Transcripts For CSPAN2 Medicare Actuary Provides Update On Trustees Annual Report 20170715

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 fasterraise 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 thong the 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 americaner into Price 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 theboard 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 greg 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 ask 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 business care hospice care, and 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 set on 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 differents 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 200,000 individually 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 fends 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 projects are 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 ear is that product different 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 pretty 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 realy 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 the notion you dont have to make changes to them is just not rooted in any reality, any policy reality and really concern e jeopardizes the program ford the people who depend on them. So, i think that is the real problem. Think in the healthcare debate we have been enmeshed in, in the path month, its been more offer were going to repeal and replace obamacare and i dont have a position on whether we should or shouldnt but the first question is what are we trying to solve . I feel like many of the policymakers involved couldnt tell you what problem it is that we are trying to solve. Ill tell you what i believe in our organization would be we will be spending more time on is how are we going to control Overall Health care costs and thats different than saying youre going to pay less for healthcare. Its creating a structure for a system that will do more to incentivize controlling healthcare costs than what we currently have. We didnt think there was enough of a discussion about that when we created obamacare and theres not enough of a discussion about that right now when were talking about options to replace it. Its in there sometimes but its not essential piece of whats motivating healthcare reform talks and given those numbers, given the scope of healthcare in our budget, how that undermines Economic Growth in our economy when we need it, it should be front and center more than it is. Ill touch upon a couple areas i would like healthcare and medicare debate to be talked more about. Then im going to turn it over to jean. Were going to be looking at a couple factors, the first is Delivery System reforms, doing more for how we deliver health care in terms of quality of Healthcare Payments for outcomes rather than what is provided so bundle incentive options, healthcare organizations, figure out whats working there and what we can do more of what it really is creating different structures in the Delivery System. A second piece of this is certainly the incentives within the healthcare system. We are to this day very much removed from the overall cost and price of healthcare so there are the right incentives aligned. An insurance is always a complicating factor in that because there is a very Critical Role for insurance in terms of ensuring people again get excessively onerous healthcare cost but at the same time you dont want to insulate people from the price completely. So there are things like first dollar coverage which can undermine price activity, you probably want to limit insurance, how hsas can be used in different ways that can be useful depending what money is allowed to be used to pay for it. And i think transparency in pricing, this is so long overdue in our healthcare system, figuring out more transparency in the pricing of healthcare is a critical component. I put out to other Court Reforms that we do more so theres not such a preventative providing of healthcare to avoid lawsuits but its more about health and finally, tax treatment of healthcare, we subsidize Health Insurance through the tax code through the healthcare exclusion in a way that economists on all sides of the aisle agree is inefficient and drives up the overall cost of healthcare. That would be a great policy to look at to limit the healthcare exclusions which could provide more revenues to shore up the healthcare system, bring down the debt, a whole lot of things and its one of those where first in policy where it would be good tax treatment and tax policy and it would be good healthcare policy. It would be also good for fiscal policy. Im always wary when people Say Something is a winwin which means theyre trying to sell you something for free when it comes to budget policy but looking at the healthcare exclusion did in fact be a winwin. Im going to end by saying the details are so important. In the big picture is also so important which is we are in an unsustainable path, we have a political system that is unwilling to come to terms with and put forth any real policy solutions that will grapple with that and its key in all those policies is going to be healthcare reform and as were fighting that out, just the quality of discussion around the healthcare debate is terrible, its been a disservice to anybody was trying to understand healthcare policy and think about what its true that there are tradeoffs, there are tradeoffs and things and we have to figure out how much you want to subsidize and who should do the subsidizing and what the structure of the pay should be. Were not having this discussion in a realistic way at all and thats really the first step in starting to come up with some start smart policies to tackle these admittedly difficult but critically important challenges so again, theres so much great data in here. Theres so much stuff to play with in these trustee reports so thanks for the presentation and the panel class thanks maia. A very good point, its certainly the case that most of this storm and drying that we are experiencing these days have nothing to do with the single biggest program, at least generally speaking in the United States or at least the one that has the most leverage in the rest of the Health System which is medicare. While its true that private insurance, private Healthcare Delivery and the Medicaid Program have great influence, the reality is that a lot of what medicare does in terms of regulation procedures shapes a lot of what goes on in the whole investment of health itself so to your point, highly relevant to this session about healthcare. Thanks joe and on the fosters panel, ive known everybody on this panel for a while and perhaps the least ive gotten to know your call and let me also add to the compliments on the work of the actuaries and is not just the Trustees Report. We have certain offices in this town that are highly informative, extremely professional and have a great deal of integrity. They include the actuaries office for cms and Social Security, officers like ceo, Government Accountability office. Its extraordinarily important that not only we maintain these offices but restrengthen them. They are the sources of information we need to help the public sort out decisions so thank you paul and thanks your colleagues. Id like to thank the aei, ive done a number of these panels before, not one recently and they keep taking my colleague at irving but through also as a trustee, hes been a past Public Trustee among many other titles but some of what ive been presented is something i did many years ago. I wanted to concentrate on the relationship of health to Everything Else thats going on so in some cases its correlated with what i already presented. And since, im reminded of some of the announcements that used to be made in synagogue bulletins. They were correct but a slightly different focus depending how you think about them so for instance, one of them was please put your contribution in the collection basket along with the person youd like remembered. And another one was the bulletin said that margaret mcgillicuddy saying i will not pass this way again much to the delight of the congregation. And another one was used will be performing hamlet today in the basement, please come early and watch this tragedy unfold. So in some ways im going to be taking some of the data i got on medicare and is going to be some of the same emphasis as mine did but to argue and joe reinforced this point, to argue that you cant talk about medicare in isolation. Maybe theres a fire on the street and your roof is caving in but you cant focus on fixing the roof. Youve really got to worry about the system. Its also partly because in the budget we make allocated decisions and as we talk about budget the unfortunate thing is people think about budget policy as deficit policy. As long as we get balance, trust funds, one of these things that balance have a lot to think about, the budget is how we allocate. If we decide were putting a dollar in medicare, where not putting it somewhere else and raising taxes to pay for it, education the same thing happens. So you have to think about what we want to do in medicare with regard to how we allocate everything and let me jump weekly to my slides. Theyre going to make four points in these slides. One, that helped dominate. Recently ive been doing work not just on how much healthcare, how much of the budget is in healthcare, much National Healthcare spending is in healthcare but the increments, the growth we have in the economy and Government Spending. Where is that going . Because those increments are usually where we make most of our decisions. We do some of the same things over and over again but its the growth that we allocate so im not going to focus on those issues and as you mightve guessed, help dominates the growth in federal spending and medicare is the flagship there. If you look at health and Social Security together, the growth in health and Social Security medicare of about 1 trillion 10 years from now , thats not a 10 year number, basically is in excess of all the growth in revenues that we are expecting even if we dont have a tax cut. The third one is generationally, we are getting youth a lot but only when you retire so we are asking you to pay a lot more for your higher education, were going to cut back on your support as workers, for your children less and a lot of other things. But dont worry, down the road we will give you more Social Security and medicare. Im not sure thats the bargain you want. My last one is that if i even go beyond the budget and look at the growth in the economy, healthcare is totally dominating the Income Growth in the economy and its distorting our sense of whats happening there, its distorting Income Distribution and all those sorts of things so now ive got to quickly go through these slides. This first slide shows you the growth in all the noninterest outlays of the government, this is ayearold because i dont have all the updates but this is cbos estimate of where the real growth in spending, by the way, cbo doesnt measure growth but real growth in spending here is about 1 trillion. That real growth in spending, say 26 versus 2016, 38 percent goes for medicare so medicare by itself is 40 percent of all the growth in spending for everything other than interest on the debt is Government Spending. And in other healthcare, other healthcare spending increases it goes to 55 percent or so. Its confirming something joe mentioned where the debate over aca and not things like medicare, if you look closely at the numbers, aca expansions, their causing growth and spending of about eight percent, eight percent of all the growth in spending whereas medicares got 38 percent so its maybe 1 5 the size and if you take medicaid before we had the aca, thats got about 10 percent so it gives you a relative standing of how all these issues stack up and how medicare is dominating the growth in federal spending. This slide shows you medicare plus coastal security, the second bar there is Social Security medicare and other health and you can see the total increase in spending their, this is updated numbers because i had some new cbo numbers, thetotal growth in spending 2017 to 27 , it bumped up a year, 10 years from now about 1 trillion more we are supposed to spend on these programs and thats in excess of the additional revenues we are expected to get so after we spend all this Revenue Growth on this growth, weve still got to cover all this growth and net interest on the debt and Everything Else in the budget is essentially getting zero, thats mainly the discretionary nondefensive discretionary defense spending. But thats what our current budget says we will do, its not the decision of current policymakers, thats the path we are on. My first slide basically shows you that this is not just an issue having to do with the fact that the birth rate l and the baby boomers are retiring. This gets to my point i mentioned earlier to young people, were promising you something, youve just got to wait till you retire because the average couple today is basically 2015 setof numbers is probably too much but 2015 set of numbers , it turned out to be the sex column or the fifth column inyour chart. Says that we get about 1 million in Social Security and medicare benefits to an average income couple retiring today, thats what they needed in a 401 k account to be able to pay for their benefits on average. Again, for you millennials, 2 million. We are going to double that. And its now suddenly has nothing to do with the decline of the birth rate. This is building growth that were going to finance more health for you. Where going to, give you more and more years of benefits and Social Security and medicare and with Social Security which were not talking about, its also wage index. If your wages are 30 percent higher than ours are youre going to get 30 percent higher benefits. Not that some of those things wouldnt be good to do but were doing this instead of Everything Else that we are doing and basically this simple graph on an individual basis summarizes where all the growth in Government Spending is going although it doesnt have that medicaid in there and finally, the final graph that i mentioned is if you look at the blue bar, this is a crude measure of something people call excess cost growth excess cost growth is this notion, lets measure the growth in healthcare costs in excess of the growth in growth in gdp. The only adjustment is ive done it on a per capita basis so whats the growth of per Capita Health costs relative to per capita growth in gdp and what you can see, all the little blue lines down there, this says the growth is maybe a little less than two percent and theres this debate over whether it stopped or started or anything else like that. Ive been proposing for some time that thats the wrong way to measure whats happening with health cost growth, not only measure but to predict it or at least projected. So what i calculate is whats the growth in income thats the shared Income Growth per capita thats going to growth in Health Spending per capita and those are the yellow lines which says that for every dollar of increased income weve had in this economy, about 32 percent from 1990 to 2007 has gone for healthcare including private and public although the majority is public. If you take the period from 2007 to 2017 including the recession, health has gone about 60 percent of all the Income Growth and if you take the cms productions going out into the future or projections is probably the wrong number, im not quite sure. We never know what to call it because we are not forecasting but you still get a number of about 50 percent. Part of that is because the Income Growth is predicted to be low so help keep spending more in real terms and its absorbing the proportion of it but this measure tells you that even when we think about people complaining about whats happening to their wages or their compensation, its healthcare thats a huge part of the story and people dont count that. They often dont count that as part of their Income Growth and it distorts all those debates as well. So those are all the slides that i wanted to do and i want to return to this notion that medicare is in many ways the flagship of much of what you are seeing here and you have to address the flagship so for instance, i dont think people have noticed what big debate in the Accountable Care act is should payments in medicaid two states grow at the rate of general Price Inflation or should it grow at the rate of medical Price Inflation . In point of fact if we keep medical Price Inflation continuing in its current system, at this rate and add onto that and the new services we get which is quantity on top of price, this is reflected in halls comments about are we on one path or the other, its an unsustainable path but to think we will solve this by looking at medicaid and demanding the states make an adjustment doesnt make sense. Youve got to deal with the system in a much broader sense and in that sense in terms of government you have to look more than anyplace else is medicare, it is the flagship, thank you. Thank you jean. Your last comments at least to mine a wellknown fact, a comparison between the us Health System and most european systems. We spend a lot more than european systems. I wont get into the details of whether we are getting value for it but theres some debate about that. Whats the big difference in the spending is not utilization, its price. That enhances the point of this chart that in previous prices are driving, the utilization, we might have a different view. Were just spending more money. Thanks very much, i want to add my positive comments to those of my colleagues concerning the performance of the office of the actuary of Medicare Programs. Ill say publicly what weve said privately to each other. In terms of fairness, in terms of making sure that they dont put their fingers on the scales of justice when they are evaluating matters, they have been absolutely first rate, professional and have done a fantastic job and have really shown what it is to be public servants. Id also reaffirm my asked point about the incredible value of the annual Medicare Trustees report. It is a rich mine of great information, statistical data and analysis that you can use throughout the year. Certainly many of us in the policy Community Use it. As my has pointed out, i do wish that members of congress would pay a little more attention to this. I do have a couple process points id like to make before i get into some of the substance of this conversation. You know, this year this report is signed only by administration officials. The two Public Trustees positions are vacant. This was true last year so what that really means is as good as this report is, it means we dont have any independent assessment of the financial status of the Medicare Program off of government officials. I think thats a problem and i think it is a problem that both president and the senate have got to start todeal with rather quickly. We cant 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. The second issue, its a process issue but i cant ignore it and that is theres a law on the books that says that the Trustees Report is to be delivered on april 1 of every year. It is now july. And this is becoming a problem, this is a law, this is not a good idea. Not a suggestion, its not something that somebody can get around to. What this really means is we have a law that is not functioning in this respect and if the law is not functioning we ought to repeal or change it. Theres a lot of things we could do, its possible that given the scope of the work that the trustees have to perform that they actually cant do it in the time that allotted to them but what we have to do is congress has got to look at this and say is there a better way of doing this . My suggestion would be that they submit the report when the budget, the president s budget is submitted so congress will have a chance to deliberate on this and make the decisions, especially if they have to make those decisions based on excess dependence, on general revenues which in fact the trustees a this year theyve made the determination that thats the case. Another observation about this, all right. Were goingto have the insolvency date 2029, last year it was 2028. Thats no big area the fact of the matter is the Medicare Trust fund hasbeen facing insolvency since i was able to read. I dont understand why the press puts the greatest emphasis on this issue of trust fund insolvency. The trust Fund Language surrounding this in the general media sometimes is really disturbing. They say we are faced with bankruptcy, its all scary language. And but the truth of the matter is over the last 51 years, the trust fund has never gone into insolvency and its likely it never will. It has to do however, there is another problem however and that is that the difficulties with the trust fund, that the trustees say in effect that a shortterm evaluation showsthat this is not a sound financial basis, either shortterm or longterm, they are right. That gets down to Political Leadership. My has mentioned this, ill repeat it. We had a real problem, im talking a Major Political problem, the problem of governance and that his Political Leadership in this country, republicans and democrats alike, are not willing to deal responsibly with some of the most important domestic policies facing this country but primarily management of the fisk deficits, debts, spending. President trump promised to bring the 26 campaign that he would not touch medicare. The president seems hellbent on keeping his promises. Of course, the first budget indicated he was not going to 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. Page 9 of the report, ill 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 the congress and executive branch worked closely together with a sense of urgency to address the implementation of the Hi Trust Fund and projected growth in hi and smi expenditures. There absolutely correct and i think the president needs to have a conversation with his appointees about the responsibilities they exercise as trustees for public Medicare Trust fund. At some point of course there will be a day of reckoning and the question of what we do with the Hi Trust Fund is going to come due. We are either going to raise taxes or where going to cut benefits in the Medicare Part a program. I would mention for context that weve already scheduled, right, over the next 10 years 102 billion worth ofpayment reductions in medicare under the Affordable Care act. Thats a lot of money, ive never seen, thats a big cut. Who knows . Thousand died but the point is that is on the table right now. In any event, the, jean makes a vitally important point which is something that has to beconstantly , we have to keep in mind and that is the cultural environment in which we live is what Robert Samuelson once called i think in a great book called the age of entitlement. The government is becoming increasingly a mechanism where we transfer money from large classes of americans to other classes of americans, mostly those who dont or cant work based on various formulas of eligibility. The bottom line is that middleclass entitlements are as jean points out starting to crowd out other budgetary priorities. We cannot allow this to continue unless you are prepared to come facetoface with a fiscal crisis. We are not going to, the trustees tell us, were not going to face the ipad machine this year. Its kind of like the doomsday machine of Health Policy which is that if in fact healthcare spending effective in 2018, healthcare spending exceeds the gross mastic product 1 percent of the independent payment Advisory Board which doesnt exist right now in reality would recommend across the board or various types of medicare payment reductions in the environment in which we are operating right now where we already have scheduled 102 billion worth of payment reductions and under the alternative illustrated scenario of the trustees , theyre saying that this could jeopardize access to care in the future. This means were going to have to make Big Decisions very quickly, we got to get serious. My plea would be that we need our Political Leadership to engage in Public Education. Americans love medicare, they love it but the surveys show that most americans are largely clueless about exactly how medicare is financed, how much it costs, how much it operates in practice and its a payasyougo system. And james work in this area is important because theres a deeply held belief by a very large number of Senior Citizens that they are somehow financing Medicare Coverage that they are getting today based on the notion that the taxes they paid in their working life are paying for those benefits. This is a denial of reality, its a common perception. If it were not so widespread, it would, the fact that it is as widespread is a very serious problem. On a personal level, when im talking with wrens and relatives, evil arlo to admit the truth that in fact no, theyre not paying for their benefits. Medicare premiums pay only a small percentage of the total medicare benefit 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. I think this is very significant. Last year the trustees said that medicare enrollment is steadily growing and will exceed 35 percent of total medicare by 2025. On page 20 of the report, trustees now say that medicare enrollment will hit 36 percent of total medicare enrollment by 2023. Medicare advantage is growing a lot faster than a lot of other folks would have projected. Recognize the fact that since 2010 Medicare Advantage payments have been cut by about 12 percent. The medicare market is very stable. The number of plans participating has been growing. The, theres been very little disruption. The Patient Satisfaction is enormous and the thing that characterizes it more than anything else is that this is basically a defined contribution system, i dont think the formula that government payment is particularly good but nevertheless, it is and i think that looking at Medicare Advantage for the future is, it may give us lessons for how we. [no audio] i want to go back to something you said earlier in your remarks. Apparently you dont believe in miracle compound interest. We use the language, especially in government to settle up a program and sometimes to make a point. And we can credit fdr with the insight back in the depths of the depression that if youre going to try to create some greater sense of ease in a troubled country, that you need to use the right kind of language so whether its creating a Social Security system, they invented the term trust fund. Pauls going to say there is a trust fund but the realist would say theres no trust fund, the money is collected and goes to the general revenue. That is an accounting concepts, is not a budget concept. But this is part of the problem and this is one of the reasons why people think that they already paid for it. Dont i have an account . I have a number, right . I have a number for Social Security and people are a little less secure which turned out to be the same number for medicaid but nonetheless they think they paid into it for their entire working lives so therefore surely i paid for it but thats false and statistics have shown for the last few years or so that thats not really true. Keith, take it away. Nice segue there joe. Let me start by saying that i would just associate myself with those works about paul and his team and i had the distinct pleasure of working with paul, his predecessor andothers here at the office of the actuary for many years in government and i cannot tell you how hard these people work. From the quality and analytics, their deeply involved in running the Medicare Program. Its one of the hardest working offices in government and they in turn put phenomenal amounts of highquality information and in an age of alternative facts and the kinds of things we see around, i think to jeans point about the value of institutions, the office of the actuary here, the office of the actuary at ssa, theyre absolutely critical to what we need and i cannot tell you how much value i think they have. A couple points and coming glass, theres so many good points that have been made. Theyre quite correct with one or two others. The first thing i would say is one of the biggest pieces of news in this report which weve kind of been glaring right past is that the ipad did not trigger. Ive been watching this and i think most of the analysts i know in the private sector have been predicting this was going to happen. Think about for a moment what would have happened had it happen. The first is the president who had said im not going to cut medicare would have to proposed cuts to medicare. Remember that under the law it doesnt matter whether it is or not, if the board fails to report in the duty to report for to the secretary. The secretary has to make proposals and they get put into place. That whole mechanism would have played out and could still play out next year or the year after in a way that for president elect negotiate, they have a certain amount of negotiating leverage as well. I fully expect that joe to open this meeting with something provocative like paul, where is the ipad body buried. He didnt, i was surprised by that but we did have the opportunity to talk to paul with beforehand that this to my second point, the most stunning thing to me here is that if you look at pauls chart on per capita growth rates, thats from 2011 through about 2017 we did the math right on a multiplicative growth rate, its under one percent per capita. I always get worried doing math but i have my son helping lastnight. I mean, thats really remarkable. Absolutely stunning that this year was only. 4 percent per capita. And thats largely i think paul commented due to information cost declines but other factors as well so to my second point here, theres been a lot of debate about whether the Affordable Care act is responsible or not and all those kind of things but thefact is from 2011 to 2017, per capita growth rates under one percent in medicare , ive grown up 30 some years around the system looking at insolvency around the corner and cost going like this every time i turn around, thats pretty steady something is going on. We do not really know what but it is a salutary thing and lets hope it keeps going on. So the second point i would make or third point is with respect to the long term here, i completely agree with everybodys comments about not focusing on the insolvency date and the end all be all things but i would say one thing to joe about trust fund. The trust fund in the government context is not the same as a trust fund in a private context because they are not set aside and reserve the same way. All this is part and parcel of what the government is not. However it has functioned extraordinarily well in many ways as a fiscal discipline device within the public context. So when we got up to 1983 i started my career at government working for the office of management and budget and Social Security system. The Social Security system was going bankrupt and people had to do something. There was a gun to everybodys collective head. And they tried to deal with both the shortterm and longterm problem and they did it by building in small and incremental changes over time such as the increases in the retirement age now in play. My point here is that the trust fund things do matter in a way. Thats where medicaid becomes particularly complicated because part of it is a trust fund, part of it is not. I agree dont obsess about that degree but its not that the trust fund is not important in a public context, it is. The second is dont obsess as much about the longterm. I think paul would agree with me that its more about what it tells you about the dynamics in trend systems. The problems he points out with potential risks from productivity growth over the long term, if i can segue for a second i will tell you one thing that none of the bills on the repeal and replace or whatever you want to call it this week on the hill, none of these examples trust the productivity adjustments. So the repealing replacing segments, theyre not doing anything with respect to the size of those kinds of issues that bob is raising about productivity adjustments or schedule. So long term is important that its important i think my take away from this is good news in some ways, in the short term. Sobering news in the long term but let me get to, i want to join my colleagues on the soapbox and say you cant really just think about medicaid in isolation, you have to look at the whole budget picture and clearly where congress is on that line is not focused on that. I would say that issue is a serious issue and it is a difficult one for democracy. Our history as a democracy is one of struggling how to figure out to manage money from the articles of the confederation to the antideficiency statutes, budget statutes, the congressional budget control and empowerment, its all about trying to figure out how to manage money. This is part of that problem. I would say the one thing that people forget about the 80s and 90s, and i went through whatever it was, they were all the acronyms of the information act is that they were born of a bipartisan, what was good for the country was shared pain. And i think bob is giving the answer to this as a political scientist but i think he is dead on that what weve got to have is weve got to have people who say look, weve got to care about what we are doing for our country and if medicare plays a role in that , as it has to i would say, taxes, other spending and Everything Else all has to be on the table and we have to figure out what the right challenge is to deal with the central issue of our time in the central issue is the aging of our population. The declines in fertility rates mean we are going to continue to get older and that has phenomenal implications not just for healthcare but for everything that goes on in this country. Id say one of those issues part and parcel of that would be immigration reform. Its far afield from medicare but if youre going to deal with this problem and the way in particular he sprained it is all of that kind of thing has to be part and parcel of the discussion. Its not just about cutting medicare or doing this. So im not a political scientist here but ive got to say Public Education point, there was a man who wrote a book named Daniel Jankovic called coming to public judgment and he talked about opinion making an opinion formation in democracy and paul can give us all the analysis and boy, its critical to this process but weve got to get back to something where at some point we get people to care about the future of the country, the role of debt in the future, how were treating our elderly, how we treat our kids. And i think the real issue here that all feeds into that that its not medicare per se. Its the whole and is not a very good place. And without leavitt, joe keith, i admire your appreciation of trust funds. I just want to clarify that the example that one shining example and that referred to Social Security. And why is that . Its because people, retirees understand when their Social Security payment might be cut but thats real money to them. But when we talk about medicare and were not really talking about cutting things that people fully understand. By and large the federal governments approach to problems that may or may not be revealed i trust these reports have been to put it off a little bit. Make adjustments in payments to providers. The political argument of course is that were not affecting the benefits. Certainly we wouldnt do that. But so basically what weve seen instead of this wonderful example from Social Security which i believe only happened once, what weve seen in the medicare world has been modest changes, temporary putting it off as opposed to fundamental structural reform. I think thats something we can debate about can i respond to that jeff . We had these debates many times and i would say that is harder to do, much harder in the medicare area than it is in the domestic area and in fact what happened through the 80s and 90s is what you have described, many changes stemming from that and the reason is as my pointed out, healthcare is really manic in the ethological area as in many other ways of keeping the pressure on all those things is a good thing. So if i can jump in, one of the things, im offering two amendments. One of them is the trust fund analysis, that basically for Political Science , is if you have something where you are basically matching spending and revenues and you go out of balance and have to pay for it, you force people to come to grips with it. And in socialsecurity, that would work if you didnt have things like demographic shifts. So if you saw some spending, if you look at the trust fund balance in Social Security, specifics and medicare, is you hit a point where all of a sudden youre paying out 30 percent more than you did, 30 percent more that youre getting revenues in the trust fund goes out of balance. The old trust fund was simply if you go out of balance slightly, you just have to go back into balance. The other thing which i thought joe was going to mention is the Healthcare Trust fund. We come out to general revenue so is a trust fund is in balance is tautological. That is true. The point i wanted to get to was something my. [bleep] and about, we hear this all the time about what we dont know what to do in healthcare. Its like trying to decide what healthcare should look like 10 years from now, given its size its like trying to determine what the economy of france should look like 10 years from now. Theres so much going on thats not the issue. The issue is what the process, what the political process to deal with that and i do this by way of analogy, we know what not to do. So suppose im debating with my wife about what our kids to do and i think the kids should be playing the piano and she thinks the other kids should be studying. Thats a tough decision. Maybe we dont know what to do. The kid is playing in traffic, do we know what to do. We know what not to do, you cant let the kid play in traffic and i argued a lot of places, the fundamental original sin of healthcare is that it goes beyond government, is you cannot set up a system where patients and providers bargain with each other over what everybody else will pay. Its enough of a demand, its enough to supply, that cannot do. So the result is somebody has to be able to say no, its price controls. It can be like in Medicare Advantage where you sort of sort of rising system which you force in the Insurance Companies are the providers like kaiser and you make that decision or you can put it on an individual which is talk because its certain things and thats what you have to do. The fight is going to be what the right mystics mixed over those things but you cant let the industry so we do know what to do. Its not simple politically but its simple economically to define it. First of all, i think the problem we are confronted with his we have a clear idea about what it is they dont like. They dont like your accuracy. They dont like paperwork, they dont like high deductibles or premiums. Theres a lot of things they dont like but if youre trying to get them to really be clear about what is they actually want, thats different. Thats a little bit more difficult. I think part of the problem we are having in the Health Policy is medicare and the General Health care debate is that were actually not having a health care debate. Were not reallydebating. You go to all of these conferences, seminars, working groups, nobody is saying okay, we want to restrict access tohealthcare. No, we ought to have access to health care, improve cost and quality so were not debating those things. Were actually not in a Health Policy debate and i guess i can claim the professional monopoly here, were having a Political Science debate. The issue is who is going to make the key decisions in the system. Ultimately at the end of the day, that seems to be the thing that is so bitter about all this. There are a number of our colleagues, you all know them very well who strongly believe that the government shouldexercise a monopoly over the healthcare system. They call it a singlepayer system. It is internally consistent and its a internally logical, theres internal logic to it, free care for all financed by taxes and the government will ultimately troll spending through a budget. Others believe in the free market, when you say what do you mean by a free market . That it starts to get messy because people have different ideas about what a free market is in healthcare and frankly, the United States has not had a free market healthcare is 1930 when doctors were going door to door collecting payments and distributing free care to poor families in the neighborhood. That was the last time we had a quote, free market in healthcare. Our situation is now we have a large set of public programs, medicare being the largest and we have a private sector that is so highly regulated that now Health Insurance is virtually a public utility. Our problem is that we havent really been able to carefully calibrate or where we havent really clearly drawn any lines where people are in agreement. I think this debate is going to be more intense regardless of what happens on capitol hill this week or next week, i think were in for a debate on health care for the rest of our lives because this is a 3. 2 trillion sector of the economy. As you point out, it eventually complex and its not clear to everybody what works best. Theres certain areas clearly in healthcare where the Public Sector has primary and a valuable and superior role and there are other areas where the Public Sector actually does a very poor job and frankly i think delivering healthcare to poor people on medicaid is working. Ill jumping on both of those debates because i love a good debate about trust funds and i think thats a great one. I think the trust funds have been a mixed bag overall. On the negative side what theyve done is they have created more of an entitlement ceiling in terms of entitlement programs, more technical the feeling of being entitled to the benefits because you believe youve paid into the program regardless of the fact that people are doing such great work on this are getting in general much more out of the program than they paid into it. But the second problem with the trust funds is they are not an effective mechanism for saving. When we built up trust funds if what youre able to do is save because you know a big demographic cohort is coming along, you can say in that thats an excellent tool work that way at all because of the investments in guarded bonds, their safe investments, thats how they financed deficits and it masks the overall deficit. The third effective trust fund and i do this out with my father who is usually processing any time i talk about entitlement reform as he wants everything paid in because he deserves it appointments myth is that when we were using money that went into trust fund to finance the rest of government, meant those generations pay lower taxes for the fence or the environment or whatever, other things there were so you talk about that money being repaid being owed by you guys, the young people in the audience , it is really a double benefit to an older generation that both put money into the program to ensure their benefits but then used it to subsidize the rest of government and not pay for it. Heres some of the problems with trust funds. One of the good things about trust funds is they create a warning sign for potentially an action forcing moment and the big problem with government right now is they dont do anything until the very last minute. We are right now to use extraordinary measures to get around the fact that we have hit the debt ceiling, thats preposterous. Were doing lastminute budgeting all the time but if we missed the deadline for everything, everything, and part of it is the problem that people, these two parties that are so pitted against each other that they will not look like they negotiated hard enough if they come up with agreement before the last second. So maybe the challenge is to try to figure out something that creates action forcing moment that doesnt in the same way create an inflexibility in the budget that we have area so i know you want to get the questions. I want to talk quickly about the Overall Health care debate and the issues that have not been addressed. Theres so many fundamental core questions and Health Insurance starting with what is the role of insurance, the roleof insurance is to pool risk. Its also and that the obvious one, nobody should go bankrupt because of healthcare costs. But its also, theres less agreement on this, to create subsidies so who should subsidize you . Should rich subsidize for, should young subsidize old and those are all questions that arent hit head on and thats part of whats going on in this debate right now is the discussion about who should subsidize who. Another role that insurance should play that im not sure it should it does a lot to cause for savings for big moments. When you have a baby, thats an expensive outlay. I know because my Insurance Company told me my daughter wasnt covered so i didnt have a child. It was a long fight with the Insurance Company about whether there was a baby who was insured, its every expensive but its not as it turns out. Those are the kind of things where there are big outlays that are somewhat predictable. Theyre going to get braces soon, theres also a role for saving in advance of big healthcare outlays. We havent even come to terms with the fundamental role of insurance. We still dont agree but at least we should have that discussion, thats nowhere to be found in the spirit debate and i question about who should be choosing what things people should have to have so i just go back to the Public Policy first principles, what problems are you trying to solve . What are the structures you could use to solve this agreement, legitimately but lets lay this out transparently from the pros and cons of the different approaches. Its great comments, we have time for about two questions. Quickly, move quickly, speak quickly. We see a lot about. [inaudible] ill review your question, just go on. Whats the question . [inaudible]. [inaudible] okay, so the questions are what happens to ipad and was going to get congress to do anything . I can tell you i know there are bills on the hill that propose to repeal it and there was a mechanism in the legislature that depends on resolutions being introduced as of february of this year that it does cost money and the cbo baseline so i dont believe its in any of the bills on the hill that are moving now. I dont know about how im going to get congress. Okay, questions. Next question over here. Does it work . It works, okay. Theres a couple things that jumped out. Theres again a sharp jump in Medicare Part d per capita growth for 2018. And a sharp jump in 2019 medicare per capita spending. And im wondering what are the causes of those and what should we read into that about future trends and also if you could just explain why the manufacturer rebates went up. Did you just suddenly notice new data or are we seeing something of a new trend in whats causing that . Theres been shifts in whats happening because they went through some respects and in particular there have been more rebates that have been returned inthe program and thats continuing to come through. You look at the projections of other shared rebates coming through and they changed dramatically over a short period of time and theyre predicting that will continue for some time. We have moved to a more micromodel in terms of building up those trends so we might have more explicitly predicting specific drugs going off or potentially coming on market. You very much, unfortunately weve run out of time. Join me in thanking the panel. [applause]. [inaudible conversation] sunday on q a. Is an absolute monarchy, speaking about the distribution of wealth and about the corruption of a prediction, this is so much trouble. Saudi arabia and womens rights activist talks about her time in prison after challenging the saudi government and on with drivers in her book to drive, a sunni womans awakening. In the industry and a huge country, they found a picture and you can put three pictures in this. We wanted to change this by this movement and the movement is going on. Were still campaigningfor the right to drive. The right to drive is more an act of civil disobedience because a woman is not supposed to drive. We show that we are able, we are capable of driving and being in the drivers seat and our own destiny by doing this act of civil disobedience. Sunday at eastern on cspan una. The National Governors association from a meeting live today on cspan starting at 8 30 eastern, governors talk about computer coding and the importance of Computer Science at school with girls who code ceo, former microsoft ceo Steve Ballmer and Tesla Ceo Elon must will speak the governors closing session. Watch the National Governors Association Summer meeting live on the cspan network, cspan. Org and listen live on the free cspan radio. Youre watching book tv on cspan2 with nonfiction books and authors every weekend. Book Tv Television for serious readers. This weekend on cspan2 we got 48 hours of nonfiction authors and books. Heres a few of the programs you will see. On our after words program, naomi klein discusses politics and the election of president trump. Hes in conversation with lydia benjamin, cofounder of code being. Also this weekend, wall street journal columnist jason riley argues that Political Capital for African Americans has left them at a disadvantage in terms of a board economic mobility. Former World Champion Garry Kasparov examines the future of artificial intelligence