plan that's hess than 60% -- less than 60% plan, perhaps a skinny medical plan or how do you leverage the accepted benefits. >> i'm sorry, the last question was tim jost from the first panel, so, yes. please. would you wait for the mic and please identify yourself? >> i'm barbara dello, i'm a nurse, i'm a caretaker and parent. and i come here because i find people whoyou assure

lived with the illnesses that you will act in the interests of patients? it has significant implications for patients and caregivers. second, the process employed by participatory and because it is not

as challenged by partisan .ivides that make it impossible most states, i work with people in it and it is hard to move these agendas without consensus and it is difficult to achieve consensus unless you have brought people to the table. view these kinds of discussions that are occurring state and locally about reallocating and redesigning the care delivery system to better meet the needs of patients and to be more affordable to those of us who are paying for it as an opportunity for that engagement. and as i say, i think those engagements are far more genuine than much of the discussion that occurs about the parts that are more politically polarized. >> you know, i talk to direct

caregivers all the time, physicians, nurses, nurse practitioners, people out in the field, and the thing -- the overwhelming message that i'm getting from them is we're absolutely inundate aing them if paperwork. and this may be the only industry this the history of american industry that's actually seen a decline in productivity as it's automated. what i hear people saying when i ask a nurse what percentage of your time is actually spent with patients, it's rarely more than a third. and when you ask, well, what are you doing the rest of the time? well, they're typing. they're checking boxes, they're, you know, coping with a flood of, you know, documentation that is in the most minimal way connected to to actually improving the welfare of the patient. so i think that's one element of this that we really need to attend to. we need to begin reducing that paperwork burden and asking serious questions about how important is it to divert a nurse or a physician's time to answering these questions? i disagree with the people on the first panel. i think there's going to be a

very significant shortage of front-line caregivers, and a lot of it we've done to ourselves. >> yeah. i just want to comment from an employer perspective. first of all, many employers have their data, their medical claims and utilization data in a data warehouse where they're actually able to segment out their population to know who's at risk, who's in the middle and those who are actually healthy. and a lot of effort goes into trying to improve those ratios so they have more people at the healthy end of their spectrum. everything that goes on within their health care benefits program is aimed at being sure that people who need the care get the right care in the right place at the right time. and those who have health challenges, in particular chronic conditions, are getting tools, resources, health coaches, everything that they knead to help them -- need to help them manage their condition. secondly, i'll say that we've had an effort underway with several of the major insurance companies where we've actually built new care management models

within the insurance company that our clients take advantage of, it's called mercer health advantage where we have a higher ratio of clinicians to patients. and we have already demonstrated much better outcomes as a result of those efforts through that -- it's called mercer health advantage, that care management program. so i think that employers are very much dedicated to centers of excellence, to programs that drive health and wellness, to a lot of medical home pilot projects so that somebody has one place that they go for all of their care. and if they wake up in the middle of the night and something's going on and they think they need the go to the emergency room, they call their medical home and say i'm having these symptoms, what should i do, and the person says go to the emergency room, i'll meet you there with their medical records, or they'll say, you know what? do this first and call me back if that doesn't help. and so i think employers have invested a lot in providing better care to their employees.

>> okay. we're almost out of time but, john, a quick question, please. >> [inaudible] john graham with the national center for policy analysis, and i'm going risk looking very foolish by misunderstanding the private exchanges. so point of clarification, do i understand that we're moving out of the arace saw benefit and looking at a choice of state-regulated policies? have i misunderstood that? >> well, in most of the marketplaces which is our private exchange we have a mix of insured and self-insured product, and of the 30 some odd employers that signed up on january 1, all of those that were previously insured in their group programs remained insured, and those that were previously insured if their group programs stayed self-insured, so we have the flexibility to administer with both insured and

self-insured plans. >> okay. i've been told that we must end this, and so that means i can't ask all the questions i wanted to ask. so i want to thank our panelists and all of you for participating, and we're going to have lunch. [applause] headed health policy associates. hetalked about what

we have a real treat and we are grateful that he has agreed to come. he is our lunchtime presenter. bob is the president of health policy commend as was to thees marketplace community with great expertise in the insurance industry. he's been doing this for more than 20 years now, and he was named because of his incisive and clear writing about the implementation issues in 2013. is meant by the "washington post" as the 23rd games wonkblog pundit of the year which is actually a pretty fine distinction. he was chief operating officer of it health and group benefits and sure and has been active in and around the health policy in workplace issues in this field for a very long time. he's a real expert and we are very, very grateful, op,

vigilant to come to talk to us today. thank you, and join me in thanking bob for coming today. [applause] >> it's great to be here, great to be with all of you today. i've been a real fan of tim and joke for a long time, as scholarship aei and i appreciate very much getting the invitation. i would give my perspective today. it will be a different perspective than you've heard, at least from where i come from. just so all of you know, i work in the marketplace, and i learned long ago that my job was to figure out to satisfy customers. -number of clients out there and what they expect me to do is to figure out what's going on in the marketplace, and what's going on in federal policy and help them navigate their business through that change. if they want the conservative perspective they will go to fox news. they want the liberal perspective they will go to msnbc. as business people they need to know what's going to happen and

how it's going to impact them. i'll try to bring that perspective here for you today. i've been working and washed them one way or another either as an executive or somebody running his own business for more than 25 years. as an insurance industry executive it occurred to me way back that the insurance industry could not sustain itself if its business mission was to figure out who not to cover. in order for the insurance industry to survive economically and politically if you how to cover everybody. i also figured out pretty quickly that as an industry we couldn't do that ourselves if as a chief operating officer i've got pre-existing conditions tomorrow afternoon, i would've had a long line down berkeley street in boston of people lined up to sign up for my coverage and i would be broke pretty quickly. i realize there is a willful government as a referee in this whole process. jay carney said a few months ago that i had been an opponent of obamacare for 20 years. which i guess makes me the first

opponent of a bunker since it is all about five years old. i don't see myself as an opponent of obamacare. survey not an opponent of health insurance reform or of health care reform. most of you know those are two different things. i am a critic of obamacare and i think it leads to lots of changes but i guess everybody says that today's of it doesn't make me any different. i'm going to firstly when going to do a bit of do my best to tell you. the affordable care act has not cleared the tower to borrow a headline from one of washington, d.c. is media outlets. it needs fixing. particularly in its health plan offerings your want to clear the sprinkler and it was launched and present of almost elected there's never been any doubt in my mind that this law will be enacted. i don't think it's going to look that much like it does today 10 years from now or even five years from now.

but it's also clear to me we're not going backward in this country. we're only going forward. now, it does need a lot of fixing. one of the things that concerns me about the so-called 8 million enrollment is it my convinced the ardent supporters of obamacare that it doesn't need fixing. as a whole lot of difference between offering a monopoly in health insurance in the united states today and a small group and individual health markets and actually have created something that people like and want to be part of. there's a big difference, a big distinction and i think it's the most important thing to understand where we are with the affordable care act today. i'll tell you what i think we need to go and that they were i think the fixes need to be, short-term and long-term but i'll tell you i don't think there's any chance we will have any fixes before at least 2017. it doesn't matter what happens in the election in 2014 whether the republicans capture the senate or not. we're not going have the environment or the votes for any kind of substantial change to

the affordable care act. we will probably not have the political atmosphere for any substantial can change. i think this thing limps along for a number of reasons. it livelong actuary our financial and it lets along politically. i will also tell you that i think while the supporters of obamacare citing 8 million account of his days i think republicans are overconfident as well. i actually think the democrats could take this issue back by november if the republicans are not careful. so there are two very different interpretations of the so-called 8 million enrollments. the first is the enrollment estimate of the exceeded expectations by we have hardly made a dent in the number of people who are uninsured. or the enrollment process program is working. it's on its three-year projected cbo track and doesn't need any major fixes, or the program is still a regulatory nightmare and needs to be repealed and replaced. i expect most people are sort of

in one camp or the other on this. but i would also suggest there's more commonality than that if we really think about it. we've seen a lot of the surveys and it's been at the heart of whether obamacare is, in fact, succeeding or not. the mckinsey survey came out first. this data was early, february. but it does include the late surge in enrollment and what they point out is that most of the people who were signing up where previously insured, that we weren't really attracting the uninsured into the program. these numbers have almost certainly changed in the last two months but i will suggest that chronic problem this program has is attracting people who are not insured before. fundamentally because the way the product, and in my context of my background these are roddick stem cells, the products are not all that attractive to people. the rand corporation came up with a survey that went into mid-march, came up with some of the same conclusions that we

were getting more of the people moving over from the insured market that we were picking up on in church. this is a fundamentally important question. because why did we turn the insurance market upside down and in such a small group market if we're not going to be successful in getting the people we wanted to get in first place. this is at the core and the heart of whether we can become to you on the right track or not. i will also tell you that when you look at these polls, be careful. this particular poll says that the majority of people who were gaining insurance were gaining it in the employer market. you heard the mercer represents a few minutes ago there didn't seem to a lot of indication from the surveys that's happening. i was with one of the largest self-insured insurance companies in the united states yesterday, ensures millions of people in the self-insured market and went to the head of marketing and i said, are you seeing any increase in the employer market

and the number of people signing up? he said no, nothing, flat. that's what i continue to hear all over the marketplace. this survey indicates signing of all kinds of people in the employer market. i don't know where they are. i'm not saying that my information is better than something the rand corporation has put out but i will tell you we need to be very, very careful when we look at these polls. we need hard data. the most recent poll came from gallup through april 14 reflecting more of the search. the bottom line is that gallup has found that probably about one in four people who were uninsured have found insurance even medicaid or otherwise. that makes some sense to me because when you look at the enrollment numbers and put a look at the 8 million people coming through the exchanges, you can make some comparison to hard numbers rather than just do polling. the 8 million needs to be reduced by the people who are

not think how many are not paying? 17%. it's a pretty good number. as i go around talking to people as recently as yesterday, this particular carrier, hundreds of thousands of people in the exchange, more than 20 -- it's not as bad as only 15%, and it's not 20% either but it's in the middle. if you adjust that 8 million by about 17%, it would be a pretty good estimate i think when it's all said and done, and then you adjust for the fact that 83% of the people are subsidy eligible, you get a number that you can compare to the kaiser foundation estimate of 17.2 million are subsidy eligible and what you get? somewhere between 25-30% have signed up. if you're inclined to believe in the cbo numbers that we're going to get one-third, going to get one-third, 130, one-third over the next three years you can say

we are on track. if you're someone who spent his grid and marketing as i have, and you look at an open enrollment that effectively lasts december, and into april, and 30% of the elves will sign up and 70% didn't, that tells me you've got a problem with the customers, that you need to worry about. so i would also, it's also interesting as i talked to insurance agents who were signing people up, very big part of getting people signed up. as a talk to people who run call centers and insurance companies who are talking to the customers at the other end of the line, what they're hearing is a lot of complaints about the product. about the offering. at the heart of the problems i think obamacare has, as economists and health policy experts and so forth, you can on your opinions on these things and the macroeconomics and the

micro economics. i did a post on my blog not long ago, i recounted a marketing story from the 80s, about dog food, dog food company went out and created this absolutely tide list doctor. site is got involved. the manufacture people got involved. they went out and got the best consoles from all over the country and they created this new dog food. but they were not consulted a doctor. nobody bought the dog food. they had this meeting. they brought that see the oh in and at the expense of consults in a country of why nobody is buying the doctor. finally, some in turn back of the room raises his or her hand and says, mr. president and it may be that dogs don't like the dog food. and i think there's a problem here when you get 30% of the people walking away and 70% -- 30% of the people signing up, 70 walking away. random something important about obamacare. obamacare is a monopoly. there's not another place to buy health insurance. if you're a responsible person

and want of health insurance for your family, you could have afforded it anyway, and you want to be that responsible person, there's only one place to buy it. if you're a person with preexisting additions and you can finally buy health insurance, there's only one place to buy it. so there's only one place to get this product. in addition to that, the government will pay a big portion of your costs. so you've got a product here that is a monopoly where somebody is paying a good share if not all of the costs for you to buy it. so you put out a product where you don't have to pay most of the cost and it's the only place you can buy it and it's the responsible thing to do to buy it, 70% pass on buying it. there's a customer issue. the fundamental problem is that people are still after the subsidies expected to pay about 10% of after-ta their after-taxe for a plan with pre-deductibles. the average deductible is $2600.

a bronze plan is $2500. then we got the narrow networks. we don't understand the consequences either in the market or anywhere else of the narrow networks so far. there are a number of issues there. take a look at the way the california individual health insurance market has rearranged itself. where the insurance carriers with narrow networks have taken disproportionate marketshare and carriers with a less known networks have lost share. clearly people in california voted with their feet towards the narrow networks. if you watch the covered california situation carefully you in the covered california had a hell of a time with a provider. if you want on the exchange to buy a plan, you will have an impossible task of figuring out who your doctor and hospital w was. but they bought narrow networks. why? because narrow networks will produce a price 25% cheaper,

that's what. if they don't know who's in the network and its wi-fi% cheaper, which direction do they move? the narrow networks are interesting from another perspective. in the employee benefits market for years we've been expanding, insurance covers of large employers, with high-performance networks. these on narrow networks where the insurance company or the large employer determines that the best provider is, the hives quality providers are very often the lowest cost providers. so you go find the centers for excellence for your heart procedures and so and so forth and to contract within inches to your people toward these networks are not because they're cheaper but because he are lower cost and they are better. that's not what we have here. what we have in these narrow networks in these exchanges is literally the insurance company mailing out a contract to all the doctors and hospitals in town with medicaid reimbursement

rates, or something like that, with the assurance that if the doctor or hospital signs the contract they will get the exclusive business from the insurance company in the exchange and then see how many signed it and send it back. that's the selection process. this business of narrow networks is really going to have to play itself out and you have to wonder from a customer satisfaction perspective where we are on this. comments were made this morning that maybe we will evolve towards a medicaid start program. i think -- is an their network is basically medicaid contract i think there's a fair risk that can happen, and then the context of the conversation, if it happens it's not so bad because people will have health insurance anyway. wait a second. the people entering the system or new didn't have health insurance before, but there were some of between 10 and 12 many people in the individual market, they tend to be higher income

people, self-employed income people, intelligent, well-educated people running their own business out there. they could afford before to buy health insurance. they got health insurance was important that assets to protect. these people can only buy now from the affordable care act insurance monopolies but are they going to be happy with these narrow networks? more than that, anybody who thinks this is about the individual market under take another look. a small group market is regulated in exactly the same way as the individual market is. it has to comply with all the same things and it's undergoing the same changes as the individual market. what are the, 35 million or so people in small market. 10 people in the old individual market, where in the process of moving something approaching 50 million people in this country into the obamacare regulated monopoly. if that starts sliding towards medicaid sal programs, is it a

sustainable political thing to do? so again i think the core of this is for my perspective the issue is have a lot to do with the kind of program that we have really created. that they questions i'll get is what will the health plans do? conservatives were convinced health plans will go insolvent or back out of the market and that's just crazy. that's not going to happen. the first thing to understand is this is little or no data knowing what we have today. i was talking to actuaries yesterday. where do you think we are? i do know. that's where we will be for some time. the first indications though are if you're only getting 20-30% of the eligible group, this is not sustainable. if you believe in the cbo projections and this is on autopilot towards 70%, then take the weekend off. if you are concerned about the level of sign-up, this thing has

got to get to about 70% market acceptance to be sustainable and it can be sustainable. the comment was made earlier today that he would are going to need high risk pools anyway that if you try to bring all the sick people into the marketplace, you can't really rationalize that in an efficient way. you got a subsidy somewhere. you do have have a subsidy and that's why the insurance scheme and obamacare was created, a three-year transition pool. but if you get a good spread of risk you don't need big subsidies to bring the sick people into the pool. and employer with 1000 employees and no mandate has a good spread of risk and an efficient cross structure. you don't need, you need reinsurance pools in the short run because they're all going to show up on day one really thick, but if you can attract people into the pool you will

rationalize the costs. every employer out there that stands on its own himself insurance with no individual mandate proves that. all individual employers also prove you don't need an individual mandate. what you need to do is attract enough people. what obamacare tries to do is coerce people with lousy products. and that's the fundamental challenge it has towards success. but having said all that, the rate increases the insurance companies will have will be fairly moderate going into the next you. i said in my blog there will probably be 9.9%. it really well. why would they be 9.5%? because 10%, you get scrutinized by the federal government. if you come in again you will not scrutinized. they don't have any doubt and they don't know. i continue health care trends in the small group market is probably in the double-digit range.

it's probably in the seven or 8% range, individual is higher than the large market because there still is anti-selection in the end of the to market before the obamacare. you so only 30% showed a. there's something called deductible leveraging and don't ask me what that is. that will take another hour but these deductibles are so darn high that it actually boosts the trend rate. theoretically they probably have got to be 12, 13 to 14% increases because they don't have the data to prove it and they don't want to make this any worse than it is now and they've got the protection for three years, i expect to see moderate increases. you will see some big and little increases. what you had in this market place some people came in late july, some people came in way too low. they will get towards the middle. anybody wants to be example of someone with a 45% increase will find anybody wants an example of someone who dropped their rates will find anybody wants an example of insurance company coming in and sustained them

they will find. what you got is the basis of the next three years as people figure out what they've got. and a lot of people say what are the insurance companies in this market? what are they upset and getting out, yada, yada.? obamacare, the affordable care act is a monopoly. if you're going to participate in the small group and individual market, as it effectively the same market, folks, go look up the rules, if you're going to participate in this individual and small group market, not just the individual market, if they're going to produce the indus 59 person market, it isn't an alternative. it isn't plan b. kerry is a general believe is going to evolve and they will be protected by the reinsurance pool for three years. they've got time. -- carriers. one way or another this will all work its way out and i believe that, too. that doesn't mean we are in great shape but it means we're not stupid. will figure a way to manage

ourselves out of the. carriers are a lot more worried about medicare advantage payments right now and they are about obamacare. obamacare -- aetna the other day said about it doesn't even move the needle for publicly traded company. the other thing to remember is health insurance plans are getting used to the government being their biggest customer. this is a picture of with health insurance industry looked like today. when i grew up in this industry i was an employee benefits business. i was in health business but you can imagine. not health insurance business is only half of what they do. the other half is managed medicaid, managed medicare. the federal employee health benefit program will probably be bigger than obamacare the next three or four years. medigap, medicare supplement, all of these products. with obamacare gets on this chart india it will probably be the smallest piece of the pie. but it is a monopoly and that's part of the market and they've got to deal with it.

what will employers to? i've talked to a lot of employers. you should activate board of directors meeting at blue cross. it was a great cocktail party, let me tell you. there is a movement towards defined contribution health care, no questions about the. private exchanges, these are all product terms but all product terms but becomes invasive forms, colors and varieties. one of the observations i will make about the marketplace over the last 12 months that i think is important is that obamacare really has changed things but it used to be your average blue cross, 80/20 standard option blue cross plan withstand health plan in america. that's what we give everybody had something like that and that's a we consider good health insurance. that was standard. what's starting to happen now is the perspective to start a more to move towards the affordable care act enlistee exchanges. today, an employer saying do i

need the 80/20 blue cross standard option, or do i just need to be better than what's in the exchanges? with much higher deductibles, 60% actuarial value, tracy potter most plans are 70% of the employer market. the new standard in employee benefits come you can sort of see this reference point growing is obamacare. you don't like what i'm give you? go to the exchanges. i'm getting a lot better than what the government gives you. people are really worried about the cadillac tax. will employers will not get the cadillac tax because they are changing their plans now. when you change, and the changes you've got to make a you can't just shift costs to the worker because the cadillac tax aggregates worker and employer costs. you've got to cut the benefits. so obamacare actually gives them permission to do that. anybody who says that obamacare isn't having a direct impact on

the employer market hasn't spent time in the employer market in the last year. don't presume it's not having an impact with the employer market to ask your friends were employed by fortune five from companies what's happened to the benefits of the last couple of years and what's happening next year and you will get an earful. there is an entirely different perspective. there's a dichotomy starting to grow in the employer market. between employers who have to compete for skilled workers and lawyers who don't have to compete for skilled workers. if i got a bunch of restaurant workers, i don't need to worry about providing good benefits anymore. it used to be not that long ago that the guy who swept the floor in the shop with a broom at exactly same health insurance as the ceo had. we all have the same health plan. that is changing very quickly. part of it would've happened anyway. there was clearly a movement going on. unmeasured blame the affordable care act for all this stuff but

if anybody doesn't think that the affordable care act is part of this mosaic, they are dead wrong. medicaid expansion from one of my favorite comments, i may be one of the biggest critics of obamacare but am also one of the biggest critics of republican governors who don't expand medicaid. might view is put up or shut up. for years i've been hearing republicans say, give the flexibility of let me run it my way. the medicaid program is broken. you bet it is. we need to experiment with different things. you bet we do. we need to try market based principles. go for it. the supreme court gave the republican governors a golden opportunity. now, some of them have taken advantage of that in controversial was the arkansas is one of the first ones out of the box. whether that is the ability to put people in private plans. they haven't got the flexibility and plan design. but they got flexibility in moving into managed care.

that is not an insignificant concession, folks. that's pretty big. you will now have managed care companies manage these people rather than the government. that's an insignificant concession and it's not enough? then there's my hero who put a plan on the table that change is not only how it's delivered but how the incentives that consumers will have. i don't know if the obama administration is going to accept that your i really hope they do because i would love to see a competition between blue state governors and read state governors about who can make this system work. and i don't know why republicans are so afraid of that competition. they tell me because it's not a perfect a block grant. well, i'm sure that in 2171 in 70 votes in the united states senate and they doubled their majority in the house and ronald reagan is back in the white house -- [laughter] they can get the perfect block grant. until then, grow up. take the challenge and do it.

republicans and obamacare. i'm an equal opportunity critic. silly republican points. unacquainted into detail on this because i don't have a lot of time. you can go to my blog and there's a post on selling insurance across state lines and association health plans in the schools and you can see the perspective indeed you. let me give you this perspective. i spent a lot of time with insurance executives. i spent a lot of time with people. when i talk to them about something insurance across state lines and these other things, do you know what the reaction is to those republican proposals? to the one, they laugh. i'm not kidding, they laughed. it's ironic that conservatives believe in using the market, makes the system more efficient, but the people who were actually the most successful to date and

making the market efficient, the winners and health insurance business, think these proposals are silly. and the second thing i hear from them is, why don't they ever ask us? [laughter] i'm not lying to you here. the nixon you're sitting face-to-face with an insurance executive, ask them about that. why is it that conservatives don't consult the marketplace they believe in? i have a lot of criticism for the way the democrats hatched a bunker in the way it works, the naivety and what it reflects in the way the insurance markets work. it's just as bad as -- bad on the conservative side. coburn is a lot smarter and it has a lot of common sense ideas and has a lot of really good ideas. i will suggest the fundament problem is it takes us back to 2013. i don't think that's realistic that we are not going backward here, folks, we're going forward. there's a republican visual

reaction to bunker that makes it impossible for them to want to fix it. part of that is political. which republicans go to the primary in north carolina saying he wants to fix obamacare? we can all understand that, but that is where we are headed. that is where we are headed. we are not going backward anymore. that i think opens up a chart update for democrats, even the party who wants to claim to fix obamacare. when we look at the poll and then no we've got a lot of polls to bring conclusions i think this one from the kaiser folks is the best one. the bottom line here is it's as if you're republican you better tell people you want to repute and replace because that's the populist. if you look with the independent voter is and where the voters are over all when you go to the general election, they want it fixed. they don't want to go backwards and that is -- there's a fox thoughtful recent visit people overwhelmingly vote for the

candidate that wants to repeal a bumpy rather than definitive they forgot to ask the third question. what do they want to fix it? you saw some more reports in "the new york times" the last couple of days, and the same conclusion occurred. people don't like obamacare because the health and primary because the health plans are so lousy in the. the product is lousy. but they don't want to go back to the days we had before. they want it fixed. it will be the candidates in the long run i think the figure out a way to position that that will be the winners. so where do we go from here? obamacare less along through 2016th of insurance programs will protected the democrats want to see it play out. the health plan reinsurance came keeps them above water. the real rates are going to need to be charged towards the end of this but that's a few years down the road. neither side in the 2016th elections i don't think are going to have 60 votes in the

senate even after the 2016th elections. in 2017 a new president and congress i think will be part of the obamacare wars and i hope we'll be ready to move on. i think that the first opportunity we will have to get a major course correction. maybe not. if you bet on washington agreeing on things and doing bipartisan things, it's always better to bet against it but i clearly don't see that happening before 2017 and i hope it happens afterwards. i do think the obamacare, obama and magician can get this thing on track any number of ways. they don't take my advice. take out a pad of paper and this can be your idea and maybe you can help them out. all they really have to do is broaden the health plan. tim jost made a good point and he's on the right track. do we did in part d the don't know, provide benefits up front the people, healthy people can see value which is not what we're getting, please don't tell me there are wellness benefits there. 27 year old kids don't care

about wellness benefits. they are well. you need some benefits the people utilize and see value. catastrophic coverage. go ask the people what they want. a family of four making $59,000 a year have to pay $5000 in premiums. think about this for a second, washington, d.c. $59,000 a year. do you think of 5000 -- you think of 400 the checking account to buy this for a $2600 deductible? it's a piece of paper for $5000. of course, they are not buying it. of course, the dogs or not eating it. but nobody asks them. there's lots of opportunity here. the government is propping 6-under dollars a a month in premiums subsidies for the people. they would probably be willing to pay one and 50 the amount and premium. i've got six and $50 of premium. give them something. what i would do is use the

existing actually force the 50% so you don't get junk health insurance plans and then let insurance companies come up with plans that are more flexible. this section of the train for that mandates the benefits is this long. there's nothing in the statute that mandates the kind of benefits the obama administration has mandated through regulation. if they back off on the regulations and let people, the number of moving parts, there's the premium, everything's it's the premium. it's the premium, the deductibles, co-pays, narrow networks and the benefits. but the benefits are not one of the variables under obamacare. so what variables do you have left? premiums, deductibles and trend 10. put benefits back on the table. and do it in a transparent way. leave the standard silver plan there. in the interest of the that offers anything else has to of a

60% actuarial floor and have to give you a piece of paper combat to give you a chart that shows you how what you're buying is different than the standard silver plan and then presume the dogs are smart enough to figure the rest out for themselves. if the obam obama administration could do that through regulation tomorrow morning, and they would put this thing back on track. all the other faults it's got to any the democrats i hope you of this done. they won't listen to me but i just told you how to fix it. they've got to do it quick, get it over to the white house fast because new rates have to be submitted to the insurance consensus in the new rates between may 27 and june 27. they've got about one month but they could get this thing back on track. and, of course, the reaction you get is the 8 million. i think is a more fundamental fix to office that's fairly easy to do. i suggest my 25 years in this town that is remarkable

agreement between democrats and republicans on health care reform. there is remarkable agreement. banning presenting conditions, insurance exchange from subsidizing low and moderate income people, using the market demand, jerry brown asian the market in california. there is agreement on doing these things. democrats are right when they say that obamacare was built on a republican chassis. republicans are right when you said democrats overregulate the heck out of it, and have created a lousy product to so they are both right. if you back off and see we agree on and what we can fix, and most importantly to listen to the customer, stop arguing with each other and g go listen to that found a four making $59,000 a year, they will tell you how to do this. they know how to do it. a more robust market for republicans and a solid safety net for democrats is a place that people can compromise.

the more robust market -- i didn't explain that i didn't explain the i didn't explain that it is the same to just talk about. giving the carriers flexibility to offer things people want to buy so we get rid of the junk policies. they are are nowhere near as many junk policies and individual market as liberals would like to think there are. you're looking at the guy with a catholic plan to get a 60% rate increase. they increase by deductible and narrowed my networks. there was a junk out there but it wasn't that much. better value by offering more choices consumers can spread to the tax credit for the. the government would be paying the vast majority of this if we have the flexibility. you don't need an individual mandate. i've underwritten hundreds if not thousands of employer plans over my career and not a single one of them had a mandate. not one. why did it work? people wanted to buy. in the people want to buy it. the dogs wanted to buy because the dog food tasted good.

it is a good product. that's why they bought it. give them the ability to do that. i go with no mandate, no fine, no free riders. the catch is you don't sign up during the open enrollment, your pre-existing condition is banned for to use but you've got to have a no free rider. don't dwell on the negative. don't say bob got preconditions bacthat could i do but don't dwl on the negatives. you've got to emphasize the positive. which is if you give people plans they value and they can afford and they appreciate, you are going to have people not buying. they will buy. never had an individual mandate in the employer market because the plans have value. the only people you're going to catch in the no free rider provision of the people deserve to get caught in the no free ride provision because you're giving people affordable health insurance which is the objective. make the tax code equitable. i believe that deductibility

and, for employers and the tax exemption for employees to exact the same thing and that's the subsidy people eligible for in the standard silver plan. i suppose republicans don't want to be a silver plan. we'vwe've got to go to the rootr something, but create a standard plan that the tax credits are tied to, and whatever we're willing to give people, that's the maximum we should willing to give them through the tax code. that's equitable and that will make the system more efficient. it's a solid safety net. because democrats can look at that and say, we are subsidizing this fellow over here, why should we be subsidizing that fellow over there with tax policy any differently? that's equitable. republicans should like it because it makes the market more efficient. tort reform, don't just put caps on the dysfunction system. reform the system. use the additional money you get by changing the tax deductibility of health insurance to strengthen medicare. medicare cuts and obamacare are

not a terrible problem for medicare today. medicare stuff was overdone. don't ask the medicare actuary to run sustainable in the long term. we've got to fix that. in the long-term and there's funding to do that. implement the medicare documents to the medicare doc fix bill mckibben a bigger bill in terms of changing the financing of american health care and the affordable care act was. the doc fix bill really creates the incentives to find move it away from fee-for-service and onto systems that are accountable for the combination. medicaid expansion to codify into law the ability so they don't also states don't have to go begging a democratic health and human services secretary or republican secretary, conflict and the leather bound to have that flexibility as long as the state to state what six and 100% and take the 100% money, fine, they've got to prove the program

is going to get a sneak people in the nitpick of want to go to 138%, give them the 138% might but they got to prove they will be able to get those people. if they can do that let them do it. give them the ability pashtun let's put competition between democrats and republicans but stop arguing about it. why is everybody so afraid to put governor cuomo against governor 10? i think it's a fantastic idea. and medicare will have to be a reform down the road. i think we need to bring back weidner write. i think 2017 we will. a platform of guaranteed medicare benefits, access to the old medicare plan, but a platform that grades and much more robust market, gives people choices and makes the market more efficient i think we'll get to that someday. the best hope i've got and 2017 are these two guys. i think ryan and presuming he's in ways and means, and widen,

the ranking member on the chairman of ways and means, this is where really exciting things can do. i'm one of thanks i see the liberals is they stole. progressives progressive that began in wisconsin and it's about people with new, fresh it is whether the conservatives or republicans. paul ryan is a progressive conservative. ron wyden is a progressive democrat. god bless them both and i think in 2017 this could be the place was really interesting things get done. so the affordable care act hasn't cleared the tower. it needs fixing but it was never going to be repealed and replaced. the lat late surge in april that will probably have people saying we don't need to fix it. this to me this look like watching football can come watching football game. the two teams on the field and someone fumbles. the ball is bouncing down the field and, of course, what you do in a game like that is to try to jump on the ball as fast as you can. obamacare is a fumble.

there are important things about it, there are need things to be fixed by the space of a fumble and its bouncing down the field. the democrats are standing there, there is one team and they are saying we don't have to jump on the ball. we've got 8 million. it's not a fumble. the republicans are standing to come watching the ball bouncing down the field addressing we don't have to jump on the ball because we are so far ahead, we will win anyway. but look at the polls, look at the kaiser polls. people want it fixed. i think the electorate is waiting for somebody to jump on the ball and take us to the next step and i think that's where the political opportunity is. i know we've got to do that. this is not going to work the way it's working right now. i also think the first real chance for reform or change, the next generation on this journey toward health insurance reform and hopefully health care reform probably doesn't come before 2017. i think the republicans could

cede the issue back to democrats. i was watching their lead to the other. she's figured this out. i think more and more democrats will figure how to take this issue of the republicans better pay attention because this election is not over. we have a couple mess of questions but i think jim will moderate. i'll be happy to answer as many as i can appl. [applause] >> let's start over here. >> good job, bob. you've advised health insurance executives angela forward to 2014 as a lot of ominous stuff there. the soft catch, the political caps on the increases that you talk about, the fact that it will be re- accelerating and that there's a very good likelihood that that 30% of the people that ate dog food are going to be sicker than the folks that didn't. how is it that two of the big

publicly plans raised their earnings guidance for 2014? how do you reconcile those earnings races with the ominous forecast? >> obamacare, the affordable care act doesn't move the needle on health insurance company earnings. first of all it's a tiny percentage of what they do. you saw the chart. the federal employee health benefit plan is more revenue than obama there's going to be over the next three years. that's number one. number two, you've got the three r.'s, reinsurance provisions, the reinsurance provisions to me the insurance companies won't lose money but they will only lose a couple points on premium. that's couple of points on premium on that small sliver of business is not a material impact on their bottom line. they are much more worried about medicaid. a big issue is boy, this is a terrific opportunity for medicaid expansion and much more what about the medicaid advantage is that it's the biggest part of the profits right now.

that's one of the reasons they did so well in october and november. and somebody said the other day, blue cross of iowa and south dakota are getting back in the business. united might be going into connecticut. that means it's working, right? i'm not going to do what those guys were thinking. idleness to know what those guys were thinking but i'll just leave you with this. if i were back running a health insurance plan in the good old days and i were confronted by all this, i might just wait out on exchange is the first you, but in -- the sick people are ready with the other guys with a couple of different interpretations for the move as well. [inaudible] >> in the mid '80s to early '90s i had kaiser in northern california and my hope for obamacare was to see something silly but it was what you talk

to, the healthy options. it was very easy, very affordable, did not have a high deductible. do you ever see a plan like that? and also quickly comment on single-payer stay you and i share a best actor in a health insurance business in los angeles in the mid '80s so i no kaiser very well and have enormous respect for kaiser and what they've always done. but yeah, i mean, what we are talking about are crafting health plans that provide real tangible benefits. that by the relatively inexpensive. it i'm going to pay for somebody to go to the doctor for strep throat, it's got to be co-pays. you can have people over utilizing and not going to the doctor when they need to wait the extra day to make sure it's not strep throat or go to the nurse that can give them the strep culture. so you have to have incentives for people to think about how they're going to utilize but there are ways to create really

valuable players. part d as a good model actually. because there is no individual mandate part d. they offered it the first year, 30% sign-up, probably 70 or 80% signed up the first year. why do they signed up? and part d by the way is a catastrophic health insurance plan. part d is a few benefits of front, a big donut hole, and catastrophic insurance. the people love it. that was a product that hits the mark. unlike these products to your second question was single-payer. i think -- [inaudible] >> well, some people question, particularly my republican friends to really mad at the insurance commissioner in cooperative obamacare. they forget obamacare is managua. what choice do they have? they really do want obamacare to work. who has worked harder to make

obama to work than the insurance industry? and been more cooperative and got slapped around quite a bit. by the customer, the federal government. why did you want to make it work? its 59 people in the market, that's a good reason. but the other reasons i think is they don't have a lot of confidence in republicans when it comes to health care policy. if obamacare blows up and fails, and it's just this god-awful mess that looks like new york or new jersey individual insurance pool did in 2013, it's in terrible, terrible mess, and will republicans grab this thing by the hordes and deal with that? they haven't had history of the. they like to sell insurance across state lines but they do not get terribly serious in the congress. u..

so that is what is going to happen. we are heading for single-payer. we make obamacare work in the market or we are going to go single-payer. no question about that. you're going to live a long life, tim. argumentpart of your is that because of the benefit requirements, plans are having to spend more for benefits people do not want. they're having to add features people do not want, like narrow networks. particular, what benefits are required that are at existential into the cost? -- adding substantially to the cost?