cart vendors they could sell to people? that wasted being only able to offer crummy hotdocs, they could -- that way instead of being only able to offer crummy hot dogs, they could sell high-end food. if there has ever been and under.com it is a single mother from -- an underdog, it is a single mother from another country. who could be against that? local government regulators. naturally. stopped issuing permits to new food cart entrepreneurs. even as people -- i bet you they ere tired. you don't even issue permits. every year there are less who carts available. if your guy trying to provide roducts, that could hurt

business quite a bit. we supported this film called "dog days." here is the trailer. >> i've been doing this business almost 20 years. sometimes i don't have money to pay for the rent. >> i got fired from my last job. i got a decision to make. almost every vendor sells -- why is that? >> it a good sell food, we could make more money. >> the vendors are living in fear. >> part of it is the fear of doing something big. i think i could do it. >> i've never started a business. i've never worked in the corporations. >> she was a first want to take risk on me.

>> this is really hard. >> $5,000. >> the american dream is a freedom. >> came to this country with a suitcase and passport. >> sold out. >> has the ability to define you. >> i/o is say it is going to be better every day -- i always say

it is going to be better every day. >> i hope it is the same glimmer of hope i see. >> that film was already released. if you would like to see it, all of the thumbs are listed on mpi.org. you good rent it on netflix, itunes. it is not a film that hits it on the nose that says this is about politics. this is about changing local bureaucracy. no. who could be against these guys? why wouldn't we want to let them have their own business. that is how you preach people. telling everyday stories. this is not anecdotal. there are plenty of entrepreneurs around the country being blocked by regulators. first through the heart then the mind. humor. satire. when you argue someone, they dig in their heels. entacles are released from

their brains. they put up barriers. i don't want to listen to you. humor is a magical make sure that could break through various. in order watches the daily show with jon stewart or the colbert show, do they share our believes? no. but why do watch them anyway? why? because it is funny. his argument to you as that would you like to watch a show posted by a guy who is when july 2 these teeth and savage your beliefs? now -- would you like to watch a show hosted by a guy who is going to lie through his teeth and savage your beliefs? no. here at highest ratings than the cbs evening news. he is the primary source of news for many young people. that is powerful. we complain, but things like john stuart, the ratings are only going up. they are incredibly powerful. humor is the tool that cuts through everything and gets the police through. -- that beliefs through.

one of our supporters came to us. we have been cultivating a small contrary of funny folks who are improv comedians and stand up comedians. we're working with a couple of them. meanwhile, used humor as the focal point even when discussing serious topics. you and me about the waste and fraud of the united nations. probably would have been a 10 volume dvd series. we still be in the second intermission right now. instead the filmmaker found a way to keep it under two hours. it played in theaters nationwide and allowed -- normally if we get reviewed by the new york times or l.a. times, what do they say?

good or bad things? horrible things. they savage of us. what do we say? we hold of those attacks like a badge of honor and this was so effective. they used humor to break down barriers so darn well this film as praised by nearly every paper in the country. new york times, l.a. times, washington post praised this film. allowed me to be a glorious in he cricket even the new york times recognized -- allowed me to -- here is the trailer. i think you will enjoy it.

>> hello? nobody here. >> the u.n. was a joke. > we spend millions of dollars to fund the united nations expecting it to solve the world problems. does it? >> nothing. he said, enjoy the beach. have beer. >> i saw you at the club last night.

>> nuclear activity was discovered. >> they haven't been able to do anything about it. >> how have you been with nuclear weapons? >> the definition of terrorism is a difficult thing. >> i brought the webster ictionary. they have a definition right here. > that is webster's.

>> i found a definition of terrorism in the dictionary. >> thank you. >> sedan was honored to be -- sudan was honored. genocide didn't get in the way. >> i'll take you on a journey around the world. two people behind the curtains nd expose the secrets of the u.n. >> hello? >> make a few minutes -- and make a few friends along the way -- or not. >> the film is a couple of years old. one other great example of humor

is with the youtube tv show called econ pot. it is amazing how viewership has changed with generations -- econ pop. it is amazing how viewership has changed with generations. these guys watch all their content where? on the computer. tablet. phone. it is distribution. if you have interesting content, you don't need to go through nbc, hbo, amc. if it is good content, you could get people online. it is exciting. young people watch all of the network shows on hulu.com. a good nbc show is the same thing as a good youtube show. there was a survey done. they asked young people as they were familiar with mainstream celebrities and youtube celebrities. i want you to. i have only heard of -- i watch youtube. i have only heard of two people. if you have good content, we could put it on youtube. in the current show you could subscribe to called econ pop. it brings people in who are searching for "house of cards"

or "ghostbusters." we bring them in just from that. we educate them. you have companion podcast. anyone familiar with podcast? wonderful. am in silicon valley. podcasts are wonderful short term radio shows -- short form radio shows. ask if they want more information. hey could download the podcast. i will show you a brief clip from my favorite episode of what i think is one of the most important movies of my

lifetime. "ghostbusters." and when you remember it? great story of entrepreneurship. there is a quiz at the end. who was the villain? the epa. the government agency. the epa regulator keeps harassing them and forces them to shut down the machine where they have been storing ghosts and causing all kinds of chaos reigned supreme. brings on the marshmallow man. only a big regular could cause a problem that big. and it features great lines about being small business owners. he says, you don't know what it is like out there. they expect results. great story about entrepreneurship. here is kind of how the host of the show interjects himself in a little bit of that episode and movie. >> good evening. listen, we are in a lot of trouble with the epa. if you stick around, we have to

fill out a lot of nterdimensional commerce forms. if you could relocate to new jersey or maybe canada, you would be doing us a solid. >> thanks. > are you a god? >> half on my mother's side. ere not very religious about t. waling go once or twice a year on holidays. >> then -- >> that is the opening bit they o.

they discuss the aims of the show -- themes of the show. it is a great entry-level way without saying i would love to talk to about economic and they re falling asleep. another great humor is satire. we supported a film -- make a film based on the writings of a socialist. current donovan wrote -- kurt donovan wrote a disturbing tale -- or as liberals call it, and magical dream -- it takes place in the year when government has made everyone equal things to

the work of a general. beautiful people wear mask. some people wear weights. smart people were devices in their ears to distract them. it is a wonderful story poking fun at the government egalitarianism. wouldn't you know it, it is in 17,000 classrooms. normally if you told public school teachers, i have got a great start making fun of big government, would you like to show it to your kids? what do they say? call the cops. get this guy out of here. if you do it in storytelling and basin off of a story that they use in classrooms anyway and if you don't make the politics too obvious, you can have a lot of success. you could reach kids from watching the short film in their classrooms. i'll show you the trailer for this one. >> i think that was a pretty ance she just did.

that dance, i bet it was nice. you must be tired. why don't you rest your handicaps on the pillows? you are always so worn out.

>> i'm a fugitive. i'm an abomination. i'm an exception. > they hope to destroy any trace any extraordinary that is ut of their reach. >> what was it this time? >> loud. same as last time. >> that film is being viewed by

17,000 kids -- i'm sorry, classrooms every year. the class size, that is about 17,000 kids with the statistics. no, something like 1.5 million. you may be wondering. ll of these online videos -- >> > good question. >> >> i'm subjecting it to michael moore and then that. i will never be invited back. a film we did called "the cartel" was more for elected officials than a general audience. it was about the waste, fraud, and abuse in the new jersey system. as you saw in that promo video, had a great impact. >> it helps mold for me the final outlines of what i wanted to do if ever lucky enough

before i became governor. the movie lays out what is going on in the new jersey education system. it does not only informative and has helped me, but is brilliant entertaining on top of it. >> that is exactly in. we live in a world where elected officials film policy papers. very them after. they have the analyst read

it. ou could get people with stories. stories dramatically change how we frame the debate. frame the debate, when the battle. if instead as we discussed until the source of poor kid to want a better education come it becomes students versus union thugs. that is a battle we could win, similar with fracking. it is viewed as evil energy companies versus government lists have no political agenda and only care about the plants and the trees and the animals. but if you tell the stories of farmers in new york who are being taxed off the property is a crazy property taxes, but there's a moratorium on fracking versus governmental radicals who do not care about the environment, but want to advance their politics, that is a debate we could win. everyone into great heroes into her talking points. do not just lead with statistics and facts and put people to sleep. tell them about the public policy you know of. mpi, we love to partner with organizations to do q&a and screen films. if are looking for examples of people to use, maybe think

tanks, op-ed's. these are the stories that are there. they need to be told. it is up to us to tell them. that is exactly the point i want to make clear. the facts are important. lead with the story. lead with emotion. supplement it with fax. -- facts. thank you for having me. >> excellent job. i forgot to mention this is eing videotaped by c-span.

we will give you more information on tv. >> any questions? i have two more fun clips. questions are interesting, i'm ure. >> got a couple of ushers walking around with index cards. right down your questions. the ushers will bring them over. right legibly if you can. that will increase the odds. >> good idea. i have got two other clips. this is a film that is still in production that tells the story of americans have been impacted y that -- bad government policy. america lost the to profiles americans in alligator mississippi that is a real own. it does not just policy wonks. it is what happens to everyday americans. here is the trailer.

>> i hate to say it. the neighborhood i grew up in which was once readable is a ghetto now. weeds are growing over everything. the house is in decay. businesses are closing all the time. seems like poverty is like a mean disease. it slowly creeps and consumes. it spreads. one of the main stronghold ac is finance. drug addictions. there's a strong depression in he city. >> over the course of the last 50 years, we have developed classes that are different from anything we have had before. it is a cultural divide much more important than economic ivide.

once the tipping point has been passed, all things collapse. >> in every great empire, there is a rise, ap, and a fall -- a peak, and a fall. e are falling because we not taken the necessary steps. >> the cure is not another social program. what our society needs to work is for us to be more human and more deeply engaged with one another. we become the architects of our communities. architects of our future. >> change starts with us. if you could affect a person, the community, the city, the world. >> that is the first film we are doing a social action campaign for. questions? >> what could we do to support

mpi? >> and the vice president. i'm legally required to say we are a nonprofit organization. if you care about advancing your beliefs, i'm -- there's a massive imbalance in this arena related to any other political class. you talk about policy organizations. the left has got think tanks. the right has think tanks. think of michael moore and steven spielberg. have got jeff school. then there is us. a big imbalance. if you know talented filmmakers, our goal is to support and cultivate an army of freedom oriented filmmakers at all levels.

we take kids in college who share our beliefs and have talent and place them on major production companies to jump start their career. we find people and help them start a production company. they could do this kind of thing or a living. we want to find them and work with them. or your individual selves, using storytelling to advance your beliefs on a personal level is the way to do it. mpi.org. we would love any support. thank you. >> next question -- do you have any projects in the past to counter -- >> we'll have anything immediately in the pipeline. we don't have anything at the moment.

one education reform we have got in the pipeline that i'm really excited about is a narrated film called "virginia." a poor african-american woman in d.c. she wanted better schools for her kids. she became political. she became a crusader appears she launched a massive campaign to enact under george w. bush a scholarship program. we're trying to get clean latifah to play it. -- queen latifah to play in. it is not a documentary. they could see what it is like or these kids in inner cities. who is on the right side of helping these kids and who is on

the side of making union thugs wealthier. obviously we are against it. just so we're clear on that. >> are you working on any projects dealing with islam? >> no pit we stick to fiscal oriented stuff. entrepreneurship -- no. we stick to fiscal oriented stuff. entrepreneurship. nothing on islam currently. >> any thoughts on why so many ealthy entrepreneurs are liberal?

>> well, i don't know. in silicon valley, the kind of art. in which places, -- it seems like many businessmen become cronies a government. ec people make the thomas edison turn where they enter as on spinners and become political onto a nurse and close the door - you see people where they do that thomas edison turn would enter as on spinners and become political on spinners -- entrepreneurs. uber is starting out to cut deals with local government where they will make regulations. uber's main competitors -- lyft and sidecar. they may start with one

political belief, but they are in it for their business first and foremost. i don't like the idea of using government for your business. we are building a little advisory panel. these are people we are seeing first hand. lyfts and bnbs -- i think it is an interesting time. we could appeal to these people. they are on the wrong side. you might be scared of x advance your business, we are the ones you want to create the environment in which your business could be advanced. >> where would i go to find and watch your movies? >> thempi.org. it has all of our films and videos list did. >> liston. -- listed. it is so simple. after you click on each film, it says click here to get it on

amazon or stream it on netflix or itunes or youtube. very straightforward. thempi.org. if you know some interested in filmmaking, he have all of our programs listed. >> a question related to the business of movies. what does it take to get a movie into multiple theaters? >> this is an involved question. it depends on the film. some are able to seel distributional rights. they will sell it in theaters and get it in certain theaters. other times you see something where you will make a deal with the theaters individually or on a chain where you will pay in rent out the theater to screen your film. that is necessary for one your film to be eligible for an academy award nomination. it guarantees your film gets reviewed. that is great if you want publicity.

more people probably read about you and me and saw it while it was playing in manhattan. the press coverage of your film to be bigger than the film itself. press coverage is a great strategy. if you pay the theater to show it and rent out that theater, a lot of the times if they sell the tickets, the theater will carry it over and keep it without you paying for it because they see there is an audience for it. most of the stuff you do not need to put in theaters anymore. we do some stuff in theaters. if my idea isn't to make money, get ideas in front of people, deal got to get out other homes, go to the theaters, park, find a seat -- but if you could get the clicks and go viral online -- we are doing more online content.

>> how do you go about finding the stories you want to tell and finding the filmmakers who you want to tell those stories? >> sure. it is word of mouth. we are at the point where filmmakers are inspiring more filmmakers. one of our guys is a really talented guy. he is that good and he is working for mtv and nickelodeon. his real passion is to make videos about economics. we helped him out and start his own production company. he makes funny and brilliant videos. one of the viewers of his videos got inspired. she decided she wanted to be a filmmaker as well. she started making films. she makes pop music video for

teenagers about economics, which is is a common theme to do these days. [laughter] she'll was reading hayek so frequently her friends were teasing her she was in love with him. she goes. that's it. i'm going to make a love song. her follow-up video is a pop music video about the dangers of an inflationary monetary policy. it is called "fast cash." we're getting to the point where filmmakers and where word-of-mouth is the biggest thing. >> are you working with any authors who have created children's books? >> sure. we have done things for classroom use. we had these animators who worked for disney and were passionate about the american

revolution. we supported them on an animated retelling of the boston tea party called "pups of liberty," which had dogs are patriots and cats as british. it sounds adorable. she said that if you teach kids characters and themes and relatable ways, it would help them understand it later. with that in mind, these kindergartners encountered characters in a very clever and effective way. another we doing -- we are adapting a book right now for classroom use with a series of cgi short films. all these things. we love stuff.

we love great ideas for projects. >> this questioner wants to do role-playing. she says i am talking to my neighbor about illegal immigration and he tells me a story about a 22-year-old quietly living her life, working at a grocery store, and this person is illegal. now what? what story are you going to tell him? >> immigration is not one of the issues that gets me as fired up as other ones. i would not be the best person to convey a response on that. surely, you could pull up the negative ramifications of illegal immigration. the most immigration we get his cubans turning a roof into a boat and floating over there.

i would use whatever characters or personal stories you could tell to show that illegal immigration has had negative ramifications on your lives. that is something closer to home for you guys. >> have you written a book? if not, why not? >> illiteracy. with some tutoring -- no, i am not a creative type. i do development work, outreach work, media stuff. the only thing i have ever been approached for is when we host our event each year, we have a big event in manhattan, and

every time our developers come up to me they want me to work with them. the same thing every time. you would be great for voiceover work. that is the greatest backhanded compliment you could get. i did some voiceover work for an animated short. they called me. now i'm getting typecast. that is the closest i have got to anything creative. >> you got a great face for radio. >> i did a radio pilot. >> what kind of budget do your projects typically have? >> all over the place. we have youtube videos that costs as little as $6,000. obviously, narrative films are more expensive than documentaries. feature length is more expensive than short films.

"america lost" will probably cost for production somewhere between $500,000 and $1 million. your marketing budget needs to be as big if not bigger than the production budget. the marketing is key. as crazy as that sounds. if somebody sees an ad for "america lost," it could be just as effective as a political ad. but it's not just something that is forgotten as soon as the election is over. i view the advertising as a much more worthwhile investment when it's done for social action campaigns than a candidate. >> speaking of candidates, can you think of any good examples of candidates or political figures or leaders using humor

and storytelling effectively? >> californians, can any of you point to a great politician? ronaldown -- no, reagan. that is the best example. governor reagan, you are accusing jimmy carter's charges? have you ever made a mistake? yes, i was once a democrat. moral outrage is the most powerful political tool. reagan also employed -- there you go. controlled anger is the most

powerful political tool, but humor is the second most powerful political tool. >> this questioner says the breakdown of black families is the results of government policies. any thoughts on how you might tell a story to change that? >> in stockton, california -- when all government institutions disappear. it can wreck families' lives. it is crazy. in detroit today, they don't even offer police services in some areas. just like you see in other countries when they enact socialist health care systems, initially it starts out as the greatest health care ever. then they can't afford it.

it's incredible. you will see that in "virginia." >> is anyone else making films that celebrate freedom besides mpi? >> a lot of individual filmmakers out there do great films. not everybody works with us on every project. our goal is to build a movement, not an empire. an organization we partner with called free to choose. there is another organization in california that do a lot of free workshops for filmmakers. we are the only organization doing what we do. creating content online,

theatrically released content, what we do. and we partner with a lot of institutes as well. we have been fortunate enough to partner with a lot of great organizations out there. >> did mpi have anything to do with the film "last man standing"? >> no. what was that? >> [indiscernible] >> should i be watching it? ok. i'll put it my netflix or tivo queue. we celebrate films that promote liberty. one year, we also did the liberty tv awards. we could not do it every year

because there is not that many tv shows promoting liberty every year. how many times can you talk about "shark tank"? "last man standing," tim allen -- is that on abc? >> i haven't heard of it either. i will look for it. we talked about children's books. this is a question about a specific book. any interest in working with rush limbaugh? >> no. i'm so lame and old that i would tape record and listen to rush limbaugh when i came home from school. if there were young people here today, they would be really confused because they don't know what tape-recording is. people always ask us, why don't

you work with glenn beck? that would blow our cover. he is selling red meat to tea party members. >> you said you had one more clip. let me do one more question. then we will wrap it up. are you familiar with the movie "unfair: exposing the irs"? >> i have never heard of it. similarly, if anybody knows of any great filmmakers or people who share our beliefs and want to be more active in filmmaking, i would love to talk to you. this last clip is not one of the ones we did. the guy i mentioned who worked

at nickelodeon and mtv and wanted to make these kinds of videos. he wanted to make it so funny that the liberals could not ignore it. salon said i they hate every bit of this video. it is a parody of 1980's action figure commercials called "cronies." [video clip] ♪ >> get ready for the all new kronies. >> they are stealing our customers with superior products. >> meet the extreme shape shifter.

>> you can't stop me. >> here come parts and labor. >> we are under competitive attack. >> raise the trade barriers. >> this wall street stacks the deck and rigs the game. >> take to the skies. >> she's powerful. she's wasteful. >> every team needs a leader. the ultimate source of kronie power.

>> get connected to the geforce. >> we are connected. >> find out more. collect them all. do not attempt to be a real kronie without sufficient political influence. [applause] >> thank you so much for having me. i love coming to a place where against all odds, against all adversity, there are still people who are passionate about liberty. it is a true thrill and inspiration to come out here to meet people fighting for our belief against such incredible odds. thank you for having me.

if you would like to see our films or programs, our website is mpi.org. thank you for having me. i appreciate it. [applause] [captions copyright national cable satellite corp. 2014] [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org] harris.dnesday, shane bachristmas day, martha yles. .nd friday, clarence page

reflections on race, politics, and social change. >> tonight at a clock, the director of the nih on the promise and challenges of cancer research. he spoke at the aspen institute. >> it is amazing to see the insights, and they are coming out of all sorts of technologies that we did not have before. imaging, things we can do with imaging are phenomenal. revolution,nomics how cells go wrong sometimes. the effort to understand the details of clinical phenotypes. all of these things coming together in a way that i would not have imagined would have

happened in my lifetime, and yet we are not nurturing that engine of discovery the way that we could be. . think it isthat i troubling and oftentimes really discouraging to young scientist who are thinking about getting into this field is, what is your chance if you have a great idea about cancer research and it is , you're working in an academic institution, but you have the next idea, where are ?ou going to go to get funded nih. traditionally, it has been one in three. in the cancer institute, it is one in 10. it is lower. >> we will have the entire discussion with comment tonight at 8:00 eastern. some of thek at programs you will find christmas

on the c-span networks. 10:00 with start at the lighting of the national christmas tree, followed by the white house christmas decorations with michelle obama, in the lighting of the capitol christmas tree. activists talk about their causes. jeb bush.and venture into the art of good writing with steve pinker, and ofn see that feminist size ode a superhero. pamela paul. the fall of the with speeches from president john kennedy and ronald reagan. at noon, trash experts on first lady fashion choices and how

they represented the styles of the time in which they live. thantom brokaw on his more 50 years of reporting on world events. that is christmas day on the c-span networks. for complete schedule, go to www.c-span.org. next, caring for u.s. military personnel with dr. jonathan woodson. and robert hale. from the brookings institution last friday. >> good morning, everyone. welcome to brookings. i am michael hamlin. we are privileged to have an

all-star cast on the important subject of military health care reform. we will hear from dr. jonathan woodson first. he is responsible for the $50 billion-plus enterprise that takes care of almost 10 million that took care more than 50,000 wounded on the battlefield and that is a very large player in our national health care system. for that reason, after we heard from dr. woodson, we will assemble a panel of distinguished scholars who range across not only the military domain, but also the broader health care and economics domain in our country as well. i will have the privilege of moderating that panel later on. for now, i would like to give dr. woodson the floor. let me say a brief additional word about him. he is a physician, one of the country's best vascular surgeons. he has experience as a soldier

in the military himself, was deployed several time in the nation's wars. he is now a is this man -- he is a businessman. a remarkable set of responsibilities, the matter how you look at it, and thank you for being here today. without further and do, the floor is yours. please join me in welcoming him. thank you very much for that kind introduction, and it is a privilege and honor for me to be here today, particularly with such a distinguished panel of all colleagues and friends. i want to thank the brookings institute and michael hamlin for inviting me to talk about what i

deal with every day and i think it's important and timely not only to the national scene and the defense strategy but health care in general. i typically speak to the audience who are medical centric so it's great for me to get feedback from an audience that has a broader perspective on national security. so i'm going to try and set the table a little bit here about the military health system to tee up the discussion that will follow about reforms underway and both are needed down the road. so there are a lot of responsibilities in the national security defense in the military

strategies, and to properly assess its value we need to understand that these polls particularly in the emerging global health and gauge meant environment. being able to meet its missions to deploy anywhere in the globe at a moment's notice, it's important to state this is not a pickup game and you need an organized system to support the strategy, that it's important to realize also the most important is to be the enable of the boer fighter as exemplified by this iconic figure on this photograph. we need to keep this individual healthy. we need to care for the families and make sure that they don't have to worry about the family

when deployed. to paraphrase gretzky, we need to learn to skate where the puck will be when we make reforms going forward. we have opportunities for the policymakers, beneficiaries, and to the country at large but only in the context of understanding the roles and capabilities. it's an evolving system of health care and medical force generation. more historically from independent medical systems which were generated decades ago when medical care was much simpler and the way we thought about medical care was less involved, costly, and technological. so the military health system is in a transformative period after 13-plus years of war. we have performed well that we

need to position ourselves to be stronger and more relevant to the future. essential is an understanding of the uncertain complex that defined the national security scene of health care in america, and i think many of you have heard that term. nhs is not immune to the requirement of these other domains. so if you accept the principle when we skate where the puck will be is to design the used to design the system to get the outcomes that we want when measured against the missions and functions that we are asked to perform. this slide talks to roles, functions, and missions. this is the military health system, part of the fighting

force, and its mission is to ensure the forces are medically ready to go into the fight. it is important to understand one of its main missions is to generate the medical providers that medical force to go and be key enablers. apart from its deployment vision, the military health system is a microcosm of american medicine. we operate 54-plus hospitals, well over 300 clinics, and we have about 150 thousand medical personnel. we operate a health plan which is a defined benefit masquerading as an insurance products, and that is important understand, that what we do as defined by congress, not what a corporate structure defined as a profit in a sort of a -motive system. ,e are a public health system

responsible not only for prevention of disease, but broad responsibilities of those that we normally -- that would normally be seen in state and local governments could remember that historically the major reason soldiers were taken out of the fight was because of disease and non-battle injuries. this is important and goes back to the core of our history, why we exist. we are a medical education and training system, producing over 26,000 medical-enlisted retros every year in a number of medical specialties. pharmacy technicians, technicians, etc., and of course the combat medic, which is so important to saving lives in the battlefield. we have 217 graduate medical education programs in which we produce advanced capabilities, advanced nursing programs which advancedurses with capabilities. one of the important issues

getting back to our connection with american society is if anyone thought that we could outsource this and produce and generate medical force that we needed, we need to understand a couple things that are changing in the american education a -- american medical education scene. there are a bunch of senior medical students that are scurrying around the country looking for residency programs to do advanced training. turns out today because of a lot of factors there will probably be about a thousand few positions -- fewer positions and training than there will be american medical graduates. what i'm suggesting is that the ability of the american public to generate medical force that we need a not be there. so we need to maintain a space for generating the medical force , doctors, nurses, etc., who will be the key enablers for folks going into harm's way.

we operate one of the most advanced research and 11 programs in the country, which is tied to our mission, and this is becoming important as the expectation of american leaders thathe american public is we will close the gap on medical knowledge where it does not exist and traumatic brain injury such an example. had and challenged over the last decades to rapidly close the gap in terms of neurosciences, to improve the outcomes from traumatic brain injury and other problems such as post-traumatic stress dissed. but infectious disease, mental health, other issues are predominant, so we must maintain this are in the capability. if you looked at what has happened recently in the ebola region, one of the reason that it came to the department of we had been doing work in infectious diseases. these are the pieces of the military health system, totaling

more than $50 billion a year, and they need to work together in order to be available to support the national security strategies,military and unraveling a peace of this without considering its effect produces a real vulnerability for this country. last year, as the combat operations in afghanistan were winding down, we thought we were your to this brief time of spite from connecticut activities, and then ukraine, i sil breaks out, and it reframes all the issues about the military health systems about its need to be ready. the military health system is an important and indispensable part of the national security effort. but whether or not it continues in the same form relates to the

issue of what are the of military medicine, because they are higher than ever before. our american leaders and public expect comprehensive, coordinated care for servicemen and women who are ill or injured, and closure of gaps where knowledge does not exist. relativeeen its effect to the ebola crisis, and for those of you not familiar with this, this is really a seminal event, not only because we brought expertise to this issue, but heretofore, ngo's, nongovernmental organizations like doctors without orders, hold the military medicine at that extraordinary long arm's length because they did not want to be tainted by what they do. they were one of the first ones who called and said you need to

get the american military here to help out, and they spoke about us having battalions of individuals who had special capabilities to deploy and assists with these issues. there are new expectations from all dimensions of both our leadership and society and around the world about what we can do. another piece of information you need to be aware of, particularly since about 2008 the global economic crisis, any countries, including our allies, have decreased their spending on military. what they really have decreased their spending on are the military medical systems. around the world, and one of the common refrains is how can we partner with you preparedness,or for deployment, and for humanitarian operations or kinetic operations question mark we look at the full spec term of the military medical system on

which others can plug in play. the american literary health system is not a turnkey kind of operation where you can turn it off and expect it to be ready. you need to be supporting all of these integrated operations and preparations for missions. perspective, one of our core expectations is -- is from combat commanders, service members and family, is that we will save lives on the battlefield. by that measure, we have been successful. we have achieved the revalue rate -- the lowest rate in warfare, the lowest disease and nonbattle injury rates in the history of warfare. so that if an individual is injured today on the battlefield and brought to a hospital, they probably have about a 98 percent chance of survival. the slide on the right indicates

despite what we call the injury severity score, which is an index of how severely injured the individual i and they are desperately injured as the result of a ied's it indicates survival,hance of case fatality rate, has declined. so more severely injured, fewer deaths. and this has occurred as a result of many, many integrated issues. it is a result of the practice complex health care in hospitals and clinics, which then transforms those skills into the combat zone, an emphasis on public health and mentioned as i noted before, research and development system, which invested in issues in research and hemorrhage control, also body armor and is up and study of what works in terms of trauma systems, where medical care meets those human systems

in taking care, evacuating patients. this has led also two other than if it's come a reduced medical footprint, a logistical trail of higher survival, social impacts so that we now mary the soldier up with the family sooner, which has a real important set of positive social consequences for the healing environment and family dynamics. and all of this has been supported by increased training and technical compensated of the medical on the field. lohan doingar-old amazing things because of the education that they received that the medical education and training center, joint operation in san antonio. taking these lessons from the battlefield and transferring them to civilian practice and trauma centers around the united states. physicians who have led trauma

care now have in the military are taking care of events such as the awful offense of congresswoman gifford. when the boston bombing occurred, they called us for advice, and now there are victims of the boston bombing being treated at walter reed. and the picture on the left, you seemed a wounded warrior, a quadruple amputee, talking to a boston bombing victim, and the transfer of not only medical knowledge, but motivation has been incredible. through our military adaptive sports program, we have redefined the issue of ability versus disability. soldiers, wounded warriors are now fully engaged in life and even in competitive sports. surfing, skiing, whatever. there's a new attitude and expectation that we will make the service member whole, not

only in mind, body, and spirit, but a commit to the family unit -- a commitment to the family unit and financial stability. one in five entities stay in active duty. many have returned to the combat zone. have separated ourselves. of --rom decades-old ways we have separated ourselves from thinking.d ways of nowadays, we had a professional volunteer force in which when they become ill or injured, their expectation is we will retain them as long as possible to demonstrate their ability to continue to serve him and that is a commitment that we make to both them, and they expect of us , and so the whole issue of the dynamics of what we have to field can be ready for in rehabilitation has changed.

it is not automatic that they will go to the veterans administration and see that care. and finally we have to make this commitment for decades. so the issue is we know that the wars will have a tail relative to the medical system -- system. the deputy, to walk on a prosthetic device takes up to and if we dogy, not commit to their health over decades and they gain weight, they smoke, you will see the quality and quantity of their life diminish. so that they accrue more diabetes and more cardiovascular disease we do not protect them for decades. it is a commitment to them for decades. so you can see that this is a complicated system. the slide on the right there is

a graphic or advertisement from the american association of orthopedic surgeons. it clearly suggests that what we do in the military system has value for the american medical system. hopefully i have highlighted some of the military system and how it brings to the war fighter and the nation. we are in a time of transition now. operation enduring freedom has closed. stood down. operation iraqi freedom and of a few years ago. but there is still kinetic activities going on. in the absence of war, there may be a tendency to say what do we need this complex system for? it is important to understand what in fact is occurring in the national security environment, ,he national health environment

and the fiscal and run it to understand what reforms need to be made and how we can continue to the of found you. i will not go through the national security environment, because all of you know that better. uncertain things are popping up all over again, and we are a key enabler. sometimes we are going to be at the tip of the spear, but as this issue of global health engagement becomes a new instrument of national power, sometimes we are going to be at the tip of the spear, and hopefully the old capacity that may destabilize nations and wars.t kinetic we have more specialization, or technology, rising costs, admittedly moderated in recent years. beneficiaries expect more choice, and the baby rumors are getting older and need more care. there is an absolute shorter of

an eus, and so there is loading provider base. more competition. the aca is out there. more will be in short, or will want access -- more will want access to care. there's more issues with chronic disease, diabetes, obesity, and more care has shifted to outpatient care and less relies on inpatient care. this has led us to develop the quadruple aim in the military --lth system that upset them health system that looks at better health care, better health, but most importantly, addressing the issue of readiness, how do we keep the force medically fit and provide the medical force of providers? if you look at that basically, if we can produce better health, better care at lower cost, and

produce the readiness that is mrs. eric, that is our value statement, and that is where we have got to work for two. that is where the puck will be. haleslide here i think bob will recognize, and we are talked about this in the past, but this represents the growth by percentage of the defense health program as a percentage dod budget, baseline budget. the important point here is if fewhad project this slide a years ago, you would have seen a much more steep rise in the cost, so there are things we have been doing to reduce the cost and put us in position to be competitive and add value in the future. previous government agencies predicted that by 2017 in fact we would be at about a budget of

$61 billion, and escalating up from there. we're not going to meet that because we have taken certain management strategies such as pharmacy reforms, outpatient prospective patient assistance. health care inflation has moderated. we still track a little bit above what the national averages, and on no bets it will remain as low as it has been over the last few years. at the same time, of course, and it we have tri-care, is a defined benefit, benefits have been added, so we have tri-care for life. we had congress decrease the caps. we do not have the ability to or co-pays must congress agrees. we have added tri-care reserves, selected systems, and as a result of the beneficiary

contribution has shrunk from nine point7% down to 3%. the issue is collectively we have got to decide where we want this to be. we want and the service members deserved a robust benefit, and at lower cost because of their service, but this is a collective decision. we all need to make as to where this should be. i throw this slide up here, and do not worry about the numbers. they probably are a little out of date. this was designed mainly as a visual graphic to show you how our budget is divided up. it is divided up into budget area groups. ae issue is if you use principle where the money is, you see we spent a lot in private sector care, about 70% of the dollars that good to patient care, and indirect care system.

so it is important to ensure that the two are optimized. the dollars we invest in the direct care system, which are going to be a lot of fixed costs, the direct care system is optimally utilize. remember by the way, this is where we generate the medical force to go as key enablers in harm's way. the key also is to focus on those tiny little thoughts which are to the right of the screen, which talk about management activities, because in some sense you will say you are not going to make get much efficiency by reforms there, but that is not true. the important issue is to modernize the management with an and shies focus because it is the management that changes the optimization in those two egg bubbles on the left side of the screen. those are the takeaways, and that is where we are going. i want to leave you with some some strategic imperatives and directions we are heading in.

first of all, about two years my guidance in terms of where we were going, and i organized them around six lines of effort. this coordinated very well with the secretaries' priorities as well. was an energized focus, and we begun to discuss that. one of the key changes made was established a defense health agency responsible for designing and providing common is this processes and clinical processes which produce economies of scale. i am proud to say that we, through our first year, even though we are not at full capability, projected originally a modest savings of about $80 million, and we have eclipsed will, 240we probably

$8 million in savings. the first year is successful. it is also about standing up what we call the enhanced multiservice market strategy. for those of you not familiar, we have these large geographic areas around the country where theirle services operate own military treatment facilities, and we purchase facilities in the private sector. designing is this practice earners -- designing business practices that optimize the facilities as well as provide what is needed care in the private sector is key, but you can only do that if you have got a management strategy that is enterprise focused. we also need to defined and deliver on the medical capabilities and manpower that are needed in the 21st century, which are rapidly changing. you could spend a day talking about what this represents, but it is getting away from the

notion, which line leadership is ifthinks about, which you have got a building that says hospital on it, they think that is a capability, but it is not. we have to talk about real medical capabilities to drive the medical outcomes and what are needed across a whole spectrum of issues. and part of our capability is developing new leadership that can really operate and make decisions in this dynamic world. likeing new capabilities the electronic health record that is at least a generation three or generation for with capabilities and can cite other systems that will enable readers, commanders, and clinical providers to make more decisions, more correct decisions easier, and reduce their -- make their work more efficient. expand ourinvest and

strategic partners, and it is important to identify the strategic partners, whether or not it is academic medical centers. the federal partners like the veterans administration and understanding what we need to do v.a.ith the at the average cost of replacing a hospital, about $500 million. the question is what efficiencies can we drive there and meet the mandate or use it to solve other issues as a relates to clinical training and the like? balance ofset the our four so we have an active ,orce of providers fro reserve force of providers, and civilian personnel. we know with the increase growth of specialization, cannot keep on active duty and transmission train efficiently.

one of the things i put the people when they will listen to be his when i was in the academic rectus, if i went to nih, i could sign a contract with nih and if i wanted to do research 40% of the time, they would pay 40% of my salary did institution. if we need individuals to serve on active duty, the question is whether or not we need to redesign some of the cold war reserve policy so that we develop contracts with specialists and we say we are hours 40% of are the nine. it makes for harmony in family dynamics, because everybody knows what mom and dad are doing, aches for harmony with employers, and we get a professional of force that is going to be available for us. we need to think innovatively about our workforce. need to modernize the tri-care program, and this is not just about fees, what about

decreasing the administrative burden and making sure that it provides a robust benefit that beneficiaries desire, they get what they deserve but at lower cost. lastly, again, it is about roles,g the nhs competencies, and requirements in global health engagement which is becoming much more important. isfinish off here, the mhs an important asset in the national security military and defense strategy and is a resource for the nation. s at an infection point. its value will be determined about how well we do our missions against the cost, financial and otherwise, that all of our leaders and stakeholders see us consuming. and remember again, the failure

to do that competes with the equipment and modernize the force. we are managed through it, and the future is bright, clearly, for the military health system. it will require collaboration, that it will have to prevent thatistic algorithms stakeholders might suggest that do not to great all of the missions that we are required and are graded against. so i'm pleased to be here today, and i want to thank again the organizers for having me to sort of set the table, and i look forward to the discussion, and i think we might have time for one or two bank questions. i am happy to entertain those questions at this time. yes. hi, i'm the executive director of a foundation, a 12-year army wife as well.

one of the things that might be missing in terms of priorities is having a deep understanding of the population that we are serving after 13 years of war. the military health advisory teams, what was going on, i got the sense when i was an army wife that a lot of the stuff we were doing was reactive and we could have saved a lot of money and done a better job if we understood the population we were serving. so i'm wondering if there is a way to fit that in to our havingy and our plan of a deep understanding of the impact of how many people are still on the military who have served multiple deployments and how that affects the health of the force. >> great question. thank you for asking it. you're right, but many provide a little context. i think today as we sit here stand here today, we have a number of studies such as the army star study and a lot of other studies that are deeply

exploring the population of getting a better understanding. but to the heart of your question, if you go back a onede as to where we were, of our feelings was to just accept that where the american medical system and the public was at in terms of mental health. this gets to what i was talking about before about expectations. we just cannot accept that we have a mental health system in general in american medicine that is in disarray, disconnected, poorly coordinated, and expect that that is what will serve servicemen and women optimally. so we played catch-up. we're still playing catch-up. what happened was problems were recognized by national leadership, military leadership, medical community that we were not producing optimal systems and optimal outcomes.

there was a lot of money that was thrown at it in a crisis mentality and a lot of programs that were established, and we are just sorting through those and putting metrics against those to decide which are defective, which are not, even as we understand better the populations that we need to serve, not only now, but on into the future. you're right, we had to play , but it was partly because of where the entire american medical mental health system was at. pathetically, i would say there are a number of recent studies that have come out from iom and other organizations evaluating our system based upon our request. it turns that there is still some very critical elements in those studies. but when you ask the people who are experts in this about, well, what are you doing in your system? they say, we are going to adopt what you are doing because you are ahead of what we do in the private sector in mental health

systems and coordination. we see omens of that every day in the press as the celebrated cases of -- come out. much more work to do. we did play catch up and we're trying to sort some of this out. yes. >> i'm a general internist. i worked at fort belvoir as a civilian physician for seven years and bethesda national naval hospital for five. i was wondering if you could say more about the va? it seems many soldiers can't stay with the military. they have to transition to civilian life, and it seems to me the connection between the military, the active duty ,military and the v.a. was

terrible, symbolized by the fact we had two incompatible electronic records systems, and that apparently they have given up trying to harmonize them, third generation of something else. this is after billions of dollars and 10 years at least. >> well, i won't get into exactly the number. i will accept wholeheartedly the spirit of your question and i will answer it in a couple of different ways. first of all, we all need to appreciate again the historical context. the military health system and the va system initially had different missions, and the whole idea was after the second world war and the wars before now, if you got ill or injured, you were going to move on to the va. so that degree of coordination, particularly at a time when health care was simpler, more simple, it served its purpose. fast forward to, you know, the 21st century and that's neither acceptable or desired,

because of the complexity of care. so we have committed, in fact, to harmonizing and working on that transition. and i co-chaired the committee with the undersecretary of the va to work across some broad areas so information technology, clinical programs, business operations, and again, i could stand appear for hours talking about what we dealt with over the last couple of years. but i want to address your issue about these enabling systems like this electronic health record. first of all, i think it was a little bit naive by everyone to think that just because if we built a single system that it would talk to each other but if you go to kaiser or whatever, and you look at all the hospitals, particularly the early experience, just because they inserted a software program at one hospital didn't mean it talked to the other but it

turned out because there's something called data standards that you have to deal with. that's the heart of it. if i would ask everyone in this audience to hold up their cell phone, we would see a variety of cell phones. you can text each other, e-mail each other, phone each other, send each of the documents, many because there are data standards. within electronic health records and what really was a nascent sort of business system called an electronic health record, which, remember, was originally designed as an archiving system, if i encountered a patient i would record their history, not a computing system. what would happen is you would see in one system they would

call a water bottle a water bottle, in another system they would call it a goblet. and another system they would call it a classic vessel to hold fluids. you couldn't talk to each other. what am i saying? we've got a long way now to do with the interim operability of data, and we, particularly last year, have made great strides in organizing between the va and the military health system, this issue of data transfer, interoperability. we expect to make more strides even as we modernize our system. so complex issue, but i appreciate the spirit of your question and it needs to be solved. we are working on that. other questions? i think we're out of time, so thank you so much for listening to me this morning. [applause] woodson. ou, dr. i will invite the panel to come up now.

thank you again very much for your remarks. >> thank you. again, secretary, thank you for those remarks. i will be brief in introducing our panelists so we can get get right to it. let me say a little bit about each because we really have an extraordinary panel, a lot of former bosses of mine by the way. i think only henry aaron hasn't worked at cbo out of this grew. alice rivlin actually created it and i will get to her in just a moment, but sitting to my right

is bob hale who was along with jack mayer my direct boss at cbo but he made up for that part of this crew by doing amazing things thereafter even though he had to supervise me for for a while. u.s. comptroller of the air force in the 1990s for much of the clinton administration if it wasn't a just about a year, the cultural of entire department of defense. and between other jobs including running the national comptroller association, i learned a great deal about defense strategy from bob as well. remarkably, it is a huge credit to pop and many others many -- many others in the military that dod kept functioning in this incredibly difficult period

. he will be putting this current issue and broader context in terms of military compensation reform and the department of defense's overall budget challenge. carla tighe murray is a ph.d economist at university of illinois. she also worked at the pentagon but she is not at the congressional budget office and she has written recent options papers and studies on defense health care that i've talked about the ways in which among other things some of the costs might be shifted a bit more within reason to the actual members of military and their families because i think as many of you know this is a very generous system in terms of the cost-sharing. and i think most of us would might be shifted a bit more within reason to the actual members of military and their agree with that philosophy that it should be generous, that co-payments and other costs and premiums should be much lower than the national average but they are extraordinarily low and and at a time when dod is dealing with a budget crunch, one question is can it afford to be quite a generous? this is an issue we will be talking about as well. as i mentioned, alice rivlin, in addition to having founded the congressional budget office, as brookings nears its 100th anniversary in two years i would

nominate her as our greatest scholar/public servant in our history. she was not only the founder director at cbo, she was the direct of the office of management and budget in the clinton administration, she is vice chairman of the fed. after that she decided try to help d.c. fix its finances, and then last year when are sent on health care reform at a brookings needed a new director, she volunteered for that job. i'm not sure "to fall into" is the right word but we'll leave it at that in the holiday spirit. great deal of work on health care over her career as well. henry aaron is the one of the greatest health care economists in the country has been at this for a long time and economic studies program. he is affiliated with a number of other organizations around the country and work on matters of health concluding institute of medicine to the american academy of arts and sciences and a number of other organizations. i looked through his resume recently and realized we should probably make greater use of him in the foreign foreign policy program because his masters degree was in russian studies.

that may even help for some of the aspects of health care system i suppose. finally, jack mayer, executive vice president at booz allen hamilton. we've been glad to have jack part of brookings' efforts over the years as well, just as bob and others have kindly help those previously. jack runs the military health of their program at booz allen hamilton. has had a distinguished career there on issues ranging from energy policy to homeland security. he was at the congressional budget office. he's a west point grad and former army officer. bob hale is a former navy officer, i should have said before. a great deal of expense across all these issues. i realize i went on a little bit of attention but they deserve a little bit of praise and and you deserve to your some of their credentials as we approach this topic. bob, without further ado, if you could put the military health care problem within broader dod budget perspective for us. >> thank you. i want to talk about it more from a budgetary perspective,

and the first point i want to make, there have been significant changes in military health care that have slowed the growth and health care spending significantly. just a few examples, five years ago the administration allowed the department of defense to use the schedule to reduce costs. the use of medicare rates for small hospitals and outpatient. dod is implemented the defense health agency as john said. congress mandated a fighter to his program of making mandatory use of mail order pharmacy which has again cut costs inevitably. some benefit reductions or increases in these, i should say, and tricare, about 50% increase the and indexing at least partially of those fees, and significant changes in co-pays for pharmaceuticals.

bottom line, $3 to $4 billion of savings a year which will go on perpetuity unless they need to be reversed. and has reversed the growth in health care costs, they've declined over the last three to four years in dod which has helped the department sort through some tough budget times. the budget restraint will continue. more needs to be done, and so i will finish up this answer, two things, to areas where think the department needs to head in terms of for the changes in military health care. one, as john alluded to already, which is some changes to the fees and co-pays in the try to -- in the tri-care program. it needs to look at in the context of overall military compensation because it's an important part of the benefits. two years ago, the joint chiefs with john woodson and many others participating led an overall look at compensation. that suggested changes like holding pay raises, which have

been adapted or adopted. taking health care right now that is entirely free and posting modest co-pays and fees. this was proposed last favor to -- last year to congress. congress did not act on it, did not allow it to go into effect , and i hope that congress will go forward with them and save a couple billion dollars a year so they're not insignificant. the other thing the department needs to do is a tough one and that's streamline the military treatment facilities. there's some significant underutilization of some of those facilities. efforts have been made to do that, but, frankly, the military services have tended to resist in part because they are not convinced they will keep the savings. dod budgets for health care centrally, services feel if they agree to these changes, which are tough in their view, they may not get the savings for modernization and training. one of the things dod may need to do is think about changing the way it budgets for health care, giving the money back to the services but requiring that they centrally manage, still

centrally run the activities, requiring that they pay for them on a fee-for-service basis. using a structure called working capital funds that are pretty, -- that are pretty common in dod. maybe that would change incentives and make it easier to streamline these facilities because some of that is going to have to happen. in the budget context of been some important successes but we need to recognize that. i hope to see more of that in the press, but there is more to do with regard to changes in benefit structure which dod has proposed anything some streamlining of health care. with that i will stop. we can have some further discussion. >> before we go into karl let me ask you one more question and this is a fraught question to give a short answer to but how would you describe the overall state of military compensation today? you alluded to the recent review that was done. as we talk about potential cost shifting towards more for the families and the personal

-- how should we think about the backdrop to this whole issue? >> the dod has got to maintain a strong compensation program to attract and retain the people it needs and i think we would all probably agree a generous want -- generous one to recognize the service of men and women in uniform, which has been very taxing and continues to be. the department is recognize its senior military leaders have recognized the need to slow the growth in compensation costs to free up money within a constrained budget. some of that has occurred, limits on pay raises, for example, being the largest dollar amount, some changes modest in commissaries and housing allowances. i think there's more to be done, and you're right, we need to look at health care in that context and there had been some modest changes in benefits there, probably some more needs to occur as well as part of overall compensation. overall slowing the growth in military compensation. >> one more follow-up and then it will be a segue to carla because if we're going to be a

big reform, because what you and dr. woodson and others have promoted has been significant as you say, but within the spirit of existing system to a large extent i think it's fair to say you can crack my premise and a -- correct my premise in a second if you wish, if there were going to be bigger broader reform in any element of compensation policy, do you think it could conceivably or should conceivably be within health care or more the retirement system where you come out of these debates i know looking at all these questions in great detail? >> i think you need to look at all of it and i think there has been, i will call it significant reform, i don't know if it has changed the structure, certainly the military compensation. in the environment we're in, i'm not sure that's realistic but i think it needs to look at all of elements -- health care, compensation, paid itself and and of the benefits, not just focus on one. because all of them are important to the military members, but also important to the efforts to slow the growth and free up money for training. >> karla, you've written about

options that might save in the ballpark, as i do the math, read your studies of maybe eight to 10 billion a year once the -- not necessarily reducing overall costs but shifting the cost more towards the beneficiaries, and especially military retirees. recent retirees who are not into the system, who were not not injured but you were in generally recently good health i think and the other jobs. that's a complex issue and a complex group of people with a lot of challenges -- i'm not suggesting everything he sees for them but could you explain more about your options, the logic behind them, and how much more that might save beyond what dod has been requesting in recent years? >> thank you. so when they think about these sorts of questions i think it's

useful to think about what the driver of health care costs have been. you saw dr. woodson's chart earlier. by my calculations been on dod health care since 2000 has more than doubled in real terms. that is, it's increased by 130% over and above inflation in the general economy. i think it's worth spending a minute to talk about what was driving the increase at what might be driving increase in the future. in addition i think it's useful when we think about options to kind of think about the source of the relative magnitude of the source data source of options. cms is really where you want to put your effort. so, for example, what sort of options are going to give you savings in the millions of dollars per year versus options that might give you things more in the billions of dollars. so in a report we published in january we took that approach and we look looked at what the drivers of military health care costs have been since 2000.

one thing it's not was the cost of the wars. dod spending on contingency-related medical care peaked in 2000 at about $3 billion i think him and it's come off since then. that's not a $50 billion program. so that has not been definitely important work being done, definitely resources needed to be devoted to medical care of course to support the war but it was not a primary driver of the 130%, if you will. instead, we felt that one driver has been the increase in the benefits and expansion of benefits by the congress since 2000. tricare for life is one of those. it is medicare wraparound coverage for those retirees who are eligible for medicare, that is, over age 65. and it's been a popular program. as of 2014, 2.1 million people

have enrolled in tricare for life. this program essentially reduces the out of pocket costs for military retirees and their families almost to zero. but basically medicare pays, then medicare part b pays and then tricare picks up the remainder of those costs. so that's been a driver. and other expansion benefits as well. a second driver, we felt, is the financial incentive to use tricare. so that the out of pocket costs are for active duty members, for the families but also for military retirees is significantly below what other options are and four civilians , either through the private insurance market or through employment-based insurance. and these financial incentives -- so, for example, a military

retiree can purchase care and tricare prime, which is a health maintenance organization type plan offered by tricare, and they can purchase that with an enrollment fee of about $550 per year for the family. and then there are co-pays, but as they use the system, that's below what most civilians face in the civilian market. so this creates an incentive -- has two incentives. first, it encourages people to join the system and you saw that as health care costs rising dramatically, the enrollment fees for tricare were constant, basically. and so use of people joining the system. and that financial incentive is continuing so far. in addition, you also see people use more health services. those who are in tricare can be used about 50% more health care

services than people using civilian hmo plans of comparable age. so you see more people joining, and those people who joined tend to use the system more. for those reasons then, we went ahead and look at what some different options might be and we looked at some on things that have been suggested on the civilian sector. we looked at things like instituting disease management programs. these are programs where you try to coordinate care more and get more routine maintenance, prescription drugs and care so you avoid the flareups and the need to go, for people to go to emergency rooms for those people have chronic conditions. we looked at options like relying more on scholarships and putting medical students, training medical students through civilian universities and closing the dod-operated medical school. we looked at some management related deficiencies along the

line of creating a defense health agency, trying to eliminate some administrative duplication. those sorts of options may be worthwhile. from a budgetary effect, the effect is relatively small. we estimated savings in the range of several tens of millions of dollars a year to maybe $150 million a year. so then you turn and you say, okay, going back now to what we thought was a primary drivers of health care costs and suppose it -- suppose we look at options that would change the cost-sharing relationship -- in other words, again keeping the cost for service members and for the servicemembers families the same, low, but increasing the share of cost more to buy military retirees and their families. and we found that you were able to save more like billions of dollars per year compared to some of these other options were -- where you are talking in the

millions of dollars per year. so in cbo's judgment, increasing the share of cost paid for by military retirees and their families addresses both the primary drivers of health care costs and pass has the potential to generate savings into billions of dollars. there are other considerations of course and they would probably come up in discussion, but that's it for now. >> thank you. that's very, very helpful. alice, if i could turn to you with a question for both you and henry. first of all, taking all this in, how does it strike you from your respect and health care reform debate and secondly, our expense with obamacare, the affordable care act, other recent develop its own despite health care front, do these offer any lessons to be new opportunities, any new choices for the department of defense?

>> let me start, i think dr. woodson outlined beautifully some of the special missions of military health care, and nobody i think would want active duty military to have less than optimal care and follow-up. and there are some special needs for search capabilities that we surge capabilities if we don't know what the future is going to bring. but as he also suggested, i'm struck by the commonality between the problems, the challenges we face in the civilian several system just as the military has several systems, and that he is somewhere in between. -- the va is somewhere in between. but there's this paradox that everybody faces. increasingly effective medical care coexisting with a lot of inefficiency and lack of coordination.

we talked about the electronic health records. that's also true in the civilian sector. they don't talk to each other very well. other evidences of duplication and overuse of care. now, on the civilian side, people are tackling this in two ways. one is to try to get more organized competition among health plans so consumers can make more intelligent choices, and providers or health plans can make more intelligent choices about what to offer and how to reduce their premiums and still offer good care. that's one avenue. and the other is changing incentives, both for providers

in bundling payments for whole episodes of care so that if you aren't using lots of different uncoordinated services you think about what does this patient really need, and also the incentive carla alluded to for patients to manage their care more, more efficiently. so there's a lot of commonality, and i have the feeling that we ought to be addressing these problems together. because the other two challenges that face both systems, american lifestyle still not very healthy and the aging of the population which certainly shows up in the va system and the retiree system. but here's one thought about how we might be addressing all of these things together. it's a little radical, but she -- should we be thinking about how the military can some of the military systems

might transition their people to the aca exchanges, and especially in the sparsely populated parts of the country, where one of the problems for the affordable care act exchanges are, there's just not enough people who live there, military faces that problem as well. tricare as an option for sparsely populated places. maybe we should come together. maybe we should be thinking about whether we can give both military personnel and their families and veterans choices on the aca exchanges with the appropriate subsidies. and that would benefit everybody because it makes a bigger pool. >> thank you.

just by the way, i just want to make sure i understand, you would consider that for military personnel who are currently being provide health care through the dod as well as perhaps some of veterans who are being provided health care through the va? >> and the other thought would be come and go the other way. there are underutilized military facilities that civilians could then opt to use a plan. >> before going to henry, let me give one quick data point and there are many people in the room who know this issue much better than i, but those were generalists and we are talking primarily today about the department of defense military health program which is the $53 billion annual operation that dr. woodson oversees. the department of veterans affairs we have referred to several times but it's a separate organization with a separate budget. the overall veterans affairs budget is now about $170 billion a year, three times the military health care.

much of that is the direct payment, either in the form of disabilities, g.i. bill, etc., but i believe roughly half of the veterans affairs budget is actually the veterans affairs medical program, which is separate from although increasing related to an interlinked with, we hope, dod. i just wanted to make sure everybody understood that basic set of bureaucratic and budgetary facts. but now, henry, over to you for your perspective on what you've been hearing and what you think we should go. >> what i'm going to say is i think in many ways going to to reinforce what alice just said. there are three distinct groups here who are i think related and under consideration. there are the active duty military that are the former active duty military which is to say veterans, and there are the family members associated with those two groups. the case for a special supply of services system is particularly strong, it seems to me, for the active duty military. for the families of the active

duty military, the case of having a dedicated supply system is, it seems to me, very much weaker. and that suggests a possible appeal of the option that our -- that alice just mentioned, which is to help families of active duty military have fair, well-financed access to the general health care system. now, in particular it seems to me that one should step back and perhaps look at this from the other side. we now have a health care system in which, if your income is less than four times the official poverty threshold, which for a family of four is now in the vicinity of $90,000 a year, scaled down for smaller families of course, you were eligible for subsidies, refundable tax credits, and assistance with