numbers. it just went up and came down. the reason is that they took a look at private exchanges. they took a look at exiting the field. they made a determination that there was really fundamentally their responsibility to ensure their health -- that employees' needs were met. that's the 87% number at the top. they are not leaving. that's the good news. the bad news for the delivery system is they are not leaving. they are going to be in the face of the delivery system going forward. that's what we have seen and hear anecdotally this year. employers putting pressure on their health plans to get zero premium increases or zero price increases from these provider systems.

there is a megatrend that is still troubling. i don't think obama should be blamed for this. this is the progressive unaffordability of health care which reflects this. over time, we're seeing fewer and fewer workers covered by employee health benefits. the reason that is true is because of the progressive unaffordability of health care. i live in silicon valley. a lot of people work at google. not a lot of people work for google. the people cleaning the floors are contractors. they generally have less health benefits than the really sophisticated high-tech folk. the other trend that relates to this is employers' experience of price. now, this is a sophisticated audience. you all know about the dartmouth atlas, the left-hand side-view on this chart where medicare spending per capita has been rigorously analyzed by the folks at dartmouth, and the dark areas of the country are expansive. the light areas are cheap. what you don't always see is the

chart on the right-hand side, which is the smart alecs of harvard who did the same an analysis but with self-employed insurance data. this explains the mystery for those of us that travel around the country. you get states like wisconsin where hospitals are getting 300% of medicare in the private sector. there is huge variation across the country in the rates paid. even in my state, california, northern california has low utilization and very high prices. southern california, it is the other way around. that's why even in kaiser, there is a $100 price per member between northern and southern california rates. this is the hardest data in america to get. so i just made it up. [laughter] ian: it is a little hard. the labels got squished. let me talk you through it. on the left-hand side. if you do coronary bypass surgery on an uninsured human in

oklahoma, you will get 7 cents back on the dollar. medicaid in my state pays 69% of the cost and medicare pays 89% of costs. so you don't have to be a rocket scientist or a futureist to figure out, you are going to charge the private sector more if you are a provider. on average, it is around 150% of cost. the dream is to get the number on the right-hand side, which i call the demented saudi prince price, which is -- what would a saudi prince pay at johns hopkins. that's what cfo's call the charge master. [laughter] ian: again, it is tough to see the labels here. what we did with exchanges is inserted another player in the mix. so every hospital board i do, this is the story you hear. this is in an expansion state. we have windfall profits on the in-patient side because their bad debt went way down, 6% to 4% for hospitals like that.

it's true in many, many states across the country. the problem is, you have now permanently impaired your pair mix, because you have way more medicaid patients. that's why over time, we are going to see the slow deterioration of the finances in those hospitals, many of whom were doing spectacularly well in 2015. i didn't really just make the data up. the american hospital association tracks this stuff. we are seeing a widening gap between what medicare and medicaid pays relative to cost and what private payers pay. there is a little bit of wining going on here. when these cfo's say to me, medicare doesn't pay the true cost of care. i say let's rephrase that. medicare doesn't pay for the income aspirations for you and your people doing things exactly

the same way, which doesn't sound so good. i know this is going to be painful. all of you in this room are feeling this sting. the pbgh board meeting, this is the number one issue for employers. i was with the ceo for care first. maryland is an odd state because it is an all pair rate setting state. he said for the first time, specialty pharma per member per month now exceeds inpatient hospitals spent. pharma per member per month exceeds inpatient hospital for all carriers i have talked to. it is going up dramatically. the entire pharmaceutical industry, including the old legacy players, are pivoting to large molecular biology indices entities with very high prices. it has gotten kind of ridiculous. hepc being the primary example.

$84,000 in the u.s. and $900 in egypt. so i put together this slide as a joke, as we say in glasgow, half joking, full serious. it is cheaper for a self-insured employer to send that hep-c patient for a three-month luxury vacation to egypt, put them up at the ritz-carlton, give them a meal allowance and take their friend or partner, fly them business class, and tack on the niles spa cruise where you will be pampered to death for 10 days, and you would still save $30,000. that's nuts. that's why when we do surveys, 72% of americans including a majority of republicans believe that price controls or caps on pharmaceuticals should be enacted. i think we will see action on this one way or the other.

it is maybe the plot forming the trump administration too. the other thing we are seeing across the country is this migration to try and make volume to value real. the best estimate i can give you of how real this is, is from our survey of hospitals where we ask them, you know, you have to pick one of these options. on the left-hand side is the least invasive, which is, we have no plans to take risk beyond modest share savings and pay for performance, about a third. on the far right-hand side are hospitals who say we are committed to removing the majority of revenue toss fully at risk within five years. that's around 6% to 8%. the next to last is building an aco model that is capable of taking risk such as medicare advantage or employer direct contracting. i think that's about right. we ask another way. about 20% of health systems say they are going to have an insurance license within five years. i think this is a separation going on between the people who want no part of this, people in

the middle who are sort of playing at it by doing a clinical integration strategy, and people that are serious about migrating more towards risk over time. the other thing that's reinforcing this is payments reforms from cms and private payers, including both bundles and the shift towards population health. i want to make a distinction between bundles and population health for a second. a bundle, more is still better. it is not so alien to these providers. they are used to being in the growth business. it does encourage improvement across by putting an envelope further out around the continuum of care. but not everything is easily bundled. i worry a lot that the sum of the bundles is going to be more than the current payment. the reason i say that is my good friend, pat fry, who ran sutter for many years, who has a tendency for profanity, which i appreciate, said to me about

bundles, "screw me on the bundle, i'll screw you on the rest." in other words, you can grind me down on orthopedics, but i will charge you more for stuff you can't bundle and come out the same. i think that's right. i think that's the way providers play the came. i'm a big fan of cap tation, risk, accountable care, population health. it makes you think about the frequency with which you do things and the appropriateness. it will cause you to go up the food chain to focus on the determinants of health. you will find a lot of the solutions. i am preaching to the converted. because this is where you have been for all your careers. it looks more like social work than medical care. that epiphany is happening all over america with providers that are getting into the risk business. there is this mutual disrespect problem. everybody in american health care thinks everybody else's job is easy and anyone can do what an insurance company does. that's just not true.

so what happens when you get in the risk business. well, what happens is you hire another smart alec consultant. they will run the numbers and you will find what is a law of physics that in any insurance poll, 5% of patients account for 50% of costs. 1% account for 20%. the bottom 50% utilizers use next to nothing. what's in that 5%? well, what's typically in that 5% are hondas, as one key category. honda?s a line tha i'm a honda. i was denied coverage before obamacare saved my bacon in 2012 in the individual market in california. i was denied coverage not once, not twice but thrice. it was thrice denied, positively biblical. [laughter] ian: the reason blue shield denied me is they said you are a honda, hypertensive, obese, noncompliant, diabetic, alcoholic, right?

[laughter] ian: none of which is true, but kind of directionally correct. [laughter] so the other thing you will find is behavioral health. 20% of americans of behavioral health, super utilizers, it is more than 85%. anyone who is in end-of-life care in the medicare population will be in at 5%. anyone with active cancer will be in it, the frail elderly and the elderly population. social work, not medicare may be , may be the solution. for any clinicians, if you prescribe one biological, you will automatically be in the top 5% high cost cases in the commercial market. let me just close by telling a couple of stories and make a couple of observations about what this means for medicare. the stories basically are what i'm hearing, how these provider systems are responding to this new future.

the story of the trap is this young hospitalist who -- a latino kid who went to ucsf and did well. he came back, wanted to serve his community in phoenix in a very low-income neighborhood with a horrible readmission rate. he told the ceo, "i can cut this rate in half." he took his truck and he drove on his own time at night to see the family, took the discharge summary, gathered the family around, spoke to them in spanish about what grandma had done in the hospital, the meds she was on now, and what should happen going forward. he did. he cut the rate in half. you don't need a board certified ucsf trained hospitalist doing it. you can have a kid with a clipboard in a checklist who spoke spanish or better yet, a friend of the family. that is happening over in the country where health systems are getting on to this.

the second example came from art gonzalez in denver health at the time. he told me the story of the number one frequent flyer patient they had. mrs. johnson, a brittle diabetic, constantly being readmitted in the e.r., in the hospital, not in control. despite the fact she was in a patient-centered medical home and the entire cast of "grey's anatomy" came around her every friday. it wasn't until some smart young nurse asked the question, mrs. . johnson, why are you not taking your meds? she said, well, they have to be refrigeratored. so?

i don't have a fridge. they bought her a fridge. she never came back. in a good way she never came back, he was fine. final story told to me by bernard from kaiser, from 300 medicaid to a million users. it has a fantastic group visit program for diabetics, multi-disciplinary team, patients, it's great. they were having this problem with the newly covered medicaid members not turning up for appointments. the doctor is getting all judgey about it. "well, that is what happens when you deal with medicaid," until some smart alec realized the reason was because the bus schedule didn't work. they couldn't get there until 10:30. so they changed the bus schedule. lo and behold, it worked out. so those are the kinds of interventions across the country, people segmenting high-risk populations, people using advanced analytics, patient registries and medical, going upstream, understanding that they have to focus on the population and be more imaginative with the problems going forward by partnering with

others, and that's what we're seeing. this group knows this. i think a lot of people have to be reminded of it. that this notion we overinvest in health services in this country and underinvest in social services. the great elizabeth bradley's work has really underscored this. i go to france. the french are number one in all these international measures. after an exposure to the french health system, it is bloody scruffy, i have to tell you. the reason they do well on every measure has nothing to do with medicare. it's because they walk, they drink red wine, and walk and get naked in the summer. nothing will keep your bmi down better than getting naked in the summer. [laughter ] ian: one final point on population health. the single biggest determinant of life expectancy is income.

this is what we social scientists call a straight line. was a massivehis study by stanford and harvard researchers. turns out, if you're going to be poor, it is better to be poor with a bunch of rich liberals in your neighborhood than in places that are more darwinian. there are lessons. i'll skip to the doctor stuff. here is the punch line for you all. medicaid is massive. it's bigger than france. 72.6 million americans by last count, as far as i'm aware, that is unbelievable how big this program is. i think it's a challenge for the country. partly because of the churn in and out of eligibility. partly the question who is going to look after them, which providers are going to take them. it's a huge list. this your world. i don't mean to be preachy here but it's covering kids, mums, expansion population.

it supports dual eligible, and it is the default for most middle class americans. i think your challenge, our challenge as a nation is design financially stable delivery models for the future. i made that point. i think the way you do that is to innovate that scale. the problem right now we do a lot of tinkering. we're great at pilots. we are absolutely brilliant at pilots appeared i go talk to the ceo's of these hospital stations, oh, do you have a patient-centered medical home, and it's like scout badges when you're in the scouts. i'll get that. do you have accountable care organizations? i've got three of them. diabetes disease register. absolutely. then you ask the follow-up question, what percentage of patients get that on a percentage basis, square root of 0. we need to innovate that scale. so let me just say in closing,

there are really only three payment streams going forward -- manage medicaid, high deductible health care, medicare advantage /aco risk. that's the game. it's going to require the delivery system to transform itself. the real question this election will decide is are rich people going to write a check for poor people. there really only three futures for health care. the nirvana where we move to large integrated systems transform to meet the triple aim spurred by payment reform by public and private payers. that's what i'm hoping for. i'm worried about darwinian consumerism of the subsidies, support being taken out, and we have to live in a world of high deductibles and economic rationing. i worry about the left of the political spectrum taking over and grinding down on budgets and prices, locking in all the

inefficiencies that currently exist in the system. what that means for medicaid, i think innovation on the one hand, about thinking creatively of combining social spending and various social initiatives in a more creative way. if it is darwinian consumerism, i think we will have to put the arm on providers to take their fair share, otherwise they will just geographically discriminate against people. i worry a bit about the price controls, how we maintain quality and appropriateness. but you are going to figure it out. these great colleagues here are going to tell us how it's going to work. i salute you for what you do. it's incredibly important. the people of america who depend on you salute you for what you do, and i thank you for your time and attention this morning. thank you. [laughter] [applause]

>> all right. thank you, ian. it is rare to see someone elicit so much laughter in a conversation around medicate but we certainly appreciate that today. so you brought up a lot of points and images, some images especially around bmi, i think we'll try to remove from our brains when this is over. but there's a lot to chew on there. so let me move immediately to experts who are grounded in the reality of the now and let's start with justin. in your experience in florida, what's your reaction to that? are these scenarios that you see, or is he just way off for a variety of reasons?

justin: i agree with the scenario he's laid out. i think the payment streams in particular are probably the ones that are going to survive. i'm optimistic. just like him. i'm very optimistic about how things will go. i was in a doctor's office several years ago. the doctor's office, like many doctor's offices, never updated its magazine stack. i was reading an "economist" magazine from a couple years earlier that was talking about this new sony ereader that came out. they were poopooing whether it would take off because it was big and clunky. in between reading, the ipad came out. every magazine, paper mill started to collapse as a result of an innovation. there are certain things out there that we don't know what's going to come down the pike. one odd thing about health care, innovation tends to make health care more expensive rather than cheaper, especially in the short run. that poses challenge.

we in florida have done our best to consolidate our systems and related by our operation and focus on what we're trying to accomplish. to come up with shared definitions of success that go across the aisle and things we're trying to achieve. we're trying to do it in a way we set the incentives. so much of what we've done in united states in health care is get the incentives wrong. it has always been pay for volume with a lot of the biggest providers being shielded from their cost increases. they are paid based on their cost. what they end up with, if you set your system up like that, is a health care delivery system where americans get more prescriptions than anyone else, they get more procedures than anyone else, and the costs have gone through the roof. it only costs us about two or three years of life expectancy compared to our peer countries when it comes down to it.

we've got to change the way that we deliver health care in the country. we've really got to work at getting incentives right and paying for value. that is a very difficult thing to do because it involves -- there are a lot of people in this room that make a lot of money off medicaid and medicare programs. they make a lot of money off of these funding streams. when you say you're going to save money -- when we say we're going to save money, what we're saying is we're going to reduce the amount of money we give you over time, and we're going to have higher expectations for what we get for that money. we're going to try to build the incentives that way. these are not cash assistance programs programs. you're speaking not to a room of poor people but a room of very wealthy people. i can only imagine what the average income is in the room or median income is in the room, but i'm sure it's much higher than the national average. we really need to think about that. if we put so much pressure in the state government on other investments that the state officials would like to make,

and they would love to make more investment in education, they would like to make more investment in trade and transportation infrastructure, but we start to swallow that up in health care. you have to question the value of that investment over time. and we have done our best to try to become a smaller and smaller percentage of our state budget. we are a nonexpansion state. i think the states that did the expansion have made a jump but , but they ultimately are trying to do the same thing in terms of becoming a smaller percentage once they captured that population. we have been successful for the last several years. we have combined a lot of different delivery systems into one. it is one of the funding streams that ian was talking about. we have medicaid managed care. that is the primary way we deliver services. we would love to see provider innovations. in our program, we actually had a special spot reserved in our competitive procurement for managed care plans for

provider-based managed care plans, ones that were owned in majority by providers. we had to give at least one slot in every region where it did a competitive bid, we had to give one slot to a provider service network. we did that. we had provider service networks bid in every state and we awarded them. there is not one provider service network in ft. lauderdale. every other one sold in six months to an hmo. by the way, that feature is still in our statute and the procurement is next year if you're thinking about forming a provider network and bidding. nice way to make money, turn around and sell it in six months. we're wondering whether we're going to see a repeat of that in upcoming procurement. all of these pressures, really need to think about the investments we're making. we really need to think about how to structure the system so the incentives are right and we're driving toward quality without being inflationary.

matt: great. thanks, justin. judy, thoughts from hawaii and procurement system. judy: thank you. as i was listening to that and some issues of cost shift, et cetera. this has come up over the past few days, actually indirectly in one of the slides there. it was who is driving the costs. right? who is the uninsured? if you think about the medicaid program, it's the hondas, the people with behavioral health challenges, much higher prevalence rates. it's poor people, who face many more challenges in maintaining their health, who are much more affected by income disparities,

by lack of access to fresh foods, to lower levels -- having to do with quality of education, et cetera. and so when medicaid isn't paying as much, it's also -- we're also working with some of the most -- some of the populations that have the most challenges in their life. so when we talk about the impact of social determinates and talk about impact of not funding within those areas, that's where the conversation is going. there's -- that's why there's the cost shift. it's that when you say that the are rich people that need to pay -- how much are they going to pay for the poor people, it's also what kinds of things are we going to do to invest in the so-called social determinates of health. where it is that we work, where

it is that we live, where we play, how much education we have, what's our housing stability? when i first got to hawaii, i went there, and they talked a lot about -- in hawaii they said, oh, we love what you did in oregon. we love the health system transformation and all your work there. we really want you to do that here. i'm thinking in my head, there's no way i'm going to do -- you can't replicate one to the other. as the saying goes, you've seen one medicaid program, you've seen the one medicaid program. each state is unique. every state has its own unique traits traits. one of the first things i did was i spent time listening, what

do the people want to see. one of the things that was so striking and so different from oregon is that in oregon health system delivery transfer systems were led by providers, they were led by health systems, by the ipa's, by the coordinated care organizations, by the managed care plans. it was led by them. in hawaii i began to talk to people, health systems, primary care associations, the long-term care industry. what people said to me is the thing that is most important to us is creating a healthy hawaii, healthy communities, healthy families. that doesn't come from the health care delivery system. that comes from communities working together at the local level, building and addressing the needs within that community. so what do we have? we have some of the most innovative federally qualified health centers.

we have a hospital and health care system that is now trying to work together to address what people are recognizing as the social determinants of health. so after being there now just over a year and a half, the interesting thing is that now people are talking about social determinants of health. we're talking about how do we invest in communities, so they to prevent trauma so they can learn better in school, get better employment, so they are not on medicaid. that's the goal. and then -- how can we address the severe homeless problem that we have in hawaii? in order to do that, you have to take a look at your behavioral health, your substance use, that

continuum of care, who is paying for it, how do you pay for it, how do you make it integrated with the medical health system? how do you partner with housing? i know more about section 8 and all those things than i ever did before. i have had to learn a whole new system of acronyms, because housing matters. and then my poor housing people have now had to learn about medicaid. that's been delightful. so all these new partnerships are being formed. now we're having conversations with the health systems, with the managed care plans. now the question is, all right, we're focusing on social determinates of health, what's health care's role? how far do you go? they are not going to be the social workers. but medicaid and the health system has a seat at the table. how are we going to play a role

within that seat at the table? that's where i really see medicaid going. that's where i see the health system going in that if you're going to talk about addressing the social determinates of health, then you're going to have to create new partnerships, new connections, and you're going to have to think about how you provide the appropriate incentives. so now the questions are with the health care delivery systems, how do we align the financial incentives so we're not paying for continued sick care instead of health care? incentivize health, and where howd incentivize health, and where should we be spending our money? those are the kinds of conversations that we're having in hawaii that i'm actually thrilled about, because i think that is really where the direction of medicaid is going and where the direction of the health care area is going as

well. matt: great. thanks, judy. so with this i want to start peppering the group with some questions. so i want to sort of start where you left off and amplify what you are saying but also come back and link in a couple of slides that ian put up there. one is the chart that basically looks at any distribution you've got, 1% of the population driving 20% of the cost and 5% driving 50. %. whether medicare, medicaid, commercial, you kind of see that , but i think it's fair to say within the medicaid world, that 1% and 5% is much more expensive and much different and much more -- brings many more sort of challenges and opportunities than in other payer mixes. does that then lead us naturally to your other chart, where we're looking at the u.s. versus other countries, where we're all engrained into this statistic of

, well, the u.s. spends far more on health care per capita than any other country. but then when you kind of add in the social services, it's much more similar, although arguably our balance of that is off. so is the key for medicaid, to build on what judy is saying, to refashion the medical into more social, to get that correct balance, and finally, to get at one of your last points, ian, which is -- i don't know if i would phrase it as will the rich pay for the poor, but given medicaid is a government program, is a public program, and is dependent on taxpayers to sustain, how do we make this transition? ask it a couple ways. how do we change it?

i'm thinking -- how do we also manage that change such that it is politically sustainable? by that i mean, you know, is there a political will for taxpayers -- there's a political will for taxpayers to be providing appendectomies for people who need them. is there a political will for government to be paying for refrigerators and apartments, et cetera, on a large scale. let me stop that question and just throw it back to the three of you. justin, i don't know if you want to go first. justin: the answer to that question is yes and no. ultimately when we went to a managed care model, the greatest thing you get out of a managed care model is the flexibility. they are on the hook for the most expensive intervention at the end of the rainbow, so they will do things like buy a refrigerator or fix an air conditioner simply because they

have a payment actuarial sound , and it makes sense for them to use that kind of purchase versus paying for that. i would think if it's in my budget as a line item to buy people refrigerators and air conditioners, it would be a real hot topic. the way we've set it up with managed care organizations being at risk for the full panoply of services, i think you can do it. in fact, our managed care associations have added lots of benefits over and above what we offer under our state plan not built into their rates because we do know they make sense. so we would be giving people services in a place that makes the most sense. i think that taxpayers in general do support the program. you have to support the taxpayers, too. they certainly don't want to feel like you're wasting their money. when they read a story in the paper about someone not getting a service that they think they have already paid for and should

be covered, the taxpayers get very angry about it. they also get very angry about waste. you have to keep them in balance. they would support anything that makes sense in a system that makes sense where they think you're driving towards a high-quality product. judy: so i was thinking as you said that, i agree entirely with justin. i think the answer is yes and no. no, i'm not going to have a line item for a refrigerator or for tennis shoes or for the air conditioner, but i do think -- i do think we should build in a way to account for those services within the managed care rate, because eventually they will go down and down and down and won't be any more savings to

have. a place i like to go a little bit more differently is to characterize i do think health care and medical system needs to become more engaged and more consumer focused as opposed to body part or provider. you are disease specific. at the same point, i think that it's not that we need to have a health care system that -- where we have doctors doing social work. i do not believe that is the model that i want to see or that i think is in any way effective. i would like physicians to be more engaged, more able to actually listen and do those kinds of things, because then you get better outcomes with your health.

when it comes to the social determinants of health, i want educators to be educating. i want that sort of social work aspect of it to come together. that gets to the point of something that we heard yesterday with the opening plenary session, and that's that it actually -- one, there's no easy solution. there's no silver bullet. it's going to take all of us working together. i think that's the other point i'd like to make, and that is it really is about community coming together and working together. so it's not that i have the expectation that we're going to pay for the rent or the refrigerators, etc., from the health care system, it's a matter of reallocating and working together as a community to invest in what the community needs to create those healthy communities and healthy families.

ian: maybe -- i agree with that completely. i actually trained in the u.k., and my graduate work was in newcastle, which was a working class town that went through massive deindustrialization in the 1970's. we were doing what we called multiple deprivation scores, which was a cross-sectional look at lack of housing, education employment and so forth. health was a tiny fraction of that. i completely agree with that. i was going to tell one illustrates, if i was in your anecdote, which illustrates, if i was in your shoes, an opportunity. as i mentioned, i was on the california health care foundation board. we had a retreat in fresno about four or five years ago.

and this city manager, young assistant city manager in one of the towns next to fresno, he and his wife had a baby and he was up in the middle of the night and he saw a pbs interview talking about hot spotting. so this guy got inspired, and he got the data from ambulance about emergency calls and hot spotted them. so we got in a bus with this guy, the board and our spouses and went on a tour of all the hot spots. the first hot spot was an assisted living facility whose idea of assistance was to call the fire department for assistance any time anything happened, like a patient snored, they would call the fire department. next thing they were in the e.r. the next thing we went to was a slum landlord where there was multiple instances of kids with asthma, having life-threatening asthma attacks and on and on and on.

my wife's old -- not old, seasoned -- emergency room nurse, analyst, asked how many fires do you have? he was going on 4,000 visits at $7,000 a pop, 7,000, 4,000, can't remember the right way around. ten. ten fires in a year, 7,000 of those events. so if i was doing customer focused analytics, i would like look at where those hot spots are for all the streams within the purview of state/local budgets, and start with that pot of money and figure out a better way to deploy that problem. i think it's massive. i think it's massive. i think there's an enormous opportunity to enrich lives. maybe by giving them a job or check or something else. i keep coming back. income and life expectancy, income and health status perfectly correlate. i tell the kids all the time, be in the top 1%, you'll do just fine. [laughter]

matt: so, justin and judy is that the answer? if so, how easy is it to actually do that? justin: i think it's really hard to do. that type of thing is coming. getting that refined opportunity at the community level and putting out figurative fires, if not, thankfully, literal ones, i think health care is going to get more personal. the relationship, the understanding of what's going on at the personal level should become greater between the doctor's office and individual, between the health plan and individual. i think information sharing is going to become much stronger. there's just a lot of opportunities there. we've hit the edge of affordability, and we've hit the edge of affordability of all three of the future streams. the private pay, the state government pay, the federal pay. everybody has hit the edge of affordability. necessity is the mother of invention. there's a lot better ways to do it.

at the same time, we're at the point of a revolution and information that could help us get back from the break. -- the brink. and that is where we are. ian: let me just reinforce what you said. hitting the edge of affordability, the woman who runs health benefits apple told me this story, when they were going to cost shift like usual to employees, it went all the way to tim cook, who said, "no, we're not going to do it." apple employs 100,000 people, 0% work in the stores. they don't make much money, but they get good health benefits. it went to the top of the company. in so doing, partly because of that, partly was the apple watch wasn't selling very well, they put in a worldwide travel ban at apple for nondiscretionary travel. they have $300 billion in a bank in ireland for god's sake. if apple has hit the wall of affordability for its employees , then we know it's real.

judy: and for sure with in-state budgets, medicare directors know we've become an increasing part of the budget. as justin noted earlier, that can't be. that cannot continue. we must have a change. must have it stop. government does invest in those social services and does invest in those things. i was at one of the sessions yesterday, also about public-private partnerships and investing in some of those social determinants of health, and i think that is another area we definitely need to start seeing some of those things happen as well. but it's very much the case that we have reached the edge of affordability. i would like to note that the truth of the statement, at least

in the health care industry, we talked about we're getting a lot better about, you know, information, et cetera. we're still in the -- we're still in the dark ages when it comes to that. ian: oh, yeah. judy: and some of our privacy rules are that way, that make it so hard to share data, to put those things together. they kind of work against you when those things -- when you're trying to do some of those things. it's certainly possible, but we have a long ways to go. in trying to pull together. i think those are some of the challenges that are upcoming in the next few years for sure. matt: let me build on the theme of affordability and take the question in a slightly different direction, thinking about the future, let's talk about

medicaid expansion itself and other types of ways in order to provide insurance to people who may not have it or are in the system. so you know, justin, you are in the state that has not done medicaid expansion. you're on the board in the south region where relatively few of the states have done it. judy, you have represented two states who have done the expansion and represent a region where not all but more have done it. in what really do you think is what really do you think is the future of the medicaid expansion either in terms of more states coming on, more states coming off, or finding different approaches to address the underlying issue? justin? justin: i think we're going to have a very prolonged period of time where there are a significant number of nonexpansion states. that is going to give those -- there's going to be data.

you will have to look at the effect that has over time. i would be very surprised if florida did it in the next few years. i would be very surprised if texas did it in the next few years and many of the other southern states. you will get this opportunity to look and see what type of impact that has on unemployment, on the state's economy, on labor participation, on the uninsured rates, and on public health. there will be basis of comparison. the one thing that has not happened with expansion states, is they have not had to pay for it yet. they will have to start paying for it on january 1st of 2017. that is coming up in a few weeks. the amount they have to pay will incrementally go up for the next few years after that. the other thing that hasn't happen since the expansion, there hasn't been a recession. if, in fact, they are driving down their labor participation rates and cutting into their revenue and driving up their

costs by taking on the expense of the expansion, it will be very interesting to see what happens during first significant recession in those states. i think that we will have a prolonged period of time with non-expansion states, and there probably will be a recession, perhaps even a significant one, where we will have to see what happens to the states that expanded versus states that didn't and how they fare in that situation. because as we went through the last recession, our enrollment, it's a counter cyclical program. our enrollment spiked by nearly a million people in a short period of time. that was a deep recession. all recessions we see several hundred thousand people added to the program. and instantly coming your costs go up at a time when your revenue really drops in the state. they have balanced budget, none can print money. that will be an interesting inflection point in the coming 10 years when the recession hits

for the states. are looking at it. one thing that the supreme court did is they inadvertently created a work requirement to get insurance coverage. above 100% oft poverty, and then you are able to purchase insurance on the exchange, the cost. in florida, our minimum wage is higher than national minimum wage, and you have to work 30, 32 hours a week at minimum wage in order to get to silver plan. the majority of them purchased silver plans with cost wraps, so they are below 250% of federal poverty. we are still looking at our data and trying to understand it. if you look at the census data, we are seeing a significant drop in the number of people that

were in the gap. we were looking at 500,000 people in the gap below childless adults, below 100% of federal poverty a few years ago. it now seems significantly less than that, less in 2014 and even less in 2015. looking at that over time and understanding significance, keep in mind that we have maybe fallen into a situation where we have a significant reduction in unemployment rate , and it is permanently 100% federally financed. judy: well, on this point justin and i don't agree. [laughter] judy: which probably doesn't come as a surprise. i would use statements, what's going to happen when there is a recession? what is going to happen to the people who find themselves uninsured, unemployed, in

recession, below poverty level they have no access to insurance? i've now worked in two states, both of whom expanded, but they also came from a different background, in their expansions and in their decisions on how to cover people. oregon, while they did expand in the sense they had population up to 100% of poverty level, they also capped it. so i come from the state with infamous oregon house study. my takeaway from that is health insurance helps save lives. i did see that on a regular basis. people who were uninsured, who did not have access to health insurance, they were foregoing needed health care.

they were coming in, and you know, we got stories, letters after oregon expanded. there were stories written -- you know, handwritten letters to us, to me as a medicaid doctor director, talking about how this health insurance saved their lives. so i approach it -- well, i appreciate the economic argument. i also approach it from a public health and from really a standpoint where health coverage and access to health insurance saves lives. does it have to be medicaid? no, it does not have to be medicaid. that's where in hawaii, it is

the only state in the country with arisa waiver, and so they have prepaid health act. they have had 90%, 95% health insurance rates for 40 years with a much higher proportion of people covered by employer-based insurance. so yes, we did have a medicaid expansion. but it didn't impact hawaii as much as it did in other states. so it does not have to be medicaid, but i would challenge us and states and others to at least consider as a public health if we want to think about how it is that you want to help keep your population healthy and have healthy communities, then how are you going to help make sure that your population has access to health insurance, especially those who are low -income, below 100% of the federal poverty level? we already talked about they are the ones who tend to have higher rates or prevalence rates of

substance use, mental health, behavioral health needs, of chronic disease, of living in high-stress areas of low income, et cetera. so i -- so that's where i come from when it comes to the medicaid expansion. i happen to agree with justin that it's not likely that the states who have chosen not to expand, i probably believe there's probably going to be additional states that might choose to expand. i hope that's the case. but i think there's other pathways to expansion, and we could explore those as well. matt: i think it's a very useful -- ian: i think it's a very useful kaiser family foundation

piece that just came out -- 4.4 million uninsured in the 19 states not expanding. 2.6 of those gap. it's clear and certainly you talk to people who have gotten coverage, they feel relieved by that, so it does make a difference to people's health. i think that is unequivocal. the question is can they do it. i want to underscore what they said about recession. we've had the longest expansion for a long time. we are way overdue for a downturn. that will put tremendous pressure on medicaid as both of you indicated. i think we've got to prepare ourselves mentally for that. it's just asking too much for a continuous expansion. economies don't work that way. i hate to be a buzz kill in that regard. i do think that what's important is finding sustainable delivery models going forward despite this pressure.

i think what we all agree is that that will require innovation for plans to provide services to states but also for providers. i honestly think in a lot of these expansion states, we have to put the arm on provider systems to take care of uninsured. what we are seeing is in states like texas is cherry picking geography of underinsured patients, and that undermines of delivering on a charitable basis , and we may have to legislate in some states. i think it's nuts in texas. it's easier to get into princeton than get a medicaid card in texas. maybe we should loosen up. matt: i want to live with one

question -- leave with one question for all of you. medicaid -- it's bigger than france. we cover births, long-term care, a lot of stuff in between. what should it look like, thinking about the future of medicaid. and obviously, ian, medicaid has a role vis-a-vis all the payers and all the dynamics that you deal with. in one minute or less, and i ian,start with you, i what should medicaid look like? what should be done to make it better and more functional? ian: i've been doing this for 30 years. i've had the same answer for 30 years. there should be a basic floor below which no american falls , and there should be a guaranteed delivery system for folks. i actually personally say we should fund a delivery system that everyone has access to. if you want to trade up with your own money, knock your self out.

but that delivery system should be paid for through tax-supported financing. not a single-payer system necessarily but funded delivery system. how we do that, whether we put the arm on delivery systems to take a certain requisite number of people or give people a block grant, i'm fine with that. but the deal is nobody should be left at the bottom. if people want to trade up for a choice of providers, they look at models like the australian system and others where there is lots of room for people to, you know, expand service offerings and pick stuff financed through supplementary insurance, provided the base program covers most people and most people would be comfortable in that quality and service of that program. i think that's eventually what we've got to get to. this categorical eligibility in and out is nuts, with all due respect. [laughter]

matt: yeah. i am trying to think about that. i do think that the future of health care needs to become more simplified, that we've made it incredible administratively complex. i was oftentimes, the aca when you talk about medicaid, we simplified eligibility. for those of us who run medicaid eligibility and had to develop medicaid eligibility systems we know that is a fundamental lie. that is not the case. that is not what happened. but if we were actually able to simplify, i'm not sure i would go all the way to getting rid of entirely the categorical that is probably probably going to continue to be some

distinguishing, some tiering. at least some basic -- everybody gets below a certain level you need to get this basic coverage. i think that is a direction. i think for the health care delivery system, i think you're going to see -- for the medicate -- medicaid program you're going to see medicaid playing a much larger role in that and partnering -- hopefully partnering more effectively with medicare in the future as well. that's a hard sell. but that would be my hope on the health care delivery side of the innovations there. >> final word. you come to medicaid and it can be bewildering. we have tried to place the enrollees at the center of the system. as they come in, they have a set of maybe four or five very clear choices of health plan with different service packages. we tried to create a session where they compete for business based on benefits they provide, based on the customer service

they provide, based on the networks they have put together and various other times the plans compete based on price as we make decisions around bringing them in. but that's what we -- we're trying to set up a system where the consumer is at the center of it and plans competing based on price and quality and consumer satisfaction and they are competing for enrollees. enrollees at the center of the system. i think providers have a place there, too. we still encourage providers to develop these systems either as subcontractors to our plans or to develop their own plan and to eventually become fully at risk and to innovate. ultimately, it has to be about the patient and has to be about the consumer and they have to come in and feel like they are in an understandable system that is going to successfully meet their health care needs. >> all right. i'm happy to end on that note with apologies to the panel because i had not vetted that question before hand.

you did that remarkably well. join me in thanking ian, justin and jody. >> it is great to see so many people here. i have been here the last day and session and matt had me talk the last two or three times. i usually do not draw as big as a crowd. kki and not to me. i would like to thank once again, the staff, it's a ton of work for them that leads up to this. thank you front of the hard work area matt, lindsay, jack, a greater job at a big hand for them. [applause] -- a great job and a big hand for them.

when matt asked me to introduce vikki this was a tough one. it could be the last time we get to work with vikki. enough to workky with her for eight years. when i was d.c. policy director i, when irst met vikk first got to meet her. what a lot of people do not know when you are the d.c. medicaid director, you get invited to a lot of meetings. the reason you get invited to a lot of meetings is not because you are important or you are doing innovative stuff, it is because of all of you medicaid directors who say i can not to be at that meeting and they need another person. -- md ort be an empty kaiser, they ask you to come.

maryland andsk a virginia. virginia is a long drive. i always say no. seeland, they are like we these people too much. as the distant director you get to go. that is why was lucky enough to meet vikki and got to meet with her way back then. the other thing is we actually lived in similar neighborhoods. there would be times we would be out to dinner and my wife and i and kids was see vikki and her family and you get to say hi and talk a little bit. i have known her for eight years. the one thing i want to say about vikki and her staff and i do not think we say this to all of you enough we know your jobs , are hard jobs. you work lots and lots of hours. the pay is not great. you've got to work with the 56 of us. i know working with me is not

easy. i get it. you know, when we were having board meetings, i say, this is what i compare it to. in the state of ohio we don't do eligibility. the state level, it's a county run system. i got a deal with job and county medicaid directors who know more about eligibility than i do. i always do it wrong. no matter what i do, i do it wrong. i say how do you guys want to do it? they say, you tell us how to do it. i tell them what to do. they say, that's wrong, that's not how you do it. i know that's how it is for you guys. i know it gets frustrating the different directions we pull you in and all the things we request you to do. i know it's a hard job. i really do, i really want to say a big thank you, vikki, to you for the last eight years of working on these things and your

staff. it's been an interesting road. we've gone through a lot. there's been a lot of change. we went through aca and all the different pieces there. many states come up with new eligibility systems and now value-based changes, a lot there. so thank you for all you've done. there. [applause] >> so with that i will have to do the obligatory bio. administrator and director of center for medicaid and c.h.i.p. services. she's deputy administrator -- already said that. in this role oversees quality affordable health care for 72 million medicaid and c.h.i.p. services works closely in medicaid and c.h.i.p. programs. previously served as director of children and adult health program groups within cms. a nationally recognized expert

on health policy, particularly as it pertains to health coverage for low income population. she served at university of chicago, budget and policy and director of kaiser foundation commission on medicaid and the uninsured. early in her career, she served at the white house office of management and budget. she holds an mpp from harvard university and ba from mount holio college. i'd like to invite vickki to come up and talk about the last eight years of this administration and the great work they have done. vikki: i want to thank you for the conference, the topics that ensued are pretty breathtaking.

i also want to notwithstanding ongoing partnership with cms and making a stronger medicaid program. special thanks to matt and john and also to tom who aren't able to be here today for your incredibly strong, effective leadership of the organization. now want to take a minute to thank andrea who is leaving this week but has been a great partner for us on the amd staff. today is election day. everyone in this room is thinking about the future. you're thinking about tomorrow, what does tomorrow bring? who will control the white house? who will be elected to congress?

who will control house and senate senate? importantly, who will kate mckinnon and alec baldwin parody now? i'm not going to speak to any of those questions. tomorrow i'll be looking forward. today i want to take a moment to look back. i want to look at the work we've done together over the last eight years to build stronger, more effective and innovative program and the ways in which that work is improving the lives of whether or not are now 73 million americans. medicaid is a much different program now than it was in 2008. the last eight years we've accomplished five dramatic changes. let's start with the basics. medicaid is now without a doubt mainstream health insurance program not welfare medicine program. it ensures 16% of americans and is the foundation of our nation's health care architecture along with marketplaces employer coverage and medicare. medicaid is no longer just a claims paying fee for service program. close to three-quarters of our beneficiaries are enrolled in managed care.

medicaid no longer prioritizes the provision of long-term care and institutions. it shifted home and community-based services for frail, elderly and people with disabilities. fourth, medicaid is now systematically focused on quality and access. we're using standard quality measures for children and adults that did not kpes eight years ago. and finally, medicaid is no longer an imitator following medicare's lead on payment roles. it's an innovator developing new ways to pay for and deliver services to vulnerable populations. if all that were not enough, starting yesterday, medicaid is now on twitter. so take out your phones and follow us on medicaid.gov and get all the news and developments in the medicaid program. while much has changed over the past eight years, much also remains the same. medicaid still makes a huge

difference in the life and health and independence of americans. let me share one example. dion bradley was born with a rare genetic disorder that produces malformations of the vertebrae and ribs. as a result she has difficulty breathing, and she's prone to repeated respiratory infections like pneumonia that can have life threatening complications. she spent the first seven months of her life in nicku. in first four months her family blew through $3 million cap under her private insurance policy. no other insurer would cover her. only one stepped up to the plate. medicaid. today she's a spirited 9-year-old. she loves to dance, into fashion, a big fan of michael strahan. her favorite place to be? at school with her third grade buddies. medicaid makes it possible for

her to go to school. it covers nursing care, home ventilator, respiratory medications. these are all what make school possible for her. medicaid kept them out of bankruptcy by paying for her life threatening southern rice. here is what her mom, desiree has to say. when the hospital first said i should go on medicaid, i was a little offended. a lot of people think medicaid is just a charity program. now my perspective has changed. without medicaid my child would not be alive. she was speaking as a parent. but her comments about her child capture what for me is the most compelling research finding about the medicaid program. researchers from harvard have calculated that having medicaid coverage actually reduces mortality. in other words, medicaid extends people's lives.

despite the dramatic changes of the past few years, medicaid has stayed true to its mission as safety net insurer. at the time it made medicaid even more effective. take medicaid's role as an insurer. medicaid's coverage expansion and eligibility simplifications are helping to drive historic declines in the number of uninsured americans. in 2008, nearly 16% of all americans lacked health insurance. today that figure is just under 9%, the lowest rate in our history as a nation. the reason? medicaid expansion, along with the marketplaces and other aca coverage improvements have helped 20 million americans gain coverage. someday the full potential of medicaid expansion will be realized when the remaining 19 states take it up and make the remaining 4 million people eligible enroll.

as dion's story underscores, medicaid coverage means concrete improvements in people's lives. medicaid eligibility no longer depends on eligibility for cash assistance, and it no longer involves 25-page applications. it no longer requires applicants to find their way to an understaffed welfare office armed with tax returns, birth certificates, social security cards, leases or returned mail and four pay stubs. liberated from these rules, the vast majority of states are making medicaid eligibility for children, pregnant women and nondisabled adults in 24 hours. this streamlining matters. in july louisiana became the 31st state in the district to take up medicaid expansion. in just the past four months they have enrolled more than 300,000 people. how did louisiana do so much so quickly? the state leveraged information

it already had from existing state systems and boiled down its application to four simple yes or no questions needed to confirm eligibility for medicaid. one new beneficiary, linette, was recently profiled by kaiser family foundation. she's 54 years old and has diabetes. she once had medicaid coverage years ago when she was pregnant. after she had her baby she lost eligibility, replied, and was denied. when she first got her application in the mail, she assumed she would, again, not be eligible but she applied and she enrolled. here is what linette had to say about the process of applying. "it was so easy. i answered the questions at the bottom of the form, scanned it and e-mailed it to the address they gave me.

that was it. i really couldn't believe it." there are, of course, those who like to turn back the clock. not just eight years but 50 years. but medicaid is now the nation's largest health insurance program with a clear mission of providing quality coverage to all low income americans. medicaid is going forwards not backwards. once upon a time in the medicaid program, services were paid on a fee for service basis. payments were tied to volume, not to value. costs rose with no commensurate increases in quality. services were fragmented and uncoordinated. since those early days, medicaid became an effective purchaser as well as driver for delivery system forum. the last majority of medicaid are enrolled in plans who are financially responsible for managing and improving the health of their beneficiaries. medicaid managed care holds the promise of improving access in quality for beneficiaries while

controlling costs. to help realize that promise early this year cms issued ground breaking final rules, the first major overhaul of these rules since 2008. the rule has lots of moving parts. at its most fundamental, it lays a new foundation for access to care, deliver better care, spend medicaid dollars more widely and promote broader delivery system reform. implementing all that would be a multi-year undertaking. it will challenge states, it will challenge plans, it will challenge cms but all our beneficiaries have a potential to be better off for it. when medicaid started, the only option for many seniors and people with long-term care needs was a nursing home. as a result medicaid spending was heavily weighted towards institutional care.

in 2013 for the first time in the history of the program, the majority of spending on long-term service and supports went to home services. these services are a critical component of medicaid program and part of a large are framework of progress towards community integration that spans efforts across the federal government. in 2008, medicaid's rules did not jive with beneficiaries or their families. in 2014, after five years of stakeholder input we updated to make sure services are truly provided in a community-based setting, not an institution. we want this progress to continue. that's why on friday we issued a request for information. looking for public input on ways to continue to accelerate progress, continue protecting quality of care for these vulnerable beneficiaries. if there's any doubt about the

importance of these services to the lives to beneficiaries let me tell you about miss lewis, a 56-year-old woman who lives in baltimore. she has cerebral palsy and a history of stroke. she has no family in the area to provide care, which makes miss lewis a very good candidate for a nursing home. instead she's enrolled in community first choice program, the program provides a case worker and personal care attendant. miss lewis is very active in the community. she's particularly close to her case worker and here is what she said about her. "i love her like a sister. she goes above and beyond the call of service. i'll call her and she's always there with a nice smile to say everything will be ok. i'm a busy bee, and she knows i don't like to be stuck in the house. she gets me transportation to my exercise program. that relationship brought to you

by the medicaid program." i don't have to tell this audience that quality and access go hand in glove. in 2008, medicaid had no systematic approach to ensuring access. a year ago, medicaid set new rules on access to care, which states are in the process of implementing now. in 2008, medicaid had no standard data on quality. now it does. medicaid is now systematically measuring quality using adults and children's core set measures which align with broader quality initiatives and all the results posted for transparency. of course quality is about much more than measurement. that's why medicaid is pioneering quality and improvement initiatives towards important national goals, goals like reducing maternal infant mortality and promoting children's oral health. historically, medicaid was not well-known for innovation and payment policy for delivery system reform.

today, it is driving innovation. in 2008 there were no federally established payment models. today eight state medicaid programs participate with other payers in comprehensive primary cost initiatives to strengthen primary tier payment through delivery and payment reform. thirty states participate in strong start as well as the district in puerto rico. they are undertaking new approaches to prenatal care to reduce frequency of premature birth to medicaid and c.h.i.p. moms. we're working with nine states on comprehensive approaches to substance use disorder, a topic you heard about yesterday. two states are approved and working with seven more. and of course, regardless of the federal models that we establish, states continue to drive innovation on their own and in partnership with cms. ask minnesota about acos. ask colorado about its accs. ask alabama about the potential

of its regional care organizations, which it hopes to implement next year. ask massachusetts, rhode island, or vermont about their ground breaking delivery models, all of which cms has approved in the last three weeks. to help continue innovation, cms established innovation accelerator program two years ago. we wanted to support all states efforts to move towards payment and delivery system. starting next month, iup will make available to states new support for analytics and data modeling so we can continue this progress. so to sum it up, there have been some serious drama in medicaid over the last eight years. there's been a dramatic expansion in coverage, a dramatic shift from fee for service to managed care. there's been a dramatic increase in home community-based services. there's been a dramatic new focus on quality and access and there's been a dramatic acceleration in innovation.

this is the work we've done together, and it makes a difference in people's health, their life prospects and health and communities which they live. i hope you would agree with me when you step back and look at it, these are the biggest changes in the medicaid programs since its inception in 1965. all of that is a lot of work, so i wanted to end by thanking all of you for the work you've done with us for these past eight years in the medicaid program. first, i want to thank our partners in the audience, providers, plans, consumer advocates for the work you've done to support cms and states during this time. ultimately neither cms nor medicaid program can accomplish our mission without you. second, i want to thank my team. maybe many of them are here at the front. they are the hardest working, smartest, most committed group of people i know.

especially i want to thank the medicaid directors. in my view, state medicaid directors have the hardest and the most important job in every state and territory. john, we do love all 56 of you. not everyone understands the importance of that role, but we at cms do and we very much appreciate your commitment to public service. medicaid's future progress like its past accomplishments will depend on you. i expect whatever tomorrow brings, cmcs will continue to partner with you in the best way possible. thank you all and have safe travels home. [applause]

>> all right. i can't end on much better note than that other than to reiterate what john said earlier, we have very deeply, deeply appreciated our partnership with cms under your leadership, vikki. in the spirit of not knowing what the future may bring, in looking back it's been a great experience. we look forward to working with you, the team, whatever that takes moving forward. again, to reiterate i love your pointish the work we're doing in medicaid i really do think is the most important work going on in this country. we are taking the things that matter most to the people who need it the most. their health, lives, well-being, and for the sickest, frailest, medically fragile people in the

country, we're trying to take a system that historically has not done a good job taking care of them and trying to change that. that is an enormous undertaking and one that has to be done with lots of people, not just states and federal partners but with a private sector in a true public/private partnership as well. it's enormously important. as we've tried to stress over the last few days, it's enormously difficult. it means it's a challenge to us to figure how high can we rise to overcome the challenges because the need to do so is so, so critically important. with that i want to thank you for coming, participating in the ongoing dialogue, supporting state medicaid directors across the country. we look forward to putting forward another session like this in a year's time and we hope to see you all there. we look forward to continue to engage with all of you

throughout the months to come to figure out how do we together solve these crises, solve these problems and figure out a better situation for those we serve. thank you, everybody. [applause] [captions copyright national cable satellite corp. 2016] [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org] announcer: a video of donald trump and mitch mcconnell walking through the capital --ore meeting privately with the president-elect met with paul ryan today and started off

the day talking about transition with president obama at the white house. they heal writing about the meeting a short time ago, president obama and president-elect tro put on a show of unity during their first meeting at the white house earlier today. ae two leaders handled difficult situation gracefully. seatednd trump were typical for when the president meets with foreign leaders from "they heal -- "the hill." here are remarks. president obama: i had the cause of -- conversation with president-elect trump, it was wide ranging. we talked about some of the organizational issues and setting up the white house. we talked about foreign policy, domestic policy. i said last night, my

number one priority in the coming two months is to try to facilitate a transition that ensures our president-elect is successful. have been very encouraged by and i have been very encouraged by the, i think, interest in wantingt-elect trump's to work with my team around many of the issues this great country faces, and i believe it is important for all of us, andrdless of party, regardless of political preferences to come together, work together to deal with the many challenges we face, and in the meantime, michelle has had a chance to brief the incoming

first lady, and we had a conversation with her as well, and we want to make sure they tol welcome as they prepare make this transition, and most of all, i want to emphasize to thatmr. president-elect, are going to want to do everything we can to help you succeed because if you succeed, the country succeeds. please. trump: thank you very much, president obama. this was a meeting that was going to last 10, 15 minutes, and we were just going to get to know each other. we had never met each other. i have great respect -- the meeting lasted for almost an hour and a half. as far as i'm concerned, it could have gone on a lot longer. we really -- we discussed a lot of great, different situations.

some wonderful, and some great difficulties. i very much look forward to dealing with the president in the future, including counsel. he explained some of the difficulties, some of the high-flying assets, and some of the really great things that have been achieved. so, mr. president, it was a great honor being with you, and i look for to being with you many, many more times in the future. president obama: thank you, everybody. we're not going to be taking any questions. thank you, guys. this is a good rule -- don't answer questions when they just are yelling at you. come on, guys. let's go. mr. trump: very good man. very good man.

earnest: good afternoon, everybody. nice to see you all, including some familiar faces. josh, do you want to start? josh: the president -- i should describe that clarify -- president obama described a meeting with president-elect and i wonder if there is anything he could have told the president. secretary ernest: i had the privilege to visit with president obama about the meeting. there are many details they will keep between the two of them.

a couple things i can share with president indicated they have the opportunity to discuss foreign policy and domestic issues. some of those foreign-policy issues came up in the context of the president's upcoming trip overseas. the president describes to the president-elect some of the to comehat he expects up with some of our allies, partners, and other world leaders he will meet with on the trip. it was an opportunity to talk to him about some of those issues in advance of the president's trips, and in advance of the conversations he expects to have. there was also an opportunity for the two leaders to talk about staffing and organizing a white house. that is complicated business, and any white house is expected to be structured in a way to deal with multiple challenges, or even multiple crises at the same time. and the president-elect indicated a lot of interest in understanding the strategy of

staffing and organizing the white house. obviously, that's something president obama has thought about extensively during his eight years in office. they spent a large portion of the meeting discussing the importance of properly staffing up and organizing a white house operation. look, other than that, what the president heard from the president-elect is a clear commitment to the kind of effective, smooth transition that president obama has been vowing to preside over for the better part of a year, and the president tends to make good on the promise in the 70 days ahead. josh: did the president leave the meeting any more reassured that president-elect trump will not try to dismantle all of the work that you and your colleagues have done over the last eight years and did president obama make any pitch to trump, for instance, not to get rid of obamacare or any significant policies? well, listen, i'm

not going to get into all of the details of their meeting. i think that president obama came away from the meeting with renewed confidence in the commitment of the president-elect to engage in an effective, smooth transition. that obviously is what president obama believes, serves the american people the best. we're committed to doing what's is required on our part to make sure that that happens and the president was pleased to hear a similar commitment expressed by the president-elect. josh: do you know if the president got any reassurances from trump about whether he plans to pursue what he discussed during the campaign about trying to incarcerate hillary clinton? sec. earnest: listen, i'll let president-elect -- let the president-elect read out his end of the conversation. but as i mentioned yesterday, the president was -- found reassuring the kind of tone that the president-elect conveyed in his election night remarks.

as i mentioned yesterday, these were remarks that the president-elect delivered not just to his supporters in the ballroom but to the citizens of the country that were tuned in to this historic election, and also to people around the world. and given the intensity of scrutiny of his remarks, it's notable that he chose that kind of tone. i think we saw a similar tone just in the oval office 30 minutes ago. where he was indicating his commitment to working closely with the outgoing administration to insure a smooth, effective transition. it doesn't mean they agree on all the issues. they obviously have deep disagreements. but what they do agree on is a commitment to a smooth and effective transition. that's a good thing for the country.

josh: did president-elect trump talk about looking forward to meeting president obama's council in the future? did they agree to meet again? was there something put in place? sec. earnest: i'm not aware of any addition additional meeting, but i wouldn't rule out additional consultations. over the last eight years, president obama has benefitted from the kinds of conversations he has been able to have with previous presidents. i wasn't surprised to hear that president-elect trump indicated that he feels like he would benefit from those conversations over the course of his presidency as well. >> was it awkward at all given all of the rancor that the two men exchanged with each other on the campaign trail and even before that? was the meeting awkward at all in terms of getting past that? was there a moment where they, sort of, had to break the ice -- sec. earnest: to be as specific

as possible about this, roberta, there is no staff in the room when president obama and president-elect trump sat down in the oval office for 90 minutes. so i think it's probably a question you would have to ask the two of them. i feel confident in telling you that they did not resolve all their differences. i also feel confident in telling you they didn't try to resolve all their differences. what they sought to do was lay the foundation for an effective transition from the obama presidency to the trump presidency. and this administration at the direction of president obama has been preparing for this moment and this meeting for the better part of a year. and this obviously was an important early step, having the president sit down with the president-elect to discuss that transition. and you know, based on the kind of agreement that was evident about the priorities that they both placed on a smooth transition, it sounds like the meeting might have been at least a little less awkward than some

might have expected. roberta: you said it was just the two of them alone, no staff in the room? sec. earnest: that's correct. that's correct. roberta: and the pool waiting to go into the oval had seen some other officials on the south lawn. i was wondering if you could tell us about what other officials from the white house may have met -- who was in those sort of discussions and meetings going on at the same time? sec. earnest: i know that the president-elect's spokeswoman, ms. hicks was here. i had an opportunity to meet her. while the president-elect was meeting with president obama. you noted that she also had longer meetings with some of the members of my colleagues in the communications team. you noted that mr. kushner was here and had an opportunity to visit with the chief of staff. those are the only two staffers from the president-elect's team i had an opportunity to meet today. there might have been others who

with him. i will clarify there is a more formal process that we would expect would guide the interactions between the president's team and the president-elect's team for the two months between now and the inauguration. there will be a formal process for that kind of consultation to insure a smooth transition. the kinds of conversations today were much more informal in nature. roberta: president-elect trump mentioned that some high flying assets. i wonder if you know what he was referring to when he talked about that. i am not sure what he was referring to, but you can check with his team on that. michelle. excellentas far as goes, you are talking about a smooth transition and having a good tone. i mean, that's all that excellent means in this?

sec. earnest: well, i think when you consider the profound differences between the two gentlemen, when you consider the fact that they have never met before in person. and when you consider the high priority that the president places on a smoot and effective transition, i think that qualifies as excellent. michelle: donald trump mentioned that this was originally supposed to only last 10 to 15 minutes. is that true? why would it go on so much longer than that? sec. earnest: the president had allotted more time on his schedule for that meeting than just 10 to 15 minutes, but they did end up spending about 90 minutes talking about a range of issues including what i described to josh earlier. i think that would be an indication of a pretty robust, valuable meeting. michelle: yes they you talk about the president having deep concerns, and everything he said on the campaign trail about donald trump was true. this meeting, i mean, considering all of that, it was a brief meeting. did it did anything to assuage any of those concerns? sec. earnest: listen, as i

mentioned yesterday, the president campaigned vigorously across the country, making a forceful case in favor of the candidate that he supported. and he did that right up to the night before election day. on election day, the ballots were counted. and the american people decided. the president was never in a position to choose a successor. the american people chose his successor. the president vowed to work with whomever the american people chose, so no, they did not re-create some sort of presidential debate in the oval office today. they were focused on doing the work of the american people, fulfilling their institutional responsibilities, and on president obama's part, that means laying the groundwork so that the incoming president-elect can hit the ground running. after all, as president obama said in the rose garden yesterday, we're all rooting for his success when it comes to uniting and leading this country.

michelle: so the president still , has concerns is what you're saying. sec. earnest: what i'm saying is that the forceful case that the president made on the campaign trail leading up to election day reflected his authentic views about the stakes of the election and about the candidate that he went all in to support. michelle obviously, there was : nothing in this meeting that would change any of that? sec. earnest: well, i guess what i'm saying is that the meeting was not convened to try to resolve the various concerns that president obama had raised on the campaign trail. the meeting was focused on the transition, and it went well. michelle: given that some of just's advisors have, prior to this meeting talked about looking for all of the ways or wanting a list of all the ways that they could roll president obama's policies back starting on day one, does the president fully expect that to happen? sec. earnest: well, listen. i'm not going to prejudge what their transition process is. obviously, our goal is to make

sure that the incoming president-elect can hit the ground running and can enjoy success when it comes to uniting and leading the country. that's what the president promised yesterday. convening the meeting in the oval office today is part of the process. -- promise. how they choose to use the time, and what priorities they choose to set for their earliest days something you expect that you would have to ask them. michelle: what does the president expect? sec. earnest: the president's expectation is the incoming president will set his own priorities and pursue them accordingly. and again, our goal is to provide them the kind of advice that would give the president-elect and his team the opportunity to succeed in uniting and leading the country. that's what he's indicated that he has made his priority. and we certainly are prepared to do everything we can over the next 71 days to support him in that effort. michelle does the president now : have any reason to believe

that donald trump is fit to be president of the united states? sec. earnest: the two men did not relitigate their differences in the oval office. we talked about them quite a bit in here leading up to the election. we're on to the next phase. justin. justin: you mentioned the formal process, and i wanted to ask if there are meetings, further meetings set up with senior staffers in the white house since donald trump won the presidency, especially national security or economic team? sec. earnest: my understanding is that the broader formal process has not yet commenced with meetings. there were a number of meetings between white house personnel and members of both candidates' transition teams in the months leading up to the election. and i know there have been a number of consultations with the president-elect's team and the white house team. but the formal meetings i don't believe have started just yet.

justin i wanted to ask about : press access. the meeting with the vice president and vice president president-elect pence and the -- was a break, and carol reported that the obamas cancelled a photo op. sec. earnest: that not true. justin okay, can you talk about : then why we didn't have a photo op, when we have had them in previous administrations and why there's no presidential access, and particularly if this is -- sec. earnest: first of all, justin, you were just in the oval office with the president of the united states and the president-elect. it is not accurate to say there was no press access. over the last eight years i enjoyed the opportunity to have many of you in by office advocating for greater access to the president and the work he's doing in the oval office.

-- and typically means is you coming in and advocating for the opportunity to see the president of the united states sitting in the oval office, photograph him sitting next to the person he's meeting with, and then hear from both people about the meeting. that is the -- that's the priority that has been conveyed to me in countless meetings with all of you over the last eight years. that was exactly what was provided today. that was not provided in 2008. i wasn't part of designing the press access for 2008, so i can't account for all of the reasons for that, but the press access we put together today was based on the guidance we received from all of you over the last eight years about what the priority is. we were pleased to be in a position to provide that today. it's an indication of the commitment we have to transparency and an indication that the president has to building public confidence in the shared commitment to a smooth and effective transition. what better way for the american public to understand that the president-elect and the outgoing president of the united states share a priority of a smooth and effective transition than to allow you all into the oval office to hear them talk about their commitment to that effort.

justin one way to demonstrate : that you guys are committed to that, i guess, effective transfer of power, would be to show the vice president or the first lady welcoming their successors into the white house. so -- sec. earnest: but i think we would all agree that would be lower in priority than what was provided today. what was provided today is unprecedentsed in terms of the access granted to previous white house press corpses. -- press course. there's also going to be back and forth. justin the reason i'm asking the : question is, while the president has come out and sort of put on a cheery face, we know obviously many people here are disappointed. the first lady spoke compassionately about how she found donald trump to be a bad -- and unacceptable choice. so, are we to read anything, or putting aside whether we should read anything -- is the reason there wasn't press access to either of those events is because the first lady or vice

president did not want to be for the graft or appear alongside. sec. earnest: absolutely not. in fact, i'm not aware that the first lady's office was consulted about the press arrangements for today. i certainly didn't consult with them. what we can do is we can go back to the white house photographer and see if there are any photos from the greet so that you all can get some incite into how that went. so we'll follow up with you on , that. justin: last 1 -- a number of foreign governments from top allies of the united states, turkey and the united kingdom, mexico, said their leader s -- leaders have been in medication with president-elect trump over the last 24 to 48 hours. beyond sort of congratulatory calls, is there concern among you guys as you're trying to pursue your foreign policy agenda over the next two months that allies could be getting mixed messages on the united states foreign policy goals? sec. earnest: i'm not aware of any concern about that. it is not uncommon for countries that have important

relationships with the united states for them to call and offer their congratulations to the president-elect. some of that -- some of those conversations are facilitated by the state department. in other cases, you have foreign governments going directly to the president-elect's office. that is consistent with past practice. i'm confident it happened in 2008 after president obama's election as well. olivier. olivier: first, i'm kind of curious as an hr professional. did he say you need to get a great chief of staff, did he say there's one job you never heard of but it's vital? or is it just, you know, obviously, donald trump knows he has to staff the white house. how much precision is the president offering in his recommendation? sec. earnest: well, i'll be honest with you. i didn't have a detailed conversation with president obama about this, but knowing how he has approached thee -- these issues himself, i think he has built an organization at the white house with an eye toward surrounding himself with capable people and putting them

in positions where they are given the authorities that they need to make decisions. also, he's insured that they are given the authority that they need to elevate decisions to him if they need to be. so structuring -- structuring the organizational chart effectively is not an insignificant matter when you're talking about life and death decisions that have to be made on a regular basis in this building. so, you know the president will , be taking some questions over the course of the next week and maybe somebody can see greater insight on that. olivier: then, looking overseas to the operations against the the president recently sent 1700 more american troops there. you have long insisted they don't have a combat mission.

these are combat troops. why did they go? are you saying they needed 1,700 more troops worth of advice? we're starting to see social media of americans who look like they are in front line operations, not in supportive ones. sec. earnest: olivier, would we is our service members when they go to iraq, they're trained for combat. they're equipped for combat because they need to defend themselves in a dangerous country, but they're not given a combat mission. that is an important distinction because the president does not believe that american troops should be in a situation in which they're expected to be at the tip of the spear, to go and take and hold ground. the idea of the u.s. military being an occupying force in iraq is not one that has yielded success for our country. it's not made our country safer. so what the president envisioned , and the mission they had been given is a dangerous one. is one that in which american service members are asked to assume great risk.

so that they can be in a position to in some cases train iraqi security forces. in other cases, so they can offer advice and assistance as iraqi security forces undertake important military objectives. there are even some situations where if some of those trainers or advisers end up in a dangerous position, then there are additional u.s. forces that are mobilized to get them out. this is dangerous work. this does put them in harm's way, and it does put them in a situation where occasionally, they have to use their combat training and their combat equipment to defend themselves. but that is much different than being in a situation in which they are asked to take and hold territory. that's just a different strategy and it's a different mission. both of them are dangerous. both of them require courage and professionalism and skill and sacrifice. and that's what we have seen from our men and women in

uniform. olivier: the point about occupying, but the kinds of troops you're sending now are actually the kinds of troops that take grounds and hold it at least briefly. sec. earnest: well, again, i recognize that the service members that president obama has sent to iraq do have extraordinary combat capabilities. they have expensive training. -- extensive training. they have the kind of combat equipment you could see in a theater of war, that you would expect our service members have when they're operating in a dangerous place. but the mission they have been given is different than the mission they were given by president bush that involved occupying a foreign country. that didn't work out well, and president obama believed we need to try a different strategy. that different strategy is yielding important success. in iraq alone, we have taken back more than 50% of the occupied populated territory that isil previously held. now, with the support of these advisers and trainers and other u.s. forces that are offering assistance iraqi security forces , have isolated mosul and

beginning the important, painstaking work of ejecting isil from mosul. we're making progress based on the strategy the president has put forward. this is a strategy that requires our service members assume great personal risk, but it's a strategy that is yielding progress and making america safer. john. john what was the president's : message to thousands and thousands of people across the country protesting this election? some of them carrying signs saying "not my president?" sec. earnest: well, john, i think the first thing the president would say is that we've got a carefully, constitutionally protected right to free speech. and the president believes that that is a right that should be protected. it is a right that should be exercised. without violence. and there are people who are disappointed in the outcome. the president's message in the rose garden was, it's not surprising that people are disappointed in the outcome, but

it's important for us to remember a day or two after the election that we're democrats and republicans, but we're americans and patriots first. that's the message that the president hopes that most people will hear. but are there some people who are going to be disappointed and are they going to express those views in public? i think we have seen that's the case. they have constitutional rights to do that, and those rights should be protected. but the president would obviously want them to hear his message as well. john given all that's been said, : were you surprised to hear donald trump say the president is a very good man who he respects? sec. earnest: listen, i think the kind of tone that we heard from the president-elect in the oval office today is consistent with the kind of tone that he used in his remarks on election night. and that's the kind of tone that you heard president obama welcome in the rose garden. it certainly is something that the president was pleased to hear.

john he did say he would seek : the president's counsel and there would be many more meetings. is president obama open to meeting again with president trump including after he -- i mean, when he becomes president trump? sec. earnest: of course, look, the president has benefitted from the kind of consultation he's had with former presidents. and president obama is determined as he mentioned yesterday, to do as much as possible to insure that president trump can have success in uniting and leading this country. as president obama himself said, he's rooting for his success as he takes on the important work of uniting the country after a divisive election and leading our country forward in a way that is consistent with the best interests of many generations of americans. john i know you said they didn't : relitigate the campaign, but want to ask what the president's thoughts are. he said just on monday that

donald trump is temperamentally -- he said on monday donald trump is temperamentally unfit to be commander in chief. uniquely unqualified. does he still believe that? sec. earnest: look, the president's views haven't changed. he stands by what he said on the campaign trail. he had an opportunity to make his argument. he made the argument vigorously. he made that argument in states all across the country. but the american decided. the election is over. the president didn't get to choose his successor, the american people did. they have chosen president-elect trump, and president obama is determined to preside over a transition that gives the incoming president an opportunity to get a running start. major. major: picking up on justin's line of questioning the , president assured president-elect trump that he would do everything he can to make a swift and sure transition. did he ask of president-elect to have his backing for anything he may do in foreign policy while he's still president?

get assurances from him there would be no criticism, either through back channels or publicly of what he's still trying to accomplish while he retains the power? sec. earnest: i didn't ask the president if he sought that assurance from the president-elect so i can't say for sure what was discussed. the thing that i am sure of is sec. earnest: president obama is president of the united states what is in exercise the best interest of the country. on january 20, it will be the turn tont-elect's assume that awesome responsibility. i think you would have to talk to the president-elect's team as to whether or not he would object to the principle i just laid out. the russian government said today that there were contacts between them and the trump campaign and the clinton campaign. reporter: