wherever it was going through, but if you look at it you google it. it was on the news and everything. they shot our kid. a 19-year-old. yes, they killed our kid even though we we will get a response from congressman buyer -- congressman beyer guest: that was a complicated incident. it was in 2010, a turkish ship going to gaza. there was concern that there were weapons on the ship as opposed to only humanitarian goods. and i think there were 10 or 11 deaths as a result, and one american citizen. host: do you think as a result of this proposed iranian deal that it's likely that the white house last week announced military aid to egypt, that the administration would provide more military aid to israel? guest: i think the administration is very committed to israel, and saudi arabia, and egypt.

we had conversations with leaders in both saudi arabia and egypt over the weekend assuring them that a framework deal with a ron did not mean we were abandoning legendary alliances with others. host: >> on the next washington journal, long-term unemployment and the economy. then we will discuss presidential campaign funded raising -- fundraising rules and senator rand paul announcement. later, the american press institute about the rolling stone magazine university of virginia rape story. washington journal is live each morning on c-span. you can join the conversation on facebook and twitter.

the next, discussion on wages and economic growth with aetna ceo. then freshman representative of oklahoma talks about being a new member of congress. a conference of independent voters met in new york next month -- this month. aetna ceo talk about increasing his employees wages and called on companies to invest more in their wages. he spoke at the peterson institute. >> love them back to our previously scheduled programming. -- welcome back to our previously scheduled programming. it is my pleasure to continue into our practical world.

we have, as a special treat today, the chairman ceo of antenna -- aetna, to talk about reestablishing the middle class. that is about as blunt a title as you can have. many of you have become familiar recently, he got immense coverage in the new york times and elsewhere. for his leadership. i think it is fair to say the word leadership. in taking the company forward, and amongst other companies voluntarily raising wages of its share of low-wage workers within the company. something that so far at least, none of the other major health insurers in the u.s. have announced. we have gotten to know mark over the last few years. he is a member of the board of

the pearson interest -- peterson and keep -- in situ. we always knew he was an interesting and provocative arson. -- person. he came to us ahead and ask us to think 3-d economics. not for the company, because he had already share that with managers and shareholders. that is not our expertise. but to think through, and a bunch of companies were to follow this example, who would they be and how much of an impact with a have? potentially, what are some of the policy encouragements that would go with that. i want to stress that his view has been repeatedly about what corporate america can do, which i think is -- certainly does not end the conversation there, but is a part of the conversation that has to be said. we are very grateful to have mark with us today. i can go through his bio. he is a distinguished leader at

aetna. he has done a pretty good job of delivering earnings per share of shareholders. he has previously held executive positions at cigna medicare, he is on the director of the verizon communications insurance company, a couple of leading charities, and a member of our board. aetna supports us, but in this case we have something to learn from them. i invite mark to the stage. thank you very much. [applause] mark bertolini: good afternoon. a little bit about who i'm not. i am not an economist. i will offer those apologies of friend. i am also not your typical ceo.

i am probably one of the quickly vanishing examples of living the american dream. i paid my own way through college, working for three different unions. i came from a union family. my dad and mother both worked part-time so we did not have insurance most of the time. my dad was a pattern maker in the auto industry and my mother was a nurse here it it took me years to get through undergrad because i was curious. i was fortunate enough to get a scholarship to cornell where i intended on going back to work in the auto industry and unions, but was enticed to start an hmo with four friends of mine. here i am in front of you to talk a little bit about why we did what we did. at aetna. and more importantly, why we think corporations have lost

their way. there is a big story in all of this that we can have a real impact. i took this job as ceo of aetna four years ago, and i said, i have three goals. i am the 14th chairman of a 164-year-old company. i have an obligation to make sure we have a commercial asset that continues into the future for another hopefully 164 years. the second, i'm a strong supporter of health reform in the united states. it's a shame we have people who are uninsured in this country. even though they may have access to health care, it is poor access. i wanted to make that really work. i've devoted our organization and my time to find a way to make health reform work. the affordable care act work. we have been behind the scenes of the company and will soon be the largest company in the federal exchanges in the united states.

in supporting the affordable care act. finally, the last was a small one, but worth tackling. reestablish the credibility of corporate leadership in the eyes of the american public. that has been a little more daunting than i thought it would need. people have all sorts of -- then i thought it would leave. people have also to suppositions about how i should behave. i don't summer. i learned that was averred -- verb. i'm a pretty straightforward person. i want to start with our mission as a company. that biggest threat to the financial security of every human being would be health. in the future. 75% of the next $10 trillion worth of act in the united states will come from medicare and medicaid. when you look at the impact of health care costs, around the

world, in every country we are involved in, there is an economic problem that threatens every economy. i think, if we can create a healthier world with healthier individuals, healthier communities, and healthier nations, we would have a better world to live in. a more friendly place to live in and a more productive ways. our view of health is that if healthy individual -- healthy individual is productive and economically viable. that economically viable person is happy. we want to create a great economy around the world. what do we mean by healthier world? we can talk about this all day. a couple of words we look at household income has been flat for the last 30 years. wages are not supporting

lifestyles for the people who do work for us and our company. 7000 employees at aetna are below 300% -- below the poverty level. we look at this number and we just don't believe the income inequality is sustainable. two christmases ago, i read a book. i got copy for all of my people on the executive team and said here is your christmas gift. this is christmas reading for you. this is a point of view and an alternative. who are we as an organization, but what are we going to do as a company to find a way to make this different? versus letting it happen? do we want to be flat as the company, and how do we make a difference.

it was a dialogue about whether or not we were taking care of our people appropriately. whether or not we were in best in our employees. -- investing in our employees are. sitting around the world is $3.8 trillion. in cash, sitting either onshore or offshore. cash is wonderful. -- plentiful. we have lost our way in the way we educate business leaders. we are normally taught to husband scarce resources, and to put at rei plentiful resources. swe are told scarce resource is always capital. so we should husband that. we are doing a great job at that. $3.8 trillion in cash.

i went to the city states in europe, that close their gates if the plague came by, sat in their homes, and then reopened it when they thought it was a. here we -- safe. he we are hitting on -- sitting on huge wads of cash. this scarce -- plentiful resource we have always assumed our people. there are always plenty of people. i would make the argument that i think that has slipped. -- flipped. we need to pursue this. our single biggest investment is human talent. we borrowed $2.5 trillion to do the latest acquisition at 1.9% after-tax. you almost can't screw up and acquisition that badly to not make a return on that kind of cash. so i've got a few ideas.

these are for those of you educated in business school. these are the numbers we pay attention to. we are told that these are the numbers we get measured by. this is how we get rewarded. we maximize return on equity, return on investment, capital. this is sort of a result of dividing stock prices per share. i would argue the mercy important one on this page, human capital. let me make this argument. we would rather invest in technology and new equipment because we can capitalize and depreciate, then invest in the workforce. because it is all expense.

we had been educated as business leaders that we create spreadsheets that have numbers on them, that was the truth. and we manage our businesses to those variants. in reality, the number that most spreadsheets cells are all lies from the get-go. they will change as we go to our business. what we need to understand are the underlying assumptions within each of those spreadsheet cells. what are the variances around them and away they are on top of each other, what are the risks associated with the effort we can -- undertake? is it a risk worth taking? not what is true, not what we prove, but what we believe is a risk worth taking as a business, in order to make the business

work. aetna's total shareholder return is over 275% here. earnings per share have grown at 13 and a half percent over that time. what is the difference? what is the price earnings multiple? the belief as to whether or not we can create a sustainable, valuable product that customers will continue to buy over time. i will argue that investing in the pe has given a greater return then investing in epf. if you look at guidance over the last four years, it has been well below 15%. we have always guided 8%-9% and generated about 13 and a half percent.

it is because we deliver a consistently valuable system animal product to customers. it is been growing the top line by keeping customers. who does that? 11.2 don't -- $11.2 billion cost structure, the $6 billion of it is people. human capital. that number at the bottom should really be at the top. so, traditional measures of success really should be different. when we look at our employee value proposition, we looked at wages, we looked at benefits and employee engagement, and turnover cost. you can see these are traditional costs and a spreadsheet. as to whether or not spending 25th $.5 million a year is worth in best to reduce $120 million

worth of turnover costs. which is what our turnover costs are every year. that is $120 million loss a year in productivity, retraining, and duplicate staffing. employee engagement, like most employers, has been dropping each year for the last five years. if you look at engagement across most corporations, those scores have been going down. the new economic lateral -- model was necessary. we started four years ago. investing in the health of our employees. we started with wellness programs. we started with subsidizing insurance coverage based on their income inside the company. six different levels of stratification inside the organization. people at the bottom, $45,000

per year did not take anything out of pocket for premiums. we looked at wages, which we found that we had about 5700 employees that were making around $12-$13 per hour. we looked at health benefits that were becoming increasingly unaffordable. we did what most employees day increasing deductibles. reduced trent every year by virtue of benefits we offer. not thinking about whether or not employees can afford it. this is a trend you see in all organizations. let's get them to exercise, stop smoking, does keep the wages where the market is and health benefit costs to us as an employers to reduce. because it is an expense. in a spreadsheet that we can control because these employees work for us.

what we came to find out, and i asked this question and encouraged any of you in organizations to question, who are the people at the lowest levels in your organization? do you know what they are like and how they live their life? asking that question is much more of a formidable problem than i thought it would. it took us over one year too, with the actual profile. i will talk about that in a minute. we started with wellness programs. we started with eating properly, exercising, and invested in mindfulness and yoga. i will give you an example. i use mindful meditation every morning. of the top quintile of the stress in our organization, measured by heart rate variability and cortisol levels those employees were spending

$2500 a year or more on health care. we have now put 13,000 employees through the program. those employees took a 12 week online life wellness course or a 12 week yoga course. we had seen 69 minutes in higher productivity, health care cost drop by $3000, and we saw the trend in health care go down -- a reduction in trend of a reduction in costs by seven and a half percent. just by investing in stress levels. we then looked at wages. we found that this employee confidence was 81 -- 81% women most of them single mothers. they had a portion of their children on medicaid because they could not afford

independent coverage. and they relied on food stamps a significant percentage. i said, how is it possible a fortune 100 company with 275% total shareholder return executives to get paid very well -- how can we sit here and let people be on medicaid and food stamps? what do we need to do to change that dynamic? we went through the struggle of the terrorism of the spreadsheet. let's pull up the numbers and do a calculation. luckily come up with? -- what can we come up with? the first number we had was $13 per hour. i said, why don't we just try $16 and see what happens? you would have thought we were giving the company away because that was a very big number for a lot of people. about $10 million. looked at the effect of wages on benefits.

if you increase wages they lose benefits. or, wage increases go to benefits. so we said what can we do -- we manage the highest level of disposable income among the population? 50 700 employees. the average increase is 11%. everybody gets at least $1600 -- $15 an hour. -- $16 per hour. the increase is effective today. everybody got their raise this morning. their bonus and 401(k) contributions will be higher because it is the stuff of their base wage. second part is we will now offer enhanced benefits for employees where they can get the richest medical plan for the least expensive amount. all they have to do is submit an application to a third-party

who will verify they will under 300% of the population -- poverty level as a family, and we will subsidize. for a lot of these employees the savings can reach up to thousand dollars a year. for them, that is a significant -- up to $4000 per year. that is a significant amount of money. we will take care of them if they take care of themselves we have a number of screening programs that they should go to. if they engage in getting healthier, we will make the investment in them and as long as they take care of themselves. the goal is to bolster engagement. this is out of jacksonville, florida, i wish i had a tape of it. the largest group of employees who will be affected, called a meeting on my way down. it was one of the most emotional events i have ever been.

employees were actually crying in the audience. people were clapping because we had so much challenged their personal lives and be able to distinguish whether to put gas in the car or food on the table. we had yet to measure engagement scores. we will do that the end of the year. this is the program. benefits, the richest medical plan for the least cost, and $16 per hour minimum wage. our wage benefit improvement will cost $26.5 million per year. that is the full rate in 2016 if everybody takes advantage of the program. what we are finding is that for retail customers -- back to if

we should have a single payer system, we will eventually get there. we will have a bunch of individuals walking around with their own money and a stipend from the employer or their government. and they will be buying health care retail. when they buy retail, 73% of them will make a decision on how much it costs in the first year and if we honor our problems -- promised to them in making it simple and easy to access, 80% will be based on that relationship with the employees. in the second year. for us, from an economic standpoint, it is best to invest in these employees for 26 nine dollars per year -- $26 million per year, in order to drive more.

when we put this on the page, we had to go through all of the spreadsheet. back to the spreadsheet example. in each cell of the spreadsheet we put a number. then we put a credibility it. what is the risk of reducing turnover costs rework, productivity ramps, reducing the amount of investment to get people up productivity? then we said, how about moving up and organization for people disenfranchised because they are doing someone else's work. customer retention and customer satisfaction. our industry rate has a net promoter higher than congress, but lower than cable companies and airlines. not a great place to be. what can we do to improve net promoter scores? you get to the point where

credibility trust and holistic experience matters. we have done a lot to improve and make that $26 million worth the investment. what do we need to believe in the way of risk factors? so our view is that companies can invest in their employees. we need changes in economic policy and tax policy, because if we invest in employees versus a machine, it will never depreciate. machines go up to five years. then you replenish them through the depreciation account. how do we think about investing in people, what are the policies we need, which will ultimately invest in the communities and our country, and around the world. health care should be local.

health systems should be providing care to people in the communities and people should be taking care of others in the community. think of uber for health care. we will be able to invest in those communities and have a healthier economic community with a health system that becomes an economic engine, in improving productivity of individuals, increasing economic volatility -- liability, and making them happy. these are the investments aetna has made. we call on other employers to engage in the same dialogue. the franchise kit we can to folks, so you can increase wages to employees, i would say that those ceos are finding the same trouble in finding data about lois compensated employees.

i think it will take time, but i see returns here it i had --. the ceo of walmart said, you have pushed me to do this. i can't get to $16, but i would like to move up on the wage scale. i believe there are a number of ceos who will come out with wage increases that matter. i hope we can star on the private sector side, dialogue that says corporations can improve the middle class as a result of investment. with that, adam, i will take questions. [applause] >> it makes so much sense, when you say it.

i mean, this is the trap, of any of us talking about things that we get into. you sort of see the light go on and you say, yeah, it's biased against investing in human capital. why didn't i think of that, and can't we do that? i guess that the real question is that we're coming off a 10-year period in which accounting gains, along with corporate c.e.o.'s, have not had the best reputation. so you've chosen to focus on this, because it reflects the kind of mind-set that you think underlies a lot of other corporate decisions. but can you say a bit more about how someone who has worked in finance, as someone who has worked in a fortune 100 company about how you legitimize something like that? is it a legislative thing? is it -- what's that thing, the public accounting oversight

board? i mean, is it just teaching differently in business schools? >> i think there's four factors. first of all i think leadership needs to start asking different questions about how we're spending our money and where we're investing our money. and it's a difficult dialogue, because we have been so trained to, you know, here's the spreadsheet, here's the truth. here's the guidance we need to have. guidance doesn't always need to be the highest number you can achieve. guidance needs to be a legitimate improvement for the shareholders that they're willing to invest in. and so it really needs to come from the very top, where you start talking about -- and i asked the very question. i don't want the truth. i want to know what we need to believe, because if we believe it, then we'll find it. we'll get it. we'll make it work. so that's one. the second is, you have to deal with your shareholder based on your board. incredibly, i have a wonderful board who embraced this whole heartedly. it was not a decision of theirs, but when i talked to them, they supported it 100%.

the shareholder base, a different one. the shareholders, i've talked to all of them. they love it. they think it's a first mover advantage. they see the expense. they they that's not too bad. how are you going to cover it? i say, don't worry it. when we run the company upon a day in, day out basis -- you have to manage your shareholder base. there are a number of shareholders we've had in our base in the past that i've suggested that they probably ought to be better invested in something else than what we have. talk to them. that's a difficult conversation. but i have had that before, or one of our largest investors said i want a higher dividend. i said, well you're not going to get one because we need to invest in the company, invest in the affordable care act and maker our government work. her response was, what if i don't like that? i said, get out of the stock. that was painful for three months while, you know, she sold off her $26 million shares.

but that in the long run, if you're looking about the long run, it's not about whether the stock price moves up over the next three months. i'm a shareholder. i want the long run to work. i'll be a shareholder for a long time, even after i'm done with this job. that's the second beast, your board and shareholders, the governance out there in the community. the third really is what can we do in washington to get the right kind of economic policy and tax policy to support investments in human capital? that's a slog. fix the debt. we've been to washington a number of times. quite frankly, our action was out of frustration, that nothing will ever happen out of washington so we might as well get something done at the corporate level. instead of pointing at washington and saying, you guys are the problem. if you'd only do it, we could, you know release our $3.8 trillion in cash and invest in the economy, i said well, why don't we just sort of help

everybody in our organization share in the economic recovery? let's make this move. and ask other c.e.o.'s to do it, which we've done. a lot of other c.e.o.'s. i belong to a group called higher ambition, out of -- out of harvard that's really focused on, how can corporations do good and do well? what are the things we can do that will make a difference in our communities and with our workforce? started with five of us. there's now over 40. last year, we had all the deans from the major business schools going, what's going on in here? who are these people? and actually, harvard wouldn't have me as a student when i applied. my hair was too long and i wore jeans and a tank stop and birk stocks when i went to business school. the last piece is your own leadership team, your own employees, how do you engage them in a very different way? that's sort of the fourth factor. you have to have a real dialogue.

i had my own blog. i'm on twitter. i engage with my employees all the time. we have our own internal social media platform and we have real conversations. i'm approachable. i don't hide behind security. i don't have a blackedout car driving me around. when i took the job, i said to our p.r. team, you can't protect me. all you can do is prepare me, because i'm going to go out there. we need to do this. so i think those four things really need to work together but it starts with leadership. it ends really with leadership and being approachable to your employees. in the middle, we need some help from our shareholders, our boards and ultimately we do need help in washington. >> let me focus on -- before i open up to questions, let me just follow up on two pieces of that. i'm not going to flatter you and say how cool your leadership is, because it is cool. let me focus on the shareholders. you talked about the quarterly

earnings. i got to participate, again, the work we're doing for the foundation in support of the foundation, part of it is on the wage stuff we're talking today. part of it is on trying to do longer-term investing. so there's this long-term value summit that was convened in new york and i think you were invited to that. ultimately, what things kept running up against was in the u.s., there seems to be a very narrow definition of fiduciary responsibility that if i'm cal pers and i'm voting shares i have to vote shares, maybe not quarterly but certainly on an annual return basis. i can't have a broad definition of shareholder value. you may or may not think that's fair, but that's certainly something i hear a lot in the investor community. is that a real constraint, and if so, how should we be dealing with that? >> if you talk to the south side, you get a very different story than you get from the

long-term holders. when you have a conversation with them, you say here's our thinking over a longer time. we actually get some of our south sides to call the other side and say, you guys are thinking about this all wrong. we stopped giving quarterly guidance. we only give annual guidance, but we still get beat up when their view of what our quarterly results should have been are off a little bit. i think it's a continuing process. but i think we do need to have a longer running view. i think larry would say the same thing. we should have a longer-run view, because that's where you're going to make the right investments. why should an asset, which, by the way, you never assume in capital, at day 366 be incredibly more valuable than it was on day 365? why shouldn't our capital gains tax by 100% on day one and go down to zero in year eight? so that we make a longer-term

vesms and have an incentive to do it? and why can't human capital be part of that cycle? we've underinvested in education because it's a expense in the municipalities, an expense in the corporations. we just say, you know what? we've got to cut expenses to make ends meet and this is an easy one. you know because there are plenty of people out there. we'll always find somebody smarter. we've hit the wall on that. we don't have the talent necessary to move our organizations and our country forward in meaningful ways. not because they're bad people. we just haven't invested in them in a way that's necessary. >> my last question then before opening it up is on exactly that point, on training. part of what we were talking about today, part of what you were talking ant with your numbers -- about with your numbers, like the $26 million versus turnover costs is an emphasis on the workers you've got, treat them better, treat them differently. they'll respond. but you're also mentioning the fact that the workers you've got or have available may not be the

ones you want in a sense. you need to get more out of them. so you've done this initiative on wages. where do you see, if you have an initiative on training or education invested where do you think that goes in the pirate private sector? >> we have to invest so people can go to school. thank god i grew up when i did. i went through wayne state. the credit hours were a lot cheaper then. today i couldn't afford to do that. i'd never get out of the hole i was in. so i think we've got to find a way, and we've looked at tuition reimbursement as something we need to invest in. we need to give them the time to learn and find more room for them to be able to get educated, on things that matter, which on the skills for america's future, out of the white house, which is really how do we match up community colleges to the workforce needs of employers in the local community? they don't match at all. and so -- even in heartford

where you only need underwriters and job programmers and people that work in all these new commuter languages. computer languages. we even have a few systems that still run that. but i think that -- we need all of that education to happen. yet we have kids going to community college getting degrees that aren't that helpful. i think we've got to encourage dialogue between the business communities and schools about what we need, so they can charge a legitimate tuition to get value for what they've educated their students with. but i don't think that match is there today. for us, it's a very difficult problem. we have to reeducate most of the people that come to work for us, because they don't have the skills necessary, in written communication. the nuns drilled into me

sentence structure and diagramming sentences. i used to take my kids through that. they should actually learn how to communicate and communicate verbally. it's a big problem for us. we've shortcut everything. >> you know a c.e.o. is down to earth when he's still quoting his fortran. we have a mic in the back. so the gentleman in the back first. >> hi. i'm eric from the wall street journal. nice to hear about wayne state in a room like this. >> great school. >> one of the first slides you showed was productivity and wage growth. i want to know, do you see any correlation between the productivity line flattening in recent years? you know maybe since 2007 or so against the longer-term of slower growth in wages? >> i think the flattening of the republic difficult curve is

directly related to engagement, employee engagement. i think people aren't present at work anymore. and when you spend time talking to employees about what it takes for them to get them engaged in their work, you actually have a larger number of people as a percentage in the workforce that actually come to work not to work. and, you know, it's because we've treated them in a way that i just don't think is fair. and i've used that term before. we haven't treated people fairly. so i think we have to find a way to reengage them. that takes a dialogue and it takes leadership from the very top. i think c.e.o.'s who can get away with undercover boss probably shouldn't be c.e.o.'s. they should be engaged with their employees. and that's the only way you get them to buy into what you want them to do to help you achieve what you're trying to do for your customers and for your country. and you have got to make it a bigger mission than, if you do this, i'll pay you this. so we have that and 22,000 of

our employees that work from home full time. higher productivity, very low turnover, no carbon footprint because they don't have to drive to work. they're in their communities, with their kids and they have 24 hours a day to chew at 8 hours' worth of work. i think all of those kinds of programs that engage your employees in fundamentally different ways are important. i think what we're seeing is people actually not wanting to do work. that we've lost engagement of our workforce. >> david? >> first, i just want to say what a pleasure it was to hear your talk. i really, really enjoyed it. >> thank you. >> this is david. >> and secondly, i want to ask you a question kind of coming off something adam said, because he said -- and my question is to ask you to reflect on both business culture and political culture. adam said that this issue of fiduciary duty, and i get the -- the fiduciary duty in this

country, at every level, is long-term. anyone who is telling you they can't do x or y that's smart because the fiduciary duty is telling you they don't want to. but the belief is worldwide. and this is a business culture question. but it's also tied to a political culture question, because you spoke of what you view as commonsense measures in both accounting and tax that would help facility investment in human capital. these are measures that there has been wide agreement on, i think, in some way. the details have never been hammered out, but accounting for investments in human capital as a depreciable investment, both in terms of gap accounting and -- and changing the kacht gains structure so it's not a cliff, that's something there's been worldwide consensus on, and yet we can't get it done.

so i would ask you to reflect a moment on both the business culture that seems to be kind of in our way in some sense and then the political culture. >> so i'll go back to the business culture and it will lead to the political culture. in the business culture, we have what i call the high school physics experiment problem where we actually run the experiment to get the results we need medical record for the experiment to be a success so we can get an a and move on. we don't do the real science. and so what we have in business is because of a spreadsheet and because you've got a bunch of people that run a different numbers, people work for the assumption that supports the conclusion they that they want to sell you. i spent a lot of time trying to figure out where i'm being bull [bleep]. that's the issue, is how do we stop the terrorism on the spreadsheet where people search for the right assumption, the

right number, in order to support their conclusion, versus using the actually science that's in the best interest of the company and most importantly that's in the best interest of its customers. we've gotten lazy. we don't ask hard questions. we have no personal courage in saying, is this really something that we can do? and then that just bleeds right over into the political climate because if the leadership of businesses aren't willing to do that, ask those tough questions and have the personal courage to come up with what should be the right answer for everybody longer term, right? then the political community is going to say, well, if you aren't doing it, why should we do it? then we say, well, if you aren't going to do it, then we won't do it. the only way you break the logjam is to have your own personal courage to stand up and do it. i look for people with personal courage. am i willing to put my interests secondary to the interests of

the enterprise and its customers and ultimately the shareholders? because if we take care of our customers, that means we take care of our employees. that will keep our customers and give us that p.e. that we want which is a company that's a growth company, because we provide a consistently valuablened sustainable product over time. that's the secret. it's kind of crazy, but that's the whole secret. so i think this issue is really around whether or not people have the personal courage. i've had many a conversation with people in washington that say, yeah, you know what? you're a master of the universe, i get it. what you say goes. but in my world, i don't get reelected if i do this. then we have people that call people names because they point at them and say, because you're point of view is different from mine i'm going to point you out as a bad person. not argue the point. i'm going to say you're just a bad person and therefore nobody should listen to what you're saying because you're an idiot. i don't want anybody to listen

to what you have to say, because that would mean we'd have to have a dialogue about what is right. we've lost that die dialogue. it's around who is right and who is wrong and this pollization on points of view that i think are just irresponsible. >> fred berk here at the institute. mark you made several references to the affordable care act. you didn't say much about it. i know you have worked hugely to make it work, make it better. what's your assessment at this point? how is it working? what more needs to be done? how to make it most effective? >> i think it started out -- the whole program was built on a level of mistrust between the industry and the government, because everybody thought that there was some sort of game to be had on this. and i have to tell you the prescription drug program which, you know, the republicans kicked off and the democrats hated, was really a very good

public-private partnership. i had to demonstrate that our technology worked a year before we went live, in order to be part of the program. so we had this mistrust that caused the government to believe they needed to build it all in order for it to work. and that got off to a bad start. which i think put a pox on the program that was not fair because we do need to get people access to insurance. the other part is, because it's such an issue, nobody has really touched it since it was passed. medicaid gets touched every year, like it or not. congress interestingly enough, runs medicare. and it gets touched every year, yet we can't touch the affordable care act, because if we touch it, make one change to it, then everything gets opened up and we have a dog fight over the whole thing. so we need to fix it. there are a lot of things that could be done to fix it that could make it a lot better and get more access to people, but

right now, because it's stuck in limbo, we can't do anything with it other than try and make what we have work, which i think people are doing a pretty good job at, given what we've got to work with. so there are a list of things. i think whoever runs for president next is going to have to, you know -- regardless of party, is going to have to make promises to the american people that it's going to get better. so that list of things is pretty common, quite frankly, between both sides. more power to the states. a little more flexibility around benefits. probably those are the biggest pieces. >> please. >> hi. i'm nancy with the ilo. i'm just interested -- you know, the socially responsible investing sector is now, including with sovereign funds over $1 trillion representing over $1 trillion in investment.

i'd be interested to know whether you, if this critical mationmass builds of your fellow c.e.o. and companies and the harvard group you mentioned, the leaders, are in a discussion with that community because if they get further into the definition around governance, i think it could help push it faster. >> well, and i think what we need to do is we need to have more so trillions -- a trillion is not a lot unfortunately, if you think about it. it's not a lot. and we do engage with the sovereign funds on a regular basis. we're engaged in a lot of other places. when we go to europe to meet with investors, they love it because they can't stand the dialogue here in the states when they come here to our meetings, because they get shut down by the other investors sitting at the table who are very short-term. they actually get embarrassed by the other investors, because they go stop talking about the

strategy stuff. we really need to know what's going to happen next quarter. and so they like it when we go over there. i was just over in the u.k. and met with a number of investors to have that very conversation. it was refreshing for them that we were having that kind of dialogue. i think we need to find the venues to do it. but i think we need to get our policies. we used to offer shares to all after our employees. we -- all of our employees. we wanted everybody to engage in growing with the company. we can't do that anymore because iss won't let us issue enough shares. so fewer and fewer people get shares every year. and so we've got this -- we actually had policies in the interest of good governance, quote/unquote, that actually worked against sharing the wealth. my salary hasn't increased for six years, but yet my wealth has increased because i take it all in shares and i'm growing with the company as a result. everybody should have that opportunity. we do have employees that can buy shares, but they don't get them. we can't give them to them

because we can't issue enough shares as a company to make it happen. >> let me pose another related question to you, mark. with ehave tried to do our -- we have tried to do our bit on thinking about which sectors which kinds of companies can follow your lead in this area. you've spoken about it in general moral terms but we talked earlier about mcdonald's or walmart or things like that. how much do you see of what aetna has done as your consumer facing company an inherently domestically oriented sector, versus other industries or other companies? how much do you think this is just general, you can do this? >> i think generally -- so it -- i'll say general for this reason. and it's not $16 an hour. it's not the benefit change. the real opportunity here is

having the -- i can ask a number of c.e.o.'s, and i have, do you know who your lowest compensated employees are? and they don't. and so it's just -- it's about taking the journey to understand who these people are. and how are their lives? they're people meeting your customers every day. how are they living their lives? do you feel good about how they're living their lives? it's in that search and that looking for that information that you start to say, well what's fair? and having that dialogue with your own team. i can tell you, i mean, our team, they all were ready for it, by the time we got to the final. they said, what are we doing with the social contract with our employees? how are we engaging them in different ways? because we can't do all the work in the c suite that's for darn sure, running a $58 billion company. so i think everybody has to do the home work. it's really about doing the homework and having the courage to do the homework and the

energy to fight through all the layers in the organization that will prevent you from scrolling up the place. we have -- screwing up the place. we have people that do their level best to keep the c.e.o.'s from screwing the place up. you've got to fight through all those layers in the company to find that information and be informed. and say, looking at this, is it right? it's a question of right. it's not a question of fact. there is no truth. $16 an hour maybe $12 or $20 elsewhere but what is the right thing for us to do in the way we're leading our organization and engaging our employees to be part of our success? >> ted here at the institute. so you -- i should know this, but i don't. so you are mostly -- you're both a u.s. corporation and a national corporation and you have some international employees too? i don't know what the split is. one interesting question in this

sort of international institute and the comparative, is there a difference from how you have approached all this, dealing with u.s. employees or non-u.s. employees? maybe you don't have -- i mean, maybe the base adjustment process has been primarily the u.s. phenomenon. but it would be interesting to me whether there are differences about how you have been doing this aspect of your business around the world. >> the embarrassing fact is that we treated our international employees around wages better than we treated our domestic employees. because we were growing investing in all those markets. we had to get the very best people. so we were changing wages more than once a year. and there was a different number. there was no number that we put on it, like 2% 3%, 4%. we just said, what do we need to do in southern china? what do we need to do in indian, in the middle east, in order to get the best people? in retrospect, i never had an argument with the team over that because they've got a --

we're building out around the world. how do we find the right people? i was a bit embarrassed by the fact i could have that dialogue with them but internally it was the spreadsheet number when we put the operating budget together. what should the merit increase be? we treated our international employees probably better than we did our domestic. >> hi. james sterling. from the business perspective between the breaks between the larger employeers and the smaller employers, and simultaneously, between the full time and part-time employee, because a lot of the breaks here come when we try to enforce something at one level but can't do it at another level or maybe we shouldn't do it. i'd like your reflections on those two break points. >> our programs for all our employees, so we didn't break it between full-time and part-time. i would say that we've not yet

been able to tackle the issue of smaller suppliers that work with us. we've encouraged everybody to take a look at it, but everybody has their own sort of issue, set of issues, particularly the smaller suppliers that work with us. i think the smaller market has a much bigger challenge in dealing with some of these, because of the ability to pass prices through, but that's the next level for us to look at as a company is, how do we think about the supplier base and being able to help them do what they should do for their employees? because their inputs are very important for the end results for our customers. but that's the next level, next generation for us to look at. >> jacoby from peterson. i was wondering if you could elaborate a little bit on how to spread the message and not from the perspective of what you as a c.e.o. can do but how the public, whether we are, you know, just interested individuals, research

institutions csr guided investors or unions or whatever it is, how you can promote the kind of corporate changes that you've seen at aetna? what are the questions that should be asked of your peers in other organizations in terms of transparency. you mentioned, which i thought was kind of interesting, ask the question, what is your lowest remunerated employee and how does that person live? so are there more of those types of questions that should be basically placed by the public? and is there -- you know, is there a role for the media here, and how should we think about that? >> we obviously have a role for the peterson institute. >> i think it's one of the reasons, you know, we're holding this is not because of some ground swallowing in the community but i actually reached out to adam and said okay, this is really for our employees but it's going to get out into the public domain. what do we do to protect the effort? and how can you help me think

through the attacks from the right and left that i'll get as a result of making this investment? which we were able to minimalize. for all intents and purposes, even the u.s. we were able to minimize that by doing proactive outreach. the other part is the ceos hang out together all the time so there are a lot of conversations. why did you do it? we have an information packet we get sent out to our fellow ceos. i can tell you some ceos have come to me and say they are embarrassed tothey did not think of it first. it has raised the level of awareness amongst ceos about what is happening because we often get a distilled spreadsheet number. it looks pretty good. in there is a number that