>> rose: welcome to the broadcast. tonight we take a look at health care reform, first, the president's prime time press conference this evening. and then peter orszag, president obama's principal budget official, the director of the office of management and budget. >> this is a very important

sector of the economy. it has important implications for households and state governments and all of us and, again, there's a reason this hasn't happened in 50 years. this is hard to do. but if you look at the alignment of forces and look at the progress that has been made, it's quite significant. >> rose: we conclude with dr. denis cortese. he's a physician and c.e.o. of the mayo clinic, one of the leading medical centers in the world. >> the problem is we don't have a health care system. there's never been one designed. nobody has consciously said what do we really want out of health care? we've never sat down to design a system because if we've had, where are if system engineers who design it so we can blame them. >> rose: can't find them. >> there isn't one. so that... frankly, though, that thought is powerfully liberating. because it says if we realize we don't have a system, maybe we can sit back and sort of design one. and sit down and say what do we really want out of health care?

>> rose: health care reform with obama, orszag and cortese coming up. captioning sponsored by rose communications from our studios in new york city, this is chare rose. >> rose: health care reform is our subject this evening. it has become, along with the economy, the most important and pressing domestic concern for the president.

increasingly, he's giving interviews and tonight had a prime time press conference to speak to health care reform and other issues. here is what he said about health care. >> even as we rescue this economy from a full blown crisis we must rebuild it stronger than before and health insurance reform is central to that effort. this is not just about the 47 million americans who don't have any health insurance at all. reforms about every american who has ever feared that they may lose their coverage if they become too sick or lose their job or change their job. it's about every small business that's been forced to lay off employees or cut back on their coverage because it became too expensive. it's about the fact that the biggest driving force behind our federal deficit is the skyrocketing cost of medicare and medicaid. so let me be clear: if we do not control these costs, we will not be able to control our deficit. if we do not reform health care,

your premiums and out-of-pocket costs will continue to skyrocket. if we don't act, 14,000 americans will continue to lose their health insurance every single day. these are the consequences of inaction. these are the stakes of the debate that we're having right now. i realize that with all the charges and criticisms that are being thrown around in washington, a lot of americans may be wondering "what's in this for me? how does my family stand to benefit from health insurance reform?" so tonight i want to answer those questions because even though congress is still working through a few key issues, we already have rough agreement on the following areas. if you have health insurance, the reform we're proposing will provide you with more security and more stability. it will keep government out of health care decisions, giving you the option to keep your insurance if you're happy with it. it will prevent insurance companies from dropping your coverage if you get too sick.

it will give you the security of knowing that if you lose your job, if you move, or if you change your job, you'll still be able to have coverage. it will limit the amount your insurance company can force you to pay for your medical costs out of your own pocket and it will cover preventative care like checkups and mammograms that save lives and money. now, if you don't have health insurance, or you're a small business looking to cover your employees, you'll be able to choose a quality, affordable health plan through a health insurance exchange, a marketplace that promotes choice and competition. finally, no insurance company will be allowed to deny you coverage because of a pre-existing medical condition. we're now seeing broad agreement thanks to the work that has been done over the last few days. so even though we still have a few issues to work out, what's remarkable at this point is not how far we have left to go, it's how far we have already come. i understand how easy it is for this town to become consumed in

the game of politics, to turn every issue into a running tally of who's up and who's down. i've heard one republican strategist told his party that even though they may want to compromise, it's better politics to go for the kill. another republican senator said that defeating health care reform is about breaking me. so let me be clear. this suspect about me. i h h h h h h h h h h h h h h hf congress. this debate is about the letters i read when i sit in the oval office everyday and the stories i hear at town hall meetings. if somebody told you that there is a plan out there that is guaranteed to double your health care costs over the next ten years, that's guaranteed to result in more americans losing their health care and that is by far the biggest contributor to our federal deficit, i think most people would be opposed to that. well, that's the status quo. that's what we have right now.

so if we don't change, we can't expect a different result. and that's why i think this is so important not only for those families out there who are struggling and who need some protection from abusess in the insurance industry or need some protection from skyrocketing costs, but it's also important for our economy and, by the way, it's important for families' wages and incomes. one of the things that doesn't get talked about is the fact that when premiums are going up and the costs to employers are going up, that's money that could be going into people's wages and incomes. and over the last decade, we basically saw middle-class families, their incomes and wages flat lined. part of the reason is because health care costs are gobbling that up. chuck todd? >> thanks. we were just talking in that question about reducing the health care inflation, reducing

costs. can you explain how you're going to expand coverage? is it fair to say... is this bill going to cover all 47 million americans that are uninsured or is this going to be something... is it going to take a mandate or is this something that isn't... your bill is probably not going to get it all the way there and if it's not going to get all the way there can you say how far is enough? okay, 0 million more, i can sign that. 10 million more, i can't. >> i want to cover everybody. now, the truth is that unless you have a... what's called a single payer system in which everybody's automatically covered, then you're probably not going to reach every single individual because there's always going to be somebody out there who thinks they're indestructible and doesn't want to get health care, doesn't bother getting health care, and then unfortunately when they get hit by a bus end up in the emergency room and the rest of us have to pay for it. but that's not the overwhelming majority of americans. the overwhelming majority of

americans want health care but millions of them can't afford it. so the plan that has been... that i've put forward and that what we're seeing in congress would cover the estimates are at least 97% to 98% of americans. there might still be people left out there who even though there's an individual mandate, even though they are required to purchase health insurance might still not get it. or despite a lot of subsidies are still in such dire straits that it's still hard for them to afford it and we may end up giving them some sort of hardship exemption. but... i'm sorry. go ahead. so i think that the basic idea should be that in this country if you want health care you should be able to get affordable health care. and given the waste that's already in the system right now,

if we just redesign certain elements of health care then we can pay for it. we can pay for hit in the short term but we can also pay for it in the long term. and, in fact, there's going to be a whole lot of savings that we obtain from that because for example the average american family is paying thousands of dollars in hidden costs in their insurance premiums to pay for what's called uncompensated care: people who show up at the emergency room because they don't have a primary care physician. if we can get those people insured and instead of having a foot amputation because of advanced diabetes they're getting a nutritionist who's working with them to make sure that they are keeping their diet where it needs to be, that's going to save us all money in the long term. jake? >> thank you, mr. president.

you said earlier that you wanted to tell the american people what's in it for them, how will their family benefit from health care reform. but experts say that in addition to the benefits that you're push there is going to have to be sacrifice in order for there to be true cost cutting measures such as americans giving up tests, referrals, choice, end-of-life care. when you describe health care reform, you don't... understandably you don't talk about the sacrifices that americans might have to make. do you think... do you accept the premise that other than some tax increases on the wealthiest americans, the american people are going to have to give anything up in order for this to happen? >> they're going to have to give up paying for things that don't make them healthier. and i... speaking as an american i think that's the kind of change you want. look, if right now hospitals and

doctors aren't coordinating enough to have you just take one test when you come in because of an illness but instead having you take one test then you go another-to-another specialist you take a second test, then you go to another specialist you take a third test and nobody's bothering to send the first test that you took-- same test-- to the next doctors, you're wasting money. you may not see it because if you have health insurance right now, it's just being sent to the insurance company. but that's raising your premiums. it's raising everybody's premiums. and that money one way or another is coming out of your pocket. although we are also subsidizing some of that because there are tax breaks for health care. so not only is it costing you money in terms of higher premiums, it's also costing you as a taxpayer. now, i want to change that. every american should want to change that. why would we want to pay for things that don't work, that

aren't making us healthier? and here's what i'm confident about. if doctors and patients have the best information about what works and what doesn't then they're going to want to pay for what works. if there's a blue pill and this a red pill and the blue pill is half the price of the red pill and works just as well, why not pay half price for the thing that's going to make you well? but the system right now doesn't incentivize that. those are the changes that are going to be needed... that we're going to need to make inside the system. it will require i think patients to-- as well as doctors, as well as hospitals-- to be more discriminating consumers. but i think that's a good thing, because ultimately we can't afford this.

we just can't afford what we're doing right now. >> rose: we continue our conversation about health care reform by talking to one of the principal shapers in the white house. he's peter orszag, the office of management and budget. peter orszag has taken an increasingly prominent role on health care issues. the "new yorker" magazine has written that he is program the dominant voice on health care within the white house. earlier today, i recorded a conversation about health care and the economy. the economy portion of that interview will be seen later. tonight, the health care part of a conversation with peter orszag. let me just start by what you think this debate is at a critical stage and what you think the debate ought to be about. >> well, it is at a critical stage. it's no surprise. i mean,q broad scale health reform hasn't happened in 50 years.

i think the debate really needs to be about whether we are going to not only expand coverage but perhaps if not more importantly transform the health care system so that it's digitized, so that it's evaluating what's working and what's not, and so that we are changing the incentives built into the current system away from more care, which is the way they're currently oriented. and towards better care, which is what what we need to do. >> rose: what do you think are the more critical elements of the plan. >> on that demention-- and we can talk about other mentions-- on our fiscal trajectory, i think the key thing is the legislation has to be deficit neutral using hard, scoreable offsets and savings scored by the congressional budget office, for example, so that its cost is fully offset and we put on the table $500 to $600 billion in medicare and medicaid savings and then there's an additional revenue piece that will likely be part of any final package.

in addition to that-- this is sort of a belt-and-suspenders approach-- so at worst deficit neutral and then we need to talk those steps that transform the health care system. health i.t., comparative effectiveness research and, importantly, a big proposal that we've put on the table, a change in the way medicare policy is set so that we move more decision making out of the hands of politicians.... >> rose: away from congress into the executive branch? >> well, into what we're called the i mack, independent medicare advisory council. and that's important because health care markets are dynamic, and this imack body would help us take into account new information and orient towards quality, which is a key part of what we need to do. >> rose: the next guest on this program makes that very point in terms of quality of service at an effective means what's happened in your own analysis to

make the cost of medical care so onerous? >> well, there are a variety of things that are happening. and the way i like to think about it is we have this huge variation in how health care's practiced across the united states. even here in new york if you look at n.y.u. medical versus columbia presbyterian versus other hospitals in the city, let alone those hospitals relative to mass general or stamford, there are dramatic differences. so for example at n.y.u. medicai last sixñr months of life on average medicare beneficiaries are spending 31 days in the hospital at n.y.u. medical, only 1 days at some ford medical. >> rose: why is there a difference? >> i think variation is greatest when we have least... the least idea as to what should happen. so there's not that much variation in... i don't know, in administering an aspirin or beta blocker when someone is admitted to the hospital with a heart attack. a lot more variation in how we treat back pain or knee pain or

what have you. we also have a payment system that will accommodate or facilitate just doing more rather than doing what's best. who would want to spend more time in the hospital than was necessary? who would want to have a unnest tests done if they're not improving the outcome and then the question is how you get at that. >> rose: go ahead. >> i think the way you get at that is health i.t. so that you can really start measuring and having the data necessary to observe much more precisely what is happening and also what the result is. a structure in place to be evaluating what works and what doesn't so that we have much more information about effective care. and then financial incentives for quality rather than for volume. and the problem in that final category is in most cases we don't know exactly how to design those financial incentives yet. what we're saying is it's clear

directionally what we need to do. we need to pay for value. >> rose: right. >> the problem is.... >> rose: we don't know how to get there. >> i mean people say pay for value, pay for performance. there are lots of promising pilot projects going on. the reason we have put forward this imac proposal is we think that's a more promising way to move to the future system that rewards value rather than thinking you can just write down the full thing today and be done with it. i think that's unrealistic. we know directionally what we need to do, we have many promising ideas but this is going to take time and effort and a continual application of incoming information to move there. >> rose: so now it's what, yesterday, or the day before? >> well, there's been on going work. it has its intellectual predecessors that have been floating around for years and that is reflected in the existing med pack which already provides recommendations of this ilk to the congress. so it's not a brand new idea, but in terms of administration-specific proposal

yes we put it forward formally on last friday. >> rose: is there now in the political dynamic an effort by the president, the press conference and everything else and all these interviews to say "we realize this is not going exactly the way we want to and so we're going to full court press"? >> the way i would put it is this is a very important sector of the economy. it has important implications for households and state governments and all of us. and, again, there's a reason this hasn't happened in 50 years. this is hard to do. but if you look at the alignment of forces and look at the progress that has been made, it's quite significant. so, you know, was it ever going to be the case that you just stepped forward and said "hey, let's reform health care" and be done with it? no. part of the legislative process is going through... is warranted the painful steps of moving through committee, addressing concerns as they come up.

and that's natural. especially on something this important. >> rose: what's on the table for negotiation with conservative democrats? >> well, i think the things that are under discussion include-- and this is something the president had spoken about-- include weather there are changes that could be made to very high cost private insurance and in particular the incentives to offer very high cost private insurance. again, this proposal that we've put on the table is under discussion. and then i'd say those are more in the sort of long-term cost containment category. in addition to that, there's the making sure over the next decade the package is deficit-neutral and exactly how you do that. so there are ongoing discussions between medicare savings and revenue, exact forms of revenue and what have you. >> rose: is the revenue now set for a couple earning more than $350,000 a year? their taxes will be up around

55%? >> no. there are different proposals floating around. let me back up again. we have said that the proposal, in addition to beginning the painful and necessary process of transforming the health care system, has to be deficit-neutral. we've put on the table $500 to $600 billion of medicare and medicaid savings. the reminder, any additional cost of the program above $500 to $600 will have to be met through revenue. and we have put forward a proposal that we think makes a lot of sense to limit itemized deductions. >> rose: right. >> the senate finance committee is considering other approaches. the house of representatives is considering yet other approaches so the figures you're mentioning refer to something that's under discussion in the house. but that's only one of many. and i'd also note, just on the numbers themselves, those figures refer to a tax situation where you include state and local taxes. and that's already the case for many families that their tax rates are higher than many

people would expect including state and local government revenue. and the second thing is it applies to a very small share of families. again, this is just... the key thing is the plan has to be deficit neutral. there are different revenue proposals under discussion and that's just one of many that are under discussion. >> rose: what is it you think is the most glaring misconception about what the administration wants to do in health care reform? >> that's a great question. i'd say there have been a couple things that have been off relative to the underlying substance of what we're trying to do. i think there's been too much attention... not too much attention, there's been... it's a natural media yah phenomenon to go to criticism and not asking the question, okay, what else could be done. because if the conclusion is we're doing everything that cowl possibly be done and people are still complaining, that's different than saying, "oh, this is no good." and the tenor of much of the

coverage, especially on cost containment in the long term i think has often played up the criticism without asking the question, okay, what else would you do? and one of the reasons-- the president has already spoken about this. one of the reasons we had a meeting in the ol' office on monday with the c.b.o. director and other outsiders is precisely to say "okay, what else can we do?" and i think we've covered the waterfront. >> rose: what do you make of the argument that they somehow-- and some republicans have said this-- you ought to spur competition among the private insurers and then we'll reduce costs that way? >> well, one of the reasons to have an exchange and one of the reasons also to have a public option is.... >> rose: to create competition. >> to create competition. and this has gotten too little attention in the debate. if you look at local insurance markets, a growing share of them have now become excessively concentrated. so if you look at traditional indexes for a market that is not fully competitive, a dramatically increased share of

local insurance markets are now over that threshold in terms of only having two or three providers that have a disproportionate share of the market. and the evidence suggests that does increase premiums. so one of the goals of having an exchange and also a public option is preciselyr?z introduce competition into those local insurance markets where there is inadequate competition currently and, frankly, less competition than was the case 0 years ago. >> rose: and what do you say to those who worry that the public option will just grow and grow and grow? >> well, a lot of that's going to depend on specifics of the proposals. i would note, for example, that the congressional budget office-- which many of those critics like to refer to in other contexts-- has suggested that enrollment in the public plan would only be 10 to 15 million people. >> rose: how much in reality of medical care is funded by the government already? >> about half. >> rose: you look at medicare and medicaid.

>> about half. it depends exactly how you do the calculations but somewhere between 40% and 60%. >> rose: and what do you think the judgment of the effectiveness of those programs-- medicare and medicaid-- is? well, i can answer that in a couple difrent ways. they certainly help the people who are insured relative to having no insurance. >> rose: exactly. >> without question. and there is evidence suggesting having health insurance does help. i mean, there are lots ofor attributes or inputs into your health. >> rose: because many argue that they worry that the public option will become like medicare. >> well,.... >> rose: in its application. >> in its application. and what i would say is medicare has to move to medicare 2.0 regardless and if we get to medicare.0, there's less concern about whether a public plan becomes like medicare. regardless of what happens with the public plan, medicare needs to move towards the types of things that we're talking about:

higher quality, providing incentives for better care, and what i find striking again is there are great examples that already exist within the united states of how to do this. and if the entire country were like those providers, we would all be a lot better off. >> rose: this somebody like the mayo clinic or somebody like hawaii or somebody like those five states that are often mentioned as examples of how systems work? >> there are a lot of examples. mayo clinic, cleveland clinic, intermountain health, there are a whole variety of systems that are doing a lot better than others on this cost quality combination. >> rose: mayo clinic said yesterday they're not happy with the plan. >> they said they weren't happy with the plan but then they came out with a statement that saying the imac proposal is precisely the kind of thing that will help fix the plan. >> rose: because they don't think congressional control with something like medicare is a good idea. >> well, no. they've said putting more weight on medical professionals and

others would be a better idea. >> rose: better idea, exactly, than congress. there is no doubt in your mind that the obama health care reform will not experience what happened to the clinton health care reform program? >> i don't think so. i think time.... >> rose: and how do you know you've learned the lesson? >> well, i think there are a few very hopeful signs. first, the alignment of outside forces is much different.ñi you have major providers and major groups behind the reform effort instead of running advertising against it. the president has avoided the potential mistake of... let me put it this way. the president recognizes that we immediate to... this is a collaborative process with the congress and there's give and take on bothñi sides and if we t 80% or 90% of what we want, that's success. i think the best way to get at

it is not to have such strong incentives always to be doing more stuff even if it doesn't help. so, again, i'm going to just say none of us would want either ourselves or our family members to spend days in the hospital that are unnecessary. or to have tests done that are unnecessary. i'll give you an example. 20% of medicare beneficiaries are readmitted to the hospital within a month of being discharged. and who would want to go back into the hospital if it's not necessary? there are hospital systems that have designed ways of reducing readmission rates and then concluded that they couldn't afford to continue those practices because it was financially disadvantageous for them to do so. that makes no sense. we need to create stronger incentives for the quality care which will avoid avoiding unnecessary readmission. >> rose: this one last question which i'dçó forgot about in ters of health care. a lot of republicans and conservative democrats are raising questions about the burden on small business.

>> well, a couple things. first, the bill would... any bill that emerges from this process is going to include important things for small businesses. ability to purchase higher quality lower cost care through an exchange that's typically difficult for them to do. tax credits, which will help them offset any additional costs of meeting insurance coverage. but i think one of the things we have to realize is as you move from small businesses into medium and larger businesses, we have to protect against firms just saying, you know what? there's this publicly subsidized exchange, we're going to drop our coverage and put everyone in there. the motivation behind many of the so-called pay or play provisions is precisely to avoid that kind of behavior. >> rose: did you learn anything about health care you didn't know when you took this job? >> i'm learning lots of things about the intricate design of specific medicare policies.

because at the congressional budget office you have responsibility for broad scale questions. in the administration, there are lots of nitty-gritty details that don't move through the legislative process that now come across my desk. >> rose: and it's often speculated even by one republican congressman who said this may be president obama's waterloo. >> yeah, i think the president said this isn't about him, this is about getting an important reform done and that's what we're focused on. >> rose: it is said, i think in the "new york times," on your desk there's a copy of teddy roosevelt's book "the strengths you life." >> yes, there are. >> rose: and another book by a greek historic philosopher. >> yes. up? why those two? >> the greek stoic philosopher had the perspective that what is most important is how we respond to external events and i think that's the only thing we can truly govern and i think there's deep truth in that observation.

and especially jobs like this it's important to remind oneself of that. teddy roosevelt embraced a life philosophy that i very much want to seek, which is that the purpose of life is to go out and be vigorous and be trying things and not only seeking comfort. >> rose: he decided the kind of person he wanted to be and he became that person. >> that's exactly right. so i think all of us hope that we can, in fact, accomplish that kind of transformation. sbhup is your equivalent to being a cowboy? >> (laughs) i want to be a good dad and i want to be a dedicated public servant and i want to continue to learn throughout life. >> rose: thank you for coming. >> thank you for having me. >> rose: back in a moment, stay with us. >> rose: we conclude this look

at healthñr care reform withñi s cortese, he's the president and c.e.o. of the mayo clinic rochester, minnesota. it provides medical care at a per-patient cost that falls well below the national average and has a a reputation for value. for this reason, many experts point to mayo as a model for more efficient national health care system. i'm pleased to have denis corps seize at this table for the first time to talk about the may owe experience and how he sees health care reform as it works its way through congress coming from the president's own plan. welcome. >> thank you, charlie. pleasure to be here. >> rose: is anything different about the debate? where do you think the debate is going from previous debates about health care reform? >> it's an interesting question. there are elements of the debate i think that we currently are seeing that are not a lot different than before. the fundamental difference, however, though, which we are trying to bring more attention to is... falls in maybe two

categories. first, everybody knows we have to do something. and the main reason everybody knows we have to do something is that i think there's a... an agreed-upon shared reality that the country is not getting what it pays for. we're not getting the outcomes. we're not getting the safety. we're not getting the service. we don't have the access. and we're putting a lot of money into it. and with the work of commonwealth fund and all other organizations over the last few years who have highlighted those differences, we're now beginning to say, hey, we have a shared we alty, we have to do more. in addition, though, there's another factor there and that is we're beginning to come to grips with the fact that we have a problem with the system of health care in the united states. i hear me people say the system is broken. and you've heard me say this before, but one of the problems with saying the system is broken is we begin to think that we can fix it. we actually think there's

something we can do-- tweak here tweak here-- and fix it when, indeed, the problem is we don't have a health care system. there's never been one designed, nobody has consciously said "what do we really want out of health care?" we've never sat down to design a system because if we've had, as you've heard me say, where are the system engineers who designed it so we can blame them for where we are today. there isn't one. nobody's ever designed it. so frankly, though, that thought is powerfully liberating. because it says if we realize we don't have a system maybe we can sit back and design one and sit down and say "what do we really want out of health care?" and when i hear people say-- and i've spoken with many people around the country-- that we're not getting what we pay for. i say "well, what is it that you really want?" and we begin to hear things like well our safety is not really good, we have disproportionate access. a whole list of things. and i say what you're saying is

you're not getting the outcomes, the safety or the service, you're saying "we're not getting high-value care." value meaning a mathematical equation of the outcomes, safety and service all in the top, the numerator divided by the amount of dollars we spend over time. so i say well, then why don't we define value and let's sort of pay for it. so then the next discussion starts and people say "what do you mean by value?" and i say let's look at this century and say what can we really do for individuals? values should be oriented around what's important to people, what's important to individuals. and let's now design a system around the concept. and one way to do that would be to say to folks, "who would like to be hospitalized tomorrow even if it's the best hospital in the world?" i've asked this question many, many times in many, many talks. >> rose: everybody says no. >> everybody says no. so that starts me thinking well, if member wants to be in the

hospital, why are we designing or thinking about systems that are oriented around hospitals? hospitals are a symbol of maybe the failure of a system of the future, not the center of the universe. >> rose: exactly. >> second question, we can say well, okay, if you don't want to be in a hospital, who would like to be sick tomorrow? well, not many hands go up. nobody actually wants to be sick. i say, okay, then, why might we design something that's around taking care of sickness? we do need to take care of sickness but we can now in this century begin to design things for a future state where we're trying to work to keep people healthy, keep them out of the hospital, keep them out of the doctor's offices, keep them functionings and healthy as we go forward. >> rose: let me go to specific questions because i hear you with what the approach that ought to be taken. were there conclusions you came out of mayo clinic with beyond what you just said in terms of when we look at the fact we need to design a new system or is there something else to add to the conclusions that you reached? >> the conclusions that came out of the four years we were working fell into four

categories. one is that we want value out of the system. >> rose: right. >> two, we should pay for value so we get that value out of the system. the third is everybody should have insurance. and the fourth is that we should... to tall do all of that you need to have integrated and coordinated care that's tailored around the individual. those are our four pillars. >> rose: question. do the proposals put forth by this administration in their health reform... health care reform efforts meet those four criteria? >> there are many proposals out there, so if you look at the house bill and the work that's going on in the house, the work that's going on in the senate, and the work that's going on in the administration itself. when you look at all of the components that are in everywhere, the things i'm talking about are there. it's just that they are not pulled together. the funding mechanism is an issue, of course.

politics has to deal with it. but in our opinion the idea of fundamental change in health care reform we absolutely support. we applaud what the president is doing. he's calling the question. i understand people are having difficulty figuring out the details, but he's calling the question that's exactly right. >> rose: what do you think of the public option? >> the public option in the plan depends on what we mean by the public option. if we mean a medicare type option that has price controls and it's fee-for-service, that will be a catastrophe.xd we've seen it already in medicare, it's the largest public insurance company. it's been up and running for many years. it's had price controls under its control for... since 1983. and with price controls, what are wexd seeing? people just do more. the rate ofxd growth of spending has still again up. >> rose: so if you get paid for every service, you want to do as

many services as you can. >> and, remember, medicare is only one style. another one could be medicaid. they have difficulty?ith it. you've got a military system. you've got have system. you have tricare. tricare isçó a pretty good litte choice product out there. people who have it like it, most people don't even know what it is. and not many folks have asked to hear from the tricare administration what they can do. what can they bring to the table. and you have the federal employees health care plan which is basically private insurance products that's available for all the federal employees, including the congressmen and the president, the mail carriers the c.i.a. agents, everybody. >> rose: this is the reason people always say if congress would give the american public the same kind of health care system they had, they'd be better off." >> well, and indeed, when you look at this and you say, well, okay, we have six public plans that are available on the shelf and i hear people saying we ought to create a new one i say what are they out of their mind? it makes me cringe to think of

really being able to put together another public plan. we already have some. pick one if we want to use that. so the idea of the public plan is fine. but the fundamental issue is not so much how we get everybody i sured. ultimately, we will get more and more people insured, maybe all of them, like massachusetts has done. the fundamental problem we will run into is, just like massachusetts has run into, the delivery system. how do we get value out of the delivery system if it's too expensive the way we care for people? getting a lot of people insured isn't going to help that. if it's too unsafe, getting more people insured in an unsafe system doesn't solve a problem. because i know a lot of people who get bad care even though they're insured. so insurance doesn't solve the real problem. the key fundamental issue in health care reform will be reforming the delivery system so it provides high value. now we'll come back to your question. the imac proposal-- which we

became aware of on monday. it was posted friday but i was traveling a lot and didn't get back into my office. i didn't see it until monday morning. when i saw that, it really struck true that peter orszag and sikh emmanuel must have been involved in this. i know both of them, we talk a lot about this and i know those two get it. they know what really needs to be done. and this ability to define value measure it, reward it, figure out ways to run pilots on how to pay for it has to be moved out of the congressional oversight. because congress is... their job is to represent people. they're busy every single day. they were not selected to be a board of directors of an insurance company. that's not their job to try to run an insurance company. you need a quasi-independent body that should report to congress but can focus on value defining it and how do we pay for it, give them three to five years to get everything in place

for what we need to do. give a warning to the whole delivery system because as soon as you warn them, they'll start to self-organize, to get where they need to be. and you begin the process and even to make it easier you can say let's focus on the top three or five conditions that are the most expensive in medicare. and when you do that, you're going to be covering about 60% to 70% of all the spending that we have many medicare. so the proposal... i like the proposal. the details will make a difference. >> rose: there a common denominator why there is a regional difference in terms of effective health care? >> i'll try to put in the one word. i think it has to do with culture. a culture of the physician. ultimately if i have to put in the one word it's the idea of the culture. you can look at certain regions of the country and find totally different styles of practices in the same state with people who are separated by00 or 300 miles.

there just seems to be a difference. when you look in colorado and grand junction, there's no real integrated group practices. but the doctors there-- i don't know how it's happened-- work in a way that that concentrate on the physicians, they have a way to distribute information and they try very hard to keep things as coordinated as they can. by doing that, you get better results. inner mountain clinic in utah. they have an insurance product, they are an insurance plan with hospitals and doctors, some of the doctors are on salary, about half of them are more like in the regular fee-for-service type environment. but they work together in a team approach to get better results. >> rose: you have said before-- and i want to make sure i understand this when i'm listening to you live or when i've read what you said-- that you think that the reform program so far has spent too much time talking about cost and not enough time talking about quality. >> exactly. there's no question about it. the two go together and when you relate them together you're talking value.

quality versus the cost. and the legislature and others are very worried about the cost. quality and... the quality is the delivery system responsibility. and the point is you've got to do both together. >> rose: have you... mayo clinic said yesterday, reported in this morning's newspapers they don't like the proposal they say, the health care reform proposals so far. my question is have you had real access in washington to the people who are creating health care reform to express as much as you wanted to and as long as you wanted to and as clear as you wanted to these ideas? >> the first part of your question is yes i've had access. the second part of your question is have i had enough time to discuss it is very complicated, the answer is no. not to the policymakers. i'm involved in the institute of medicine and other areas so we have a lot of chances. >> rose: why not?

>> i don't know. (laughs) >> rose: but, i mean, isn't this the... the administration, it is being said, that this is a huge test. it's the first big test of the administration. >> right. >> rose: down the line, in your judgment, with you, why aren't they with you on these points? >> lobbying. >> rose: explain. >> political pressure. they're in the hot seat and they have political pressure. what i am talking about is a long-term vision. it's a vision of where we need to be into the future. and what we need to expect. i understand we can't get there in one lump sum or one year or five years, ten years. this could be a one year, a three year, a five-year plan. this is the way we think in mayo clinic. we begin to think with what is the shared vision where we want to be? where do we really want to be? and that's what we're fighting for now, we... whatever decision this country makes, mayo clinic is going to support it. we're going to go ahead. we also function in our own organization and while we're

creating the shared vision that we get our say. everybody talks; everybody listens. we hear, we modify, we try to come to grips with it, we create the vision and once we have the vision, okay, that's where we want to work towards. so our goal is to be participated in the shared vision discussion, ts why i'm here today with you. the simultaneous discussion, though, which is frequently the harder one, is to come to grips with what is the shared reality in this country. and too many people don't want to honestly say what the shared reality is in the country. and what is actually happening in the country? how are we taking care of people? are we focusing on people? are patients the center of all our design? do we have those three questions i ask about do you want to be hospitalized? do you want to be sick? do you ever want to be a patient even. do we have that in the back of our mind as we develop the future? if the shared reality says no we don't, then we have a shared reality and a shared vision and all we've got to do is fill in the gap. and the gap can be filled in with a plan that says in one year we'll be here, five years

we'll be here, ten years we'll be here. that's the way we function in our business and other businesses. congress can't do that and that's why we are a pro proponent of this idea of let's get the health care stuff out of congress. >> rose: that's the imac? >> something like that. imac or something like this. we're not the only groups talking about this. the blue ridge group-- not the blue dogs-- but the blue ridge group are talking about that and even the blue dogs are starting to talk about that. so how do we move it over and have an organization that we hold accountable to move us progressively toward a shared future. >> rose: let me turn to how do you pay for this? as you know, they wanted this to be deficit neutral, the health care reform. >> right. >> rose: as you know, there are a series of proposals out there. they believe that prevention will provide savings. they believe that... >> long-term? >> rose: over the next ten years. >> great. >> rose: they also believe that part of it has to come from revenue. do you support all of that?

>> the answer is yes. again, in the long-term vision.... >> rose: and is it neal have. >> the long term return on investment by creating some... pulling some levers that will have the delivery system self-organized for better value is real. this has been shown in many different places. the cost of providing services for medicare patients in miami is about $16,000 per year per person. the cost of providing services with the same outcomes-- maybe even a little better in hawaii-- is $5,500. so somehow in there there's some savings, somehow that we have to be able to find by getting more efficient in the way we care for people. so that's number one. the other reality is, it will cost more to get people insured in the short term until later you start to reap the rewards of people not ending up in hospitals, not ending up in doctor's offices. that is a long-term investment. the c.b.o. can't score that stuff, i understand that. the short term is the reality.

so then we say, okay, how do we actually fund it? and, frankly, from mayo clinic's perspective and our health policy perspective, the proposal that ron widen submitted a while ago, which was.... >> rose: the widen/bennett? >> the widen/bennett bill. and i believe even max baucus would like to see something along this lines where we have some equalization of tax deductibleability of purchasing for health insurance. either get rid of it, extend it for both, cap it but do something about it. i think that's a fundamental important step that has to be made. if we have to tax more people some more money, we do that, too. this is a political issue on how to pay for it. but we have to pay for it in a system that we're redesigning or we'll never get that return on the investment. that's why i think we have to be focused on both. this is the time toe make a statement about insurance for everybody and going for value at the same time. massachusetts has shown it. >> rose: and we need both.

>> and we need both and massachusetts has proven it. >> rose: mandated insurance. >> they've mandated insurance but now we are two or three years later, they've got many more people insured, 98% or more. now they're coming to grips with the fact that delivery system is not as efficient and effective as they need it. now they're talking about bundled payments, different ways to pay, et cetera. so we have that experiment in our hand we have to try to learn from that by tackling both of these, not in the same year but in the same set of bills. the bills that come out and get passed, i would like to see it be a visionary statement for where health care will be five years are from now or ten years from now. everybody insured and we're getting high-value care. one we can do sooner than the other but we've got to be focusing on both. >> rose: because i haven't spoken to it, this idea of the last year of costing so much, what's the answer to that? >> i think that that phenomenon

is a function of what we call in the medical field and others call, too, utilization. what does that mean? how much do we do to people? any time in our practice when we look at the care for people in a certain time frame, if it's the end of life or it's earlier in their life we find a system phenomenon. the same types of providers do less to people and get better outcomes. that translates to lower cost. >> rose: the same types of people do less... >> same groups are providing... the folks that are getting less expensive delivery of care to people in their end of life, what those providers are doing is they're getting satisfied patients who have... those providers have interacted with their families, talked to them about the pros and cons of what needs to be done and at many times as a physician, many times

you have to come to a point that you really have to practice the art of medicine and stop doing things for people but keep them comfortable. keep them as viable as they can at home with their family, with their friends. as much as you can and find ways to do that. that's not the same thing as saying they should be in the hospital longer or in i.c.u.'s longer, that's not the same statement. the areas of the country that get lower cost at the end of life do it by ending up having done fewer tests, fewer office visits, fewer days in the hospital, fewer i.c.u. days, for instance. they do it, i think, because they know their patients, that i ear with them, they're integrated, they're coordinated, there's more interactivity there. we need to infeuds more of that back. in the whole delivery system for everybody, not just the end-of-life care, it's the whole thing. so those providers that are lower expense providers, lower utilizers at the end-of-life for patients, part of the same ones

that perform well in those other age brackets, too, because the nature of their practice is a little more integrated, coordinated, focused on the patient, interacting with the patient, taking the patient's desires in mind. >> rose: in your best judgment, do you believe we'll get the health care reform we need? >> well, i have to. it may not be this year, but it will be before 2015 or 2017 because medicare will bankrupt the country. what i'm doing right now at the end of my career, i've stopped practicing, i'm talking about this stuff, it's all about my grandchildren. this isn't about me, not about obama, not about baucus, not about charlie rose, it's not about anything else other than what is best for people over time. and it will probably be the people behind us that we've got to do this for. because i don't think we'll get this done in the next two or three years. but we'll never get it done if we don't a clear vision of where we want to be in five, seven, or ten years. >> rose: so we've got to start

redesigning the system today. >> that's what i'm asking for and recognizing we can only bite off certain chunks at a time. and i recognize that. but i'm looking for.... >> rose: so what don't we bite off now? >> no, what i'm saying is we bite off int insurance for everybody now. let's get going with that. that's what we're doing. right now say we're going to go for high value care. if the government did just those two things, the delivery system over time will begin to self-organize, become a learning organization where people are interacting with each other whether it's locally, regionally or nationally. there are examples of national networks that are building up right now. patrick sewn shone has developed one in connectivity that could be a huge valuable grid for the country. there are many examples if we could just tap them and say, hey, if you do this and you create value, there are rewards at the end of doing that. >> rose: thank you for coming. >> thank you very much. >> rose: pleasure to have you here. >> you're really welcome. i enjoyed this. >> rose: thank you. thank you for joining us. see you next time.

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