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Medicares longterm fiscal conditions. This is an hour and 45 minutes. Everyone. Rning everyone here and everyone on cspan to the American Enterprise institute. Were having a discussion today about the Medicare Trustees report, the report was issued late yesterday afternoon, and is an annual report that gives some indication of not only the current fiscal status of the Medicare Program but also the longterm outlook. My name is joe antos. And i will be introducing the panel in just a second. I did want to highlight a few things that the trustees said in their report. The perhaps their biggest concern has to do with the outlook, as they said in their summary. A major concern has to do with the growth of health care innovation, which has its positives and negatives. The positives, of course, is with modern technology and modern techniques were able to cure or address the Serious Health conditions of many more people than we could have in the past, but as the trustees say, while most healthcare technological advances to today have tended to increase expenditure this health care he can landscape is shifting no one knows whether future developments will increase or decrease costs. That could be but one might take a more realistic view of that in my opinion. Let me also cite a critical point that the trustees made in their report, having to do with productivity, the Patient Protection and Affordable Care act or the aca, has a provision in it that the Current Administration is not taking any actions to remove, which sets payment reductions dooring to the growth and general productivity and payment reductions to Healthcare Providers, and as the trustees say, Healthcare Providers will have to realize productivity improvements as a faster raise than experienced historically for this policy to avoid leading to serious erosion in the access to care and quality of care. Very serious issues, and then finally let me cite the i like to think of them as the Public Trustees in exile. Former trustees who wrote a paper before they saw the report yesterday but made a very important point, which is that delaying action on medicare fiscal challenges, until a crisis is imminent, which too often has been congress approach, would not only have adverse impacts on beneficiaries but would severely restrict the remedies available to address the problem. Waiting to act could have devastating consequences. So with those upbeat words, let me introduce the panel. Our first speaker is the chief actuary for the medicare and Medicaid Program, paul spitalnic, and then after paul gives his talk the panel will make comments and well have general discussion and open it up to the audience. The next speaker is Maya Macguineas on the commit for a responsible federal budget. Then theres gene sterling, an Institute Fellow at the urban institute. Then we have bob moffet, a surgeon fellow a senior fellow at heritage foundation, and then finally keith fontanel who is a managing director at hooper, lindsey and buckman but has long experience at the office of management and budget and other related organizations. With that, paul, please give your presentation. All right. Good morning. I always appreciate the opportunity to come to the American Enterprise institute and talk about the financial status of medicare after we released the annual Trustees Reports. In the interest of bearing the lead but this years report is not very different than what we have seen in prior years. But that in and of itself is actually a pretty big story. That we have a very different the current members of the board of trustees are from very different perspective on health care than the prior administration. The members of the board of trustees are theres three cabinet officials, the secretary of health and human services, the secretary of the treasury, the secretary of labor, the commissioner of Social Security, and then theirs also typically two Public Trustees who play a very Important Role and that position has been vacant over the last couple of years as well. But the fact remains that in a shifting administration, with very different perspectives towards health care as evidenced from the debate on the the Current Health reform efforts, the fact that the underlying approach, the assumptions, the methods, and ultimately the results of what were going to see as i walk through the key findings from the report, are not very different. I think that really is a testament to both the current and the prior administrations for the role that the board of trustees play in overseeing these very important programs. And that they are free of political perspective or bent, that they are truly an independent, objective evaluation of the status of these trust funds and that of itself is a pretty important observation and reality. So with that ill turn to my presentation. Ill walk through the agenda is going to be walking through the current status on the evolution of the program, walk through the formal evaluation of the financial status of the programs, which is the key objective of the trustee report, the independent payment and Advisory Board or ipab is something that could have garnered a fair amount of attention this year. Again, to not bear the lead, it was not triggered this year so therefore not getting a significant amount of attention. What has got an fair amount of attention has been the part b premium rate. Ill talk about the evolution of where we are today and what the 2018 part b premium, and ill summarize for those that have seen my presentation before, first i apologize. Its fairly similar to what its been in years past but i have added what hopefully will continue to eliminate how these programs are evolving and changing over time, and hopefully in a way that you can actually visualize that these are big programs that move relatively slowly, but even when they move relatively slowly there can be some substantial changes over short period of time. Like to start my presentings always by putting up this these comparisons. This is a comparison of the split between how the program has evolved, basically how spending by medicare has changed over time. Each and every year board of trustees put out the report that have a 75 year projection. So what we are trying to do is forecast what this program will look like, what the spending will be, 75 years from now. And if we were to jump back to just 1976 just moved back 40 years and look at what the program looked like at that point, where this was predominantly an inpatient hospital program, nearly 75 more than twothirds of the spending was for inpatient hospital in 1976. As compared to what looks like today, and this theres a lot more pieces to that pie and clearly those the program is a lot more than just inpatient hospital. It they should be much bigger over time. You can see growing from just under one percent of gdp in 1976 to more than 31 2 percentage of gdp in 2016. Well talk about continued growth in gdp in a little while but just like to start with this as demonstration for although it would have been impossible in 1976 to forecast that construction of that pie 40 years down the road, it still actually very important to measure and estimate and evaluate what the anticipated affects are of current program. Obama is the reason why this pie looks different is because las vegas the legislation has changed and will evolve and will town to do so. Stopping annually and evaluating the current financial status is actually a pretty important process. One of the reasons why we have seen these changes is this very large change in shifts towards private plans. This is really looking at Medicare Advantage, penetration rates over rough lay 25year period. You can see that the rate of managed care takeup has been growing very steadily growing very steadily and forecast to be even more so. This is a lot of detail on it. This kind of high lights when were talking about medicare there or two separate and distinct trust funds and separate and distinct benefits just within the medical portion of the program. The hi Hospital Insurance Program Provides mostly inpatient hospital care, and other Skilled Nursing home, hoss nursing home, hospice care insurance. The part b which has the Physician Services outpatient, home health, but also has the part b account. One reason why its important to keep the programs separate or to evaluate them separately is that the financing is extremely different between the two. The source of financing for hi is payroll taxes. Theres the amounts are included in a trust fund. And theres no authority to provide benefits to the extent there is insufficient Funds Available in that trust fund. Well get most attention each and every year in response to the report is the data depletion of that trust fend. Well talk about nat in a little bit. Thats not very far off into the future in this years report. Its 2029. As compared to on the Supplementary Medical Insurance side those are financed via general revenue transfers and beneficiary premiums. Those financing rates are seton an annual basis so they are effectively always in financial balance, and so when evaluating the status of those programs, its more important, the fact theyre always in financial balance is important to consider the other impacts of such spending, such as share of gdp, share of federal income taxes, proportion of individuals Social Security checks and all those things are captured within the report. So, the foundation of the projection always startled with evaluating the new experience and so this is a comparison of the 2017 the projects of 2016 medicare experience between the 2017 report and the 2016 report. The income is generally forecast projected by our counterparts in the Social Security administration, and generally subject to less variation than of the expenditures. 2016 was a goodyear to be an actuary a good year to be an actuary. It is pretty remarkable to see differences in expenditures as small as these. The fact that expenditures on hi were 1. 7 billion lower than expected, still good news, but on part b side, were almost exactly aligned, 0. 3 billion higher than expected. On the part d side the expend it tours were somewhat lower. Ill talk about that but generally theres been some more favorable experience on the part d side after years a couple of years of higher costs associated with in particular specialty drugs, those that treat hepatitis c. This looks at the income and expenditures. Kind of builds up from the payroll taxes. Payroll taxes are set in statute to be 2. 9 that are of payroll, of income, and that amount is fixed in law. The 2. 9 is split between employees and their employers, selfemployed pay both portions. Theres also an additional opt of. 9 that are paid by high income earners, those over with incomes over 200,000individually or 250,000 joint filers. That has got summon attention recently. Theres also a tax on Social Security benefits that reflect a portion of the income that goes into the Hi Trust Fund, and then building up theres the premiums, which are generally a large portion of both the part b and Part D Program. Theres some state transfers and drug fees that mostly go into part d. The general revenue transfers, thats the federal matching on part b and the contributions on the Part D Program, and that line up top, the gap between those buildup and the total expected accident did tours, which expend did toward which max out at 5. 9 of gdp. That the gap there is the deficit. And that is the amount of expected expenditures that programs would be making, most notably for hi after the deficit reflects the amount the gap between the spending from current sources of revenue versus what would be available in trust fund. And so thats the deficit that would need to be made up in order to pay full benefits for all assumptions realized and well talk more about that. The formal status of the trust has to evaluate both the h and i the sni funds separately. The key questions to answer on the hi are assets plus protected income, assets expected been fit cost and on the smi side, the fact that there are annual for part b and part d, no longterm solvency issues but others that are informative. Well also note that the injections in the report are that the projections in the report are mostly on a current law basis, and there are some potential aspects of current lieu that might prove problematic to maintain indefinitely into the future. These are 75year projections and the two in particular ill note are, one, the productivity costs with the Affordable Care act, and that basically at the payment updates for most nonphysician providers will be reduced by economywide productivity. The issue here is that product different that can be achieved that productivity that can be achieved in the Health Sector has historically less than what can be achieved in the economy more broadly to the extent that providers cant keep up with those payment reductions, the expectation is that there might have to be either reductions in access to care or quality or care or some other changes that would account for that gap. Again, thats only if the payment the providers cant transition to become that higher level of productivity. For physician updates, the passed two years ago specified all price updates for physicians in all future years, and so theres the transition period until we get to the point where either physicians are in these apms or alternative thank you for at that time or in the meritbased incentive payment systems, and once they are there, all of the updates are at are specified in law, and these payment rate update so the prices they price increases that physicians will receiver set to be. 75 in theyve in alternative Payment Methods or in. 25 in the program. Those rates are specified and they will be constant regardless of whether underlying costs for Physician Services are increasing at a faster rate. We anticipate that the underlying costs as measured by medical economic index for physicians is closer to 2. 2 , and that gap between what we think underlying physician costs are going at, versus what the payment rates will be updated by will become a concern over time. So while there might be some main efficiencies that could be wrung out of the system over a period of time, were concerned that over a long period of time they could be could prove to be problematic. In response to those potential concerns the trustees have presented a see anywheror that demonstrate the potential understatement in current law to the extent the provision does not continue indefinitely into the future. So there is the productivity transitions that transition to what would be experienced in Health Sector, physician updates are helping to transition to the mei, and the independent payment Advisory Board, i pab provisions are not implemented. Those are what presented in this illustrative alternative scenario, which is included in of and reverenced in the report as a potential referenced in be report as potential understatement of the current law cost tuesday to the extend they cannot be realized in the future. So turning to the rules of the reportthe results of the report you can see the Hi Trust Fund ratio, comparison of assets at the beginning of the year to the percentage of annual expend did tours, the objective is the short range objective goal is to achieve 100 for all years. You can see that we are clearly below that level today and we are projected to actually become depleted in 2029 this year. We have lower 2016 expend did tours and reduced trend rates for inpatient hospital and the very short term. You can summarize the status in terms of an actuarial balance which looks at the present value of income rate so all the dollars going into the program less the cost rate all the dollars going out for benefits and other expenses compared to taxable payroll, the basically which income is generate and you can see the income rate rarely changes from year to year and there was this slight improvement in the cost rate. As a result, the actuarial balance has improved and less of a deficit this year so effectively thatsing a waral deficit of. 64 means if the current payroll tacks of 2. 9 if those were increased immediately today in 2017 to 3 54 the trust fund would be in financial balance for over 75 years. 3. 54 . So, onthis is more interesting when there are bigger changes. You can see that there are not many differences. This is basically just a walkthrough of what the differences are between that deficit from 2016 report and the 2017 report, and you can see that the largest contributor here is the hospital assumptions. So the. 8 . So looking at the longrange heres the annual representation of what is happening on both the human being and the cost rate. A couple of things to note here, that you can see in 2029 that basically theyre the line that drops from the cost rate down to the income rate. That represents that when assets are depleted the only amounts of Funds Available are the amounts that are actually coming in, into the fund. So, in 2029 we estimate that income would represent 88 of the needed funds to provide benefits. You can see over time that those ratios change over time, but its roughly in those midtoupper 80s. You also see that the cost rate kind of bounces actually gets closer to the income rate over time and then kind of stays level there, and thats partly, again, due to some of those productivity offsets and well the next slide will throw sorry this one first compares the cost rates from year to year, but this one adds in what the cost rates would look like under the alternative assumption and you can see the productivity offsets, which are roughly 1. 1 as compared to what we think could be achievable in the Health Sector of roughly. 4 starts off if you only look through 2027 or 2040, those gaps are not very large but you can see that as you compound out these differences over time, in particular over 75. Those differences get very different. You can see that the cost rate, while it is currently in roughly the five percent range, would max out over in excess of 8 , just for hi, under that illustrative alternative, which highlights the importance of providing those alternative projections. As i mentioned, on part b in particular, smi in general and part b in particular, the rates are financed adequately so you always see that the income is going to be very close to what we project for expenditures. So, in terms of evaluating financial status theres not a lot to show here. You can see that the 2017 is slightly higher than where it was for the 2016 report. A little more to the story here in part d. There was a notable reduction in anticipated spending and actually to spending in 2016 for on behalf of with respect to hepatitis c relate drugs. These two factors contribute to a significant decrease in the expected expenditure ford the Part D Program. This is actually a pretty significant change in what we were experiencing in part d. This just summarize both b and d program together, and you can see, again, under current law, we are currently at something a little in excess of 2 of total expend did toward of gdp. That is expected to grow to a little less than 4 of depressed by the end of of gdp by the end of the project period. Looking at the changes, this is pretty much just another way to look at what we were summarizing previously. Not much change on the 2016 as a percent of gdp but in 2090 there was actually some part b is slightly higher and the part d is somewhat lower. Again, the comparison from this years report to last years report shows that this years report is slightly higher than b. Importantly, this one looks at medicare expenditures in total. Again, comparing that current law to the alternative and demonstrates that even though when we are looking at under current law basis a part a program that has an actuarial deficit issue, expected to be depleted in roughly 12 years time, to the extent that current law provisions are not able to be implemented and not part b and Part D Programs that show a largely increasing share of those programs as a share of gdp and other relative measures, those potential troubling results could actually be a lot worse to the extent that current law provisions are not able to be implemented completely over time, and you seek the magnitude of the differences are quite substantial. Under current law projections, medicare and did tire expected to grow to 4. 9 at the end of the 7 5 year period but teen illustrative alternative expected to grow to 9 . So the independent payment advisory bonder has a fair amount of attention. In last years report it is expected to be triggered in the 2017 report. It did not happen this year in part because of some of the favorable experience in the program. But just to kind of take a step back, a determination made each and every year where the medicare rate is going to exceed a target rate specified in Law Enforcement for each year we have had to do so the target rate has not been exceeded. So the ipab has not been triggered. So basically the comparison is looking at medicare cost growth rates for the two years prior to the evaluation and two years post evaluation forks a totaloff five years. The medicare growing rates are compared to a target which historically was based on cpiu and medical cpi. Looking forward its going to be based on gdp plus one measure. If the medicare growing rates are greater than the tarring target rate is must certify what the savings target and is that must go through a process by which an approach process sal to reduce spending would by implemented to do so. In the 2017 report, the current report, that was just released, we are projecting that the ipab will be triggered in 2021. However in that year, if you actually look at the report, that guess to two decimal percentage points. Its identical there you actually have to good out two or three or four decimal opinion sod its on the razors edge and theres a very good chance that would not yet be triggered even in 2021. However, this does get evaluated annually. So just heres the summary. Changing a little bit. Basically we are comparing the medicare growing rate this year, the 0. 4 , excuse me the supposed to be a circling around the 2015 through 2019. In doing so if you were to average the two, the 1. 1, 0. 4 they get the 2. 14 and compare that to the target of 2. 87 and thats why the apag was not triggered this year. You can see in 20221 2021 we have he comparison and the mid care figure slightly higher than the tarring. Looking at the part b premium, the Social Security cost of living adjustment is projected to be 2point this year. 2. 2 this year inch response to that largely in response to that there is the expectation or the forecast that the 2018 premium will by projected to remain at 134. Roughly 70 of the beneficiaries have been held harmless in 2017, and in fact, have seen pretty modest increases in their part b premiums since 2013. The premium rate was actually flat for a number of years. At 104. 90, and the number of in 2016 there was a zero percent cost of living judgment which trent there were a large number of people held harmless. In 2017, there was a 0. 3 which mence individuals experienced a small increase in their Social Security checks. This hold harmless provision specifies that individuals cannot see a net reduction in their Social Security checks due to an increase in the part b premium. With very with either low or no increases in Social Security checks, many beneficiaries, roughly 70 , were affected by that provision. So, on average, we were expecting that these people are paying roughly on average 109 this year. Were expecting that gap between the current amount that these individuals are paying, the 109, and the current premium level of 134 to narrow considerably when there is a substantial sore more substantial cost of living adjustment that is forecasted for 2018. However, despite receiving a significant cost of living adjustment, many actually most will not actually experience a net increase in their Social Security checks because they have for the fact they benefited from the hold harmless provision for a number of years that gap will be made up largely in 2018 with that cost of living adjustment. I wanted to end with almost where we started. Started with comparison of how these programs have changed over pretty long period of time. We often look at individual trends and individual rates of change in individual comparisons to what was projected. This is a comparison i apologize if its difficult to read at the bottom there but basically this is looking at the changing share of part ac for Service Benefits over time. Starts at 2006 and ends at 2025 so 20year period, the blue bar represents the largest component of fee for service part a spending, which is for inpatient hospital. The orange bars reforget Skilled Nursing facility yellow, the gray is hospice, and the is the inpatient hospital which is obviously is still the largest share of part a spending, fee for service spending, has changed quite substantially over relatively short period of time and its attributable to both the growth in skilled nurse facilities and hospice. Thats not really telling the full story there. I think largely what is driving this phenomenon you can see that trying to illustrate here is how do those programs change so dramatically over a long period of time, and the answer is that they change really slowly each and every year. And part of what is happening here is what we have seen over a number of years is that a large number of cases that would have otherwise been inpatient have moved to outpatient and well see that on the next slide win we look at part b spending. If what is remaining in part a in true Inpatient Experience is the more severe cases, those cases that could not be treated in an outpatient setting, what is remaining are the shares of care that would almost more likely to result in a sknf stay. So you can see that shift. You have the aging population and some shifts in policy towards increased hospice care over time but largely what were seeing is the shift from inpatient to outpatient. We turn to part b, a similar comparison here. Again, looking de the blue bars are physician, orange is outpatient, gray is durable medical equipment, and the yellow is all other. You can see that the largest share ten years ago was physician, thats no longer the case. The largest share of part b fee for service no longer the case in the forecast when we get to 2026. There is a large and growing share that is attributable to outpatient so we think that shift is going to continue, and you can actually start to see the effect moves of the payment rate updates on the physician side towards the latter end of this particular protection. So a little more subtle on the dme side, a reduction from 7 force 4 or 3 over time. Which shows the effects of some of those Competitive Bidding programs that have been implemented around durable medical equipment. So, interesting and take your opinion on how interesting this is, is different than mine, how being those might be, if we look at part d my last slide the differences here are pre striking. This is comparing the blue bars are direct subsidy, the original bars are reinsurance, federal spending for catastrophic claims and this shows that in 2006, almost threequarters of the benefit were direct subsidy spending, direct subsidy spending is the ill call it the value that is attributable to the general part d benefit. Benefit is split into several different phases. In the ending the catastrophic phase after an individual hit this out of pocket limit, the benefit changes significantly and the funding changes significantly. 80 of catastrophic spending is funded by the medicare directly as compared to the standard benefit is funded 75 through the plan so, how this benefit has changed so significantly over such a short period of time really demonstrates how the changes landscape of Prescription Drugs, in particular Prescription Drug pricing has changed over time. People are get egg similar amounts of drugs they always have. What has happened is that the vast majorout of the most common drugs are now generics and those generic are relatively low priced. So theres been a decrease in that aspect of the benefit. Where theres been significant increases is on the higher cost drugs, on the specialty drugs. Most notably hepatitis c drugs. What were seeing is there are relative will you few people generating a large portion of those ultimate spending. What this means in terms of impact and potential impact on policy is theres just the broad value that individuals were receiving in the Part D Program has shifted, where many were getting very good value out of their coverage, to the extent that the value is now centered towards those that are just using the highcost drugs, is something that policymakers really need to be aware of and take seriously and take into consideration. I know met medpac has some recommendations what should and should be done but this is Something Interesting way to kind of look at the changing market around Prescription Drug benefits. Okay, thank you, paul. On that last slide, one of the other aspects that you didnt mention was the change in policy, though, to close the socalled doughnut hole, which also you can see it is not solely pricing, its also policy that is driving part of that. Somewhat. There wasnt a huge change in the number of people getting to catastrophic coverage in response to that. If anything that would have dampened the effect there might have been more people getting more coverage, more value through the benefit and the fact we have kind of seen that catastrophic continued to increase as a share, i think the issue remain, but, yes, the close offering the coverage gap certainly provides more coverage to more people earlier in the benefit phase but not sufficient enough to actually offset the effects of those high cost drugs. Right. Okay. So, maya, take ill away. Thank you, thank you to aei for hosting the event, paul, a really good presentation. So much information in there, and great overview of real really complex topics. I encourage people to read the Trustees Report. Its a team where with policymaking were losing touch with the numbers and the facts of good starting opinions and things leak the annual report to trustees, documents from the congressional bug office are so informative and i learned about Social Security and medicare by reading these reports. Doesnt sound like a lot of fun but you learn a lot and theyre great and impartial and very useful. Im going to take a step back and talk a little bit about healthcare in the overall fiscal situation were facing and a little bit about our environment for dealing with these things and ill be brief because im looking forward to having a discussion. What this is a starting point, our overall fiscal picture in this country is an on unsustainable possibility. Our big entitlements, our debt picture is on an unsustainable path. Our debt relative to the economy is the highest it has been since world war ii. And the difference is that after world war ii, it quickly came down and came back to closer to historical averages. Were on track for a debt relative to economy will be growing indefinitely. Faster than the economy. That is unsustainable. That it is undermining of any healthy economy. In many ways reflects a broken political system where we no longer are really willing to confront and tackle these vary difficult challenges that require hard choices, so if we do nothing right now the debt, which i 77 of gdp, is on track to go up to 91 of gdp ten years from now. Well basically again make nothing policy changes, borrow 11 trillion over the next ten years. And hard to picture what 11 trillion is but thats too much money to have a plan thats whatber going to be borrowing over the next ten years. And so the key is how are we going to get ahold of these problem inside the Biggest Issue is health care. The healthcare costs are the single biggest challenge because the so are the drivers of the growing of the debt along with the aging of the population and its complicate. Social security is in need of reform as is medicare, we know how to do it. There are five variables to make changes to that are nor that difficult from a policy perspective how to make a fix. I went to graduate school to focus on budget deficits and when i was there they got the deficit under control. And i thought no problem. Then you study a little bit more these longterm challenges from Social Security and medicare are still looming out there. And so i spend two years in Public Policy school and decide i would become an expert in Social Security because it was so easy to fix and i was going to leave the hard ones to other people. And you cant be a fiscal policy expert without focusing on health care but this one is the more rick one. We dont know all of the policy solutions. Thats why its ann more important to get started on putting in place reforms to control costs as quickly as possible because as we have been well have to continue to try to see what works, figure out what is working best either in the states or pilot programs and then implement more offer those changes. Medicare is a huge key to this. The second Largest Program in the federal budget. About 15 of the budget. And it is one of the Fastest Growing programs. So over the next ten years, its going to account for about 30 of the programmatic growth in the bug. Over the longer term, healthcare cos account for all of the negotiate all of the noninterest growth in budget. Interest is the Fastest Growing part of the budget but healthcare costs account for all of the longterm growth. Medicare is 80 of that. So theres just no question that what we need to be doing is focusing on reforms and every year when the trustees come out their with report, they warn us that you do need to make reforms. The sooner you make them the easier they for make and theres absolutely no reason to be putting the them off other than from a political perspective that its hard. To talk for a moment about the political environment, i think one of the troubling things is that right now, really the willingness to confront hard choices between and including both parties, seems to be at the worst point its ever been. I feel like i say that every year but then proceeds to get worse remember its the worst point every year and then the next year is worse and thats a terrible moment where the partisanship is so deep, so high, and the way that both parties are competing is saying im not going to do a single hard thing. And if you look at the overall budgetary situation way he a president who ran on same im not going to up to Social Security and medicare. Irtheres anything we know you have to make reforms to them remember its perfectly legitimate to have very deep differences of opinion about what reforms, what changes to make to fix the programs, but it really jeopardizes it for the people that depend on them. It has been much more of a clinical debate that may policy debate. I think first looking at the principle of replacing and repealing obamacare and i dont have a position on whether we should or should not but the question is, what are we trying to solve . Many people could not tell you. I believe we should spend more attention on how were going to control Overall Health care cost. That is different than saying you are going to pay less for health care. It is creating a system that will do more to incentivize Controlling Health care costs. We do not think there was enough conversation with obamacare and we do not think there is enough conversation about that now. Sometimes there are pieces that could do it but it is not these central piece of what is motivating the Health Care Cost. Given the scope and how it undermines the potential for economic growth, it should be itnt and center more than is. I will touch on a couple areas i wish the debate would talk more about. I think the key is looking at delivering systems reforms. Doing more for how we deliver health care in terms of creating payments for quality payments. For outcomes rather than what is provided. Accountable health care. Whatizations figuring out is working, what we can do more. But it really is creating different structures in the delivery system. The second peas of it is an incentive within the health care system. We are too removed from the overall cost for pricing of health care so there are not the incentives aligned. Insurance is a complicating factor because there is a Critical Role for insurance and terms of ensuring people against excessively onerous Health Care Costs. At the same time you dont want to isolate people from the process completely. There are things like first on dollar cost. You want to limit supplemental insurance. How hsas can be used in different ways depending upon what the money can be used for. Transparency and posing as so long overdue. Figuring out transparency in health care is a critical component. A few others. More. Eform so we do so there is not excessive preventative providing of health care to avoid lawsuits but it is more about health. Finally, the text treatment of health care. The Subsidized Health care. On all sides of the aisle. Agreed it is inefficient. It would be a great policy to look out to limit the health care exclusion which could provide more revenues to shore up the health care system, bring up the debt. A whole lot of things. It is one of those rare things and policy where it would be good tax treatment and policy and health care policy. Policy. Od fiscal im wary of when people Say Something is a winwin situation because they are trying to sell you something for free when it comes to budget policy but i think looking at the Health Care Solution can in fact be a winwinwin. The details are so important. The big picture is also so important, which is we are on a nonsustainable path. We have a political system unwilling to come to terms with that and put forth any real policy solutions. The biggest ski and all of those policies is health care reform. Wewe are fighting it out, need quality discussion around the health care debate. It is been terrible. A disturbance to anybody trying to understand health care policy. There are tradeoffs. We have to figure out how much we want to subsidize. Who should do the subsidizing. What should the pay structure be . Were not having this in a realistic way at all. That is a first step. Coming up with a smart policy to tackle these admittedly difficult but critically important challenges. There is so much great data. So many numbers. So much to play with. Thank you for the presentation and panel. Thank you. Very good points. It is certainly the case that most of the issues we are experiencing these days have nothing to do with the single biggest programs generally speaking. In the United States or at least the one that has the most leverage, medicare. While it is certainly true that and healthurance care delivery and the Medicaid Program have great influence, the reality is a lot of what medicare doesnt sure in terms is regulations and procedures and shape a lot of what goes on in the system. Your points are highly relevant to this discussion. Well, i am honored to be on the panel. Ive known everybody on the panel for a while. You,lad to get to know paul. Let me add my highest governments on the work of the actuaries on this report. Free of certain offices in this town that are highly informative, extremely professional, and have a great deal of integrity. Office. Lude the actuary Social Security, they include offices like cbo, government accountability. I think it is extraordinary that andaintain these offices strengthen them. They are sources of information we need to help the public sort out and make decisions. O, thank you you all i would like to thank a ui, i have been over these panels. I would like to thank my friend who has been a trustee among other illustrious titles. Something irs ago, did, one to do today is concentrate on the relationship of health with everything going on. Reminded ase, i am bit of some of the announcements that used to be made in church and synagogue bulletins. They were correct but give you a different focus depending upon how you think of them. For instance, please put your contribution in the collection basket along with the person you would like remembered. Laughter] another when was the bulletin that said that Margaret Mcculloch he saying i will not pass his way again much to the delight of the congregation. Food today in the basement, come early and watch this tragedy unfold. [laughter] i would like to argue that you really can not talk about medicare and isolation. Maybe there is a fire in the risk is the roof caving in but you cannot focus on the roof, you have to think about the system. We make a location decisions. People think of the budget as deficit policy. There is a balance. These things must be in balance, we have a lot to think about. Basically, the budget is how we allocate. If we put one dollar and to medicare, were not putting it in something else. If we put it in education, the same thing happens. See you have to think about what we want to do it medicare with regard to a week allocate everything. Let me jump to my slides. I will make four points in these slides. Doing a lote been of work focused on how much health care how much of the budget is on health care. How much of the budget are we spending. But the information of how much growth we have an spending, where is that going . Because those increments are usually where we make most of our marginal decision. We tend to did the same things over endeavor again but it is the growth we allocate. So i will focus on those issues. Health dominates the medicare spending. If you look at Social Security and health together, the growth of Social Security and medicare of about one trillion dollars 10 years from now that is a when your number not a tenure number ofbasically is the genesis all the growth in revenue we are expecting even if we do not have a tax cut. The third one is said generationally we are giving youth a lot but only when you retire. We are asking you to pay more for your education. We are going to support your children less. A lot of other things, too, but dont worry because down the road we will give you a lot more. That is what the system says. I do not know of that is the bargain you want. My last one is, if i go beyond the legend in these issues and look at the growth in the economy, health care is totally dominating. The Income Growth in the economy is distorting our sense of what is happening there. Income distribution, the sorts of things. Medicare versus Everything Else, this first slideshows you the growth in all. I dont have all the updates yet so this is one year ago. This is cbo estimates of where they grow growth and spending place. It doesnt measure row grows, it measures nominal growth. I had to convert it to grow growth. Of that will growth and spending for026 versus 28 goes medicare. Medicare would observe close to ofabsorb close to 40 everything. Other Health Care Spending so. Eases, it goes to 55 or this conference something joe mentioned a minute ago. We are having this debate at aca. If you look close at the numbers, the aca expansions are causing the growth and spending of about 8 . They have about a percent of all the growth and spending. There is about 38 . The size. Then if you take the aca, Accountable Care act, it is down about 10 . This gives you a real world standing of just how medicare is dominating the growth and federal spending. Medicaree shows you plus Social Security. The second bar is Social Security, medicare, and other health. You can see the total increase in spending there, this is updated but they did have some new cbo numbers. The total growth in spending, 10 a trillionnow, about dollars more were supposed to spend on these programs in excess of the additional revenues we are expected to get. Selector we spend all this money, the revenue growth, this growth, we still have to spend all this. And of course Everything Else is officially zero. That is mainly the discretionary nondefensive spending. That is what our current budget since we will do. It is not the decision of current policymakers, it is the top we are on. My first slide shows you this is not just an issue having to do with the fact that the birthrate fell and the baby boomers are returned. This is what i mentioned earlier. We are promising you something, you just have to wait till you retire because the average couple today, this is basically the 2015 said of numbers in this graph. At the 2015 said of numbers, it is the fifth column in this chart. Things we give about one man dollars in Social Security and benefits to an average couple retiring today. That is what they need in a 401 k earning a modest rate to pay for their defense on average. 2 million. Ennials, you know, were going to double that. Either way, this has nothing to do with the decline in the birth rate. This is the builtin growth due to the fact that we have to finance more mark health care. Were going to give you more and more years of benefits, Social Security, medicare. Index. Lso a wage if your wages are 30 higher than ours, you get 30 higher benefits. Im not saying some of the things would not be good to do but remember were doing this instead of Everything Else. Basically, this summarizes where all of the growth in Government Spending is going although it does not have medicaid in there. Finally, there is a final graph i mentioned. If you look at the blue bar, this is a crude measure something people call excess cost growth. Notion of, lets measure the growth in Health Care Cost and access to the growth in gdp. The only adjustment i made was i did it on a per capita basis. What is the growth of per Capita Health relative to the per Capita Health and gdp. You could see the blue line says the growth is maybe a little less than 2 . This debate about whether it stopped or started or anything else like that. Wrong way to the measure what is happening with the health cost growth, not only measure or at least project. What i calculate is, what is the growth and income, share of Income Growth per capita of that is going to grow and Health Care Spending per capital and those are the yellow lines and say that for every dollar increase of income we have in this economy, about 32 from 19902007 has gone for health care. Including private and public, that the majority is public. Admittedly017, including the recession, help has got about 60 of health care Income Growth. If you take the projections going out into the future, im not quite sure we never know what to call this. And you still get the number of about 50 . Now, part of that is the Income Growth projected to be low. So if we keep spending more and more enrolled terms and the economy is not growing much, it is absorbing large portions. But this measure shows even if people are complaining about what is happening to wages, compensation, health care is a huge part of the story. People do not count that as part of their Income Growth and it starts all those debates as well. So, those are all of the slides i wanted to do. I wanted to return to this notion that medicare is in many ways the flagship of much white youre are saying here. You have to address the flagship will stop for instance, a lot of people of not notice it but one of the big things right now in the Accountable Care act is, should payments in medicaid to oftes grow at the rate general Price Inflation or should it grow at the rate of medical Price Inflation . The point of fact, if we keep medical rice inflation continuing as the Current System does at this rate and and onto that the new Services Come the quantity on top of the price reflected a lot of comments about are we on my path or another it is an unsustainable at. But to sink an unsustainable path. But to think we will solve it, does not make sense. Youve to deal it in a broader sense. You have to look as much if not more at medicare. It is the flagship. Thank you. Thank you. Your last comment rings to mind the wellknown fact of the comparison between the u. S. Health care system and most european systems. We spend a lot more than most european systems. I will not get into the details of whether we are getting value for it by there is some debate about that. But what is the big difference in the spending . It is not utilization. It is pricing. That enhances the point of this chart bad it really is prices that is driving at. If it was utilization we would have a different view. But we are just spending more money. First of all i want to add my positive comments. For those of my colleagues concerning the performance of the office of the actuary of the Medicare Program. I will say publicly, what weve said privately to each other. In terms of fairness and in terms of making sure that they do not put their fingers on the scales of justice when they are evaluating manners, they have been absolutely firstrate. Professional. Theyve done a fantastic job and have really shown what it is to be public servants. But also white we affirm myas point about the incredible value of the annual Medicare Trustees report. Greata rich mine of information, statistical data, and analysis that you can use throughout the year. Certainly many of us in the policy Community Use it. I do wish that members of congress would actually pay little bit more attention to this. I do have a couple of process points i would like to make before i get into the substance of this conversation. This reportis year is signed only by administration officials. The two Public Trustee positions are vacant. His was true last year what that really means is, as good as his report is, it means we do not have any independent assessment of the financial status of the Medicare Program outside of government officials. I think that is a problem and i think it is a problem that both the president and the senate have got to start to deal with rather quickly. We cannot have this next year. This says nothing about the integrity of the report but the fact of the matter is if you want to build Public Confidence in a report, you do want Public Trustees. Secondly, it is a process issue but i cannot ignore it. That is, there is a law on the books that says the Trustees Report is to be delivered on april 1 every year. It is now july. A problem. S becoming this is a law. This is not a good idea. It is not a suggestion. It is not, you know, something somebody can get around to at some point. What this means is we have a law that is not functioning in this respect and if a law is not functioning we have to repeal it or agent. Theres a lot we could do. It is possible we could, given the scope of the work to trustees have to perform, that they actually cannot do it in the time allotted to them. I think what we have to do is congress has duke look at this and say, well is there a better way of doing this . My suggestion would be that a submit the report when the budget, when the president s budget is submitted, so congress will have a chance to deliberate on this and make decisions. Especially if they have to make those decisions based on excess dependence for example on general revenues which in fact the trustees say this year they have made the determination that that is the case. Another observation about this, all right, so we are going to have the insolvency date at 2029. Last year was 2028. That is no big deal. The fact of the matter is, is the Medicare Trust fund, facing insolvency since i was able to read, i do not understand why the press puts the greatest emphasis on the issue of trust fund insolvency. The trust Fund Language surrounding this in the general media sometimes is really disturbing. They say, well we are facing and in. It is scary language. And, you know, but the truth of matter as of the last 51 years never goneund has into insolvency and it likely never will. It has to do, however, there is another problem, however, that is that the difficulty with the trust fund, you know, that the you know, the trustees and effect that a shortterm evaluation shows this is not on a sound financial bases shortterm or longterm. You are right. That gets down to Political Leadership. I will repeat it. We have a real problem. I am talking about a Major Political problem. A problem with them and us. Leadership in this culture, republicans and democrats alike are not willing to deal with responsibility with some of the most important domestic policies facing this country. I merely management of the fisk deficits. Spending. These issues. President trump promised during the 2016 campaign that he would not touch medicare. The president seems hellbent on keeping his promises. His first budget indicated he would not touch medicare at all. The paradox we have here today is we are discussing a report signed by three cabinet secretaries who say exactly the opposite. Whos sentiments are exactly the opposite. Page nine of the report reads, i will read it quickly the financial projections in this report indicate a need for substantial steps to address medicares remaining financial challenges. It goes on to say the trustees recommend that the congress and the executive branch work closely together with a sense of urgency to address the depletion of the Hi Trust Fund and the smiected growth in hi and expenditures. They are absolutely correct. The president needs of a conversation with his appointees about the responsibilities they exercise is trustees of the Medicare Trust fund. At some point, of course, you know, there will be a day of reckoning. And, the question of what we do with the Hi Trust Fund is going to come do. Were going to raise taxes or we are going to cut benefits in the Medicare Party program. Program. I would just mention for context with already scheduled about 802 billion worth of payment reductions in medicare under the Affordable Care act. That is a lot of money. That is a big, big cut. Who knows . Thousands could die but the point is that is on the table right now. Jean makesthe a vitally important point which is something has to be constantly where to keep in mind, the cultural environment in which we live is what Robert Samuelson once called in a great book called the age of entitlement. The government is becoming increasingly a mechanism where we transfer money from large classes of american who mostly work to other classes of americans, mostly those who do not or cannot work based on various formulas and forms of disability. The bottom line is, middleclass entitlements have started to crowd out other did terry priorities. Budgetary other priorities. We cannot allow this to happen unless we are prepared to come facetoface with a fiscal crisis. Trustees tell us were not going machinethe doomsday this year. That if in fact Health Care Health care2018, if spending exceeds the gross to mr. Product plus 1 , the independent panel Advisory Board which does not exist right now in reality, would recommend across the board various types reductions payment and the environment in which we are operating right now in which well rehab have scheduled 802 billion worth of payment alternativender the scenario of the trustees, they are saying that this could jeopardize access to care on the future. This means we have to make some very Big Decisions very quickly. We have to get serious. Likely it would mean we need our Political Leadership to engage in Public Education. Americans love medicare. The actually love it. But the survey shows most americans are clueless about how medicare as finance, how much it costs, how it operates in practice. And, it is a payasyougo system. The work and this is pretty close because there is a deeply held belief by a large number of Senior Citizens that they are somehow financing medical coverage they are getting today based on the vague notion the taxes they paid in their working life are paying for those benefits. This is a denial of reality. It is a very, very common perception. If it were not so widespread, it would the fact that it is so widespread is a very serious problem. I know on a personal level, even though i am talking with friends and relatives, people are loath to admit the truth that the fact is they are not paying for their benefits. Medicare premiums and only a small percentage of the total medicare and if it costs. There is one thing i want to bring to your attention on the Trustees Report before i turn it over to keith and that is on page 20 of the report, there is a discussion of Medicare Advantage growth. Verynk this is significant. Last year, the trustee said that and roman is steadily growing in will exceed 35 total by 2025. On page five of the report, trustees now say that medicare and enrollment will hit 36 of total medicare enrollment by 2023. Advantage is growing a lot faster than a lot of other folks wouldve ever rejected. Sinceize the fact that 2010, Medicare Advantage payments have been cut by about 12 . The medicare market is very stable. There has been varied little disruption in Patient Satisfaction is enormous and the characterizes more than anything else is a defined contribution in the system. So looking at Medicare Advantage for the future of how they can introduce intense competition so based on what is happening already. In fact it may already be that reality is out running the politicians. We are going to see an evolution of the system that is more private overtime than we have in the past. Congratulations to the trustees for producing a wonderful report and thank you for the very fine presentation. I want to go something i want to go back to something you said earlier. You dont believe in miracles of compound interest . So to use day language to make a point to credit with the insight through the depths of the depression that you will try to create a greater sense of ease in a very troubled country that you need to use the right kind of language. When they created the Social Security system, they created the term trust fund. A realist would say there is no trust fund. The money is collected but this is part of the problem this is why they think they have already paid for it. I have an account and i have a number. Right . I have a number for Social Security. People are less clear of my account number which is the same number for medicare. They think they have paid into it for their entire working life. So therefore i surely have paid for it. But as the statistics have shown over the last 50 years that is not really true. Take it away. A little segue. So with those remarks of paul and his team, i had the distinct pleasure to work with his predecessor but i cannot tell you how hard these people work with those analytics. Theyre deeply involved it is one of the hardest working offices and with those high quality. In an age of alternative facts, i think they were about the value of institutions like cbo or the actuary. They are critical and i just cannot tell you how much value i think they add. So maybe with one virtue others that biggest piece of news is that the alarms did not trigger think most of the analysts in the private sector for is predicting this would have been. Think about for a moment if it would have happened. And with those proposed cuts to medicare remember under the law so if they fail to report so they have to make proposals and to put into place and then still could play out in the next year or the year after that they could give a certain amount of negotiating leverage. I expect that joe to open this meeting with something provocative like paul, where is the ipad body buried tobacco he didnt body buried . He didnt. But we did have the opportunity to talk before but the most stunning thing to me looking at the percapita growth rates related to the ipad through if i did the math right 2017, that is under 1 per capita. I always word get worried when matt in front of guys who have phds in math math ined about doing front of guys who have phds in math. [laughter] that is really remarkable and stunning. It was only. 4 per capita and that is largely due the inpatient costs decline so that is the second point so there is a debate to the affordable cash Affordable Care act is responsible but the fact is those growth rates under 1 , i have grown up over 30 years of this system looking at the solvency every time a turnaround. So something is going on. We dont know what but it is a salutary thing so the second point i would make is with respect to the Long Term Care and i agree completely with everybodys comments with the solvency date to be the be all and end all but the trust fund in the government is not the same in a private concept. That is not set aside a reserve in the same way. It is all part and parcel but it has functioned extraordinarily well in many ways in the fiscal discipline device within the public context. So in 1983 i started with the office of management and budget. Social security was going bankrupt and people had to do something. There was a gun to everybodys head. They tried to deal with the short term and long term problem in the small and incremental changes over time. But the trust fund does matter and that is where becomes particularly complicated so while agreed to not obsess about that date, it isnt that the trust fund is not important, it is but dont obsess as much about the longterm. I think paul would agree it is more about those trends in the system with potential risks from productivity growth over the long term. If i could segue that none of the bills on the repeal and replace would touch the productivity adjustments of medicare. So theyre not doing anything with respect to those types of issues about those productivity adjustments that are scheduled. It is important with my a take away that good news and the short term and sobering news in the long term. So with my colleagues on the soapbox is very, you just cannot think about medicare in isolation. You have to look to whole picture and clearly it is not focused on the pitcher. Actually the issue is serious and it is difficult for democracy. From the articles of confederation through that antideficiencies statute it is all about how to manage money. This is part of that. I would say that the one thing that people forget about, the 1980s and the 1990s i lived through all of that, the reconciliation act as they were born of a bipartisan consensus of what is good for the country was shared pain. So i think he is dead on we are going to have a half to care what were doing for our country for other spending and Everything Else. So to figure out the right balance so with the aging of our population. The reader getting a lerner will continue to get older. So with everything that goes on in this country. So part and parcel is immigration reform. If you will really deal with this problem i think all of that has to be part and parcel. So im not the political scientist here but this Public Education point. There was a man wrote a book in the 1980s called coming to public judgment. He talked about opinion making, opinion formation in democracy. Paul can give us all of the facts and analysis but we have to get back to something where it some point where at some point we get people to care about the future of the country and the real issue here so that is this whole thing. It is not a good place. So i will close the. Your appreciation of the trust funds. I want to clarify that the example, the one shining example refer to Social Security. Why is that . Because the retirees understand when Social Security might be cut. That is real money to them. Medicare, weabout are not talking about cutting things that people fully understand. By and large the federal governments approach to those problems that mayor may not be that may or may not be revealed. So most make adjustments of payments to providers. Certainly we would not affect your benefits. So what we have seen is this wonderful example from Social Security which i believe only happened once. What we have seen in the medicare world has been modest changes, temporary putting it off as opposed to fundamental structural reform. That is something we could debate about. Can i respond to that . Joe is a great friend. Doould say that is harder to in the medicare area. Fact, what happened in the 1980s and the 1990s is what joe described. Many changes. Health care is a really dynamic technological area. Keeping the pressure on all those things is a good thing to do. Usa today a good thing to do. So offering these two amendments. And basically matching spending and then had to pay for the trust fund. But with Social Security with those demographic shifts. And that is only a piece of the medicare. You are this point where youre paying out 30 more than you did , getting revenues. That trust fund notion is that just go back into balance slightly. So with that trust fund to be in balance. That is true. And i agree trying to decide what health care should look like 10 years from now. So there is so much going on but what is the process to deal with that . We know what not to do so talking to my wife about what the kids should do she thinks they should study a savings to play the piano that is a tough decision. The kids playing in traffic. Do we know what to do or not . You cannot let the kid play in traffic. Fundamental original sin of health care is you cannot set up a system where patients and providers bargain with each other so somebody has to be able to say no. It can be government for price controls. It can be like Medicare Advantage we can semivoucherizing the system. So the Insurance Companies like Kaiser Permanente day or that is tough. And that is what you have to have to do. The fight is going to be what is the right mix . But the kids cannot play in the street. So i think the problem we are industry. In the street. So i think the problem we are confronted with people have a clear idea of what it is little like. If you try to get them to really be clear about what it is they actually want, that is different. That is more difficult. Part of the problem were having and this applies to the General Health care debate we actually dont have a health care debate. Were not really debating you go to all of these conferences, nobody says we will restrict access to health care. And then improve the quality. We are not debating those things. Were not in a Health Policy debate. We are having a Political Science debate. It is actually who will make the key decisions in the system. That seems to be the thing that is so better about all of this. Bitter about this. With those to very strongly believe the government should exercise a monopoly over the of single payer system. There is an internal logic to it. Free care for all. The government will ultimately control spending. Others believe in a free market. And then it starts to get messy because people have ideas what a free market is in health care. The United States has not had a fair market in health care since the 1930s when doctors were going doortodoor collecting Cash Payments industry meeting free care to poor families in the neighborhood. That was the last time we had an pure, free market. Healthinsurance is virtually a public utility. We havent been able to carefully calibrate or we havent clearly drawn any clear lines and that is more intense that were in a debate for health care for the rest of our lives. This is a 3. 2 trillion sector and immensely complex there is a test that are certain areas in health care with the public has a superior role and other areas where the Public Sector does a very poor job. Delivering health care to poor people is one of them. I will jump in on both of those. The trust funds have been a mixed bag. On the negative side, what they have done is created more of an entitlement feeling which is more technical but to be entitled to the benefits that you paid into the program and that they do such great work to get more out of the program than they paid into that. It is not be effective mechanism. So what youre able to do is save with that demographic cohort. That is an excellent tool but it doesnt work that way at all. By necessity, they are invested in government bonds. That makes sense for how we finance the deficits could be financed. And how i duke this out with my father protesting. By using money into the trust fund and that they pay lower taxes. So when you talk about that many it is aed by you guys double benefit to the older generation and then use that to subsidize the rest of government. Those are some of the problems with trust funds. So one of the things about trust funds is they do create a warning sign for the action forcing moment. So right now they dont do anything until the very last minute. Right now were using extraordinary measures with the fact we have not lifted the debt ceiling we do lastminute things all the time. We miss the deadline for everything. Everything. Part of it is the problem that these two parties that are so pitted against each other think they will not look like they negotiated hard enough if they come up with an agreement for the last second. Maybe the challenge is coming up with something that creates action moments that doesnt create an influx ability in the flexibility in the budget. Just want to talk quickly about the Overall Health care debate so without fundamental core questions so what is the role of insurance . And obviously nobody should go bankrupt because of Health Care Cost. But it also creates subsidies. Who should subsidize who . Should rich subsidize poor . Should healthy subsidize the sick . They are not discussed headon that is what is going on in this debate right now. So whats another role is that it does a lot to have the savings for big moments if you have the baby that is expensive and i know that because my Insurance Company told the aisle she was not covered because i did not have a child and i had to fight if there was a baby. But those are the kind of things that is somewhat predictable. Kids will get braces also for saving in advance. We havent even come to terms of the fundamental role of insurance. The discussion is nowhere to be found in this Current Health care debate. Questions about who should be choosing what things people should have to have. I go back to Public Policy first principles. What problems are you trying to solve . What are the different structures you can use to solve them . If the agreement is legitimate and then go to the different approach. We will be having that debate forever. We have time for about two questions. Move quickly and speak quickly. [indiscernible] i will repeat your question. Just go on. [indiscernible] what is the question . [indiscernible] what is a going to take to move this forward and have the debate back of and have the debate . [indiscernible] so the questions are if we would get congress to do anything . I can tell you that i know that our bills on the hill. There was a special mechanism in the of legislation with an intricate status of february this year but it does cost money so i dont believe that is in need of the bills on the hill that are moving now. It isnt part of the aca measure. Question, quickly. Right here. Does it work . There is a couple of things that jumped out. But a sharp jump of Medicare Part d growth in 2018 and a sharp jump in 2019 percapita spending. And i am wondering what are the costs of those and what should be read into that about future trends . And also can you explain why the manufacturing rebates went up . Did you just notice new data . Are we seeing some new trend . There has theres been some shifts. In particular there have those been continuing to come through. With the share of rebates and they changed dramatically over a short period of time. So in terms of yeartoyear changes we have moved to a more micro model in terms of building up those trends. It might be more explicitly projecting specific drugs going off panted desk going off patent. Going off patent. Thank you for a terrific discussion. [applause] [inaudible] [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. Visit ncicap. Org] [captions Copyright National cable satellite corp. 2017] cspans washington journal live every day with news and policy issues that impact you. Coming up this morning, a look at efforts to pass the 2018 budget beginning with brendan boyle. The texasowed by congressman jodey arrington. Sam gimenez on his book, dreamland. Be sure to watch cspans lessons in journal live at 7 00 eastern this morning. Join the discussion. This morning, the Senate Foreign Relations Committee takes up a nomination to be ambassador to the vatican. She is the wife of former house speaker, newt gingrich. See our coverage at 10 00 eastern on cspan3. Wednesday the House Budget Committee mucks up the House Republicans blueprint for fiscal year 2018. Our coverage begins at 10 00 a. M. Eastern on cspan3. A. Sunday on q and when we look at president obamas domestic legacy, i think there are two things that are very important that will have longlasting, good consequences that can be summarized in four words. Sonia sotomayor his two. Ominees to the Supreme Court the second to our twopart interview with david gero. He talks about his book, rising star the making of barack obama. The point to emphasize is that over the course of iraqs presidency, there were scores of people in illinois course of baracks presidency, there was scores of people in illinois who were disappointed with the trajectory of the obama presidency. Disappointed that he forgot the people most of the people who were central to his political drives. This sunday at noon eastern, a cspan special event. As American History tv is live from the Detroit Free Press Institute Mark and 50th anniversary of the 1967 detroit riots. We spoke with former police chief and the pulitzer prizewinning historian to find out what happened and why. Then the oratorio page editor and former Detroit Free Press and news journalists discuss the Media Coverage of the right and its aftermath. The 1967 detroit riot, 50 years later. Live sunday starting at noon eastern on American History tv on cspan3. Deputy secretary of state, John Sullivan testified before the Senate Foreign Relations Committee on the proposed reorganization of the state department. The plan is a part of trumps fiscal year 2018 budget proposal. The entire hearing is about 90 minutes. Senator cornyn wanted to make sure that everyone had the opportunity

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