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Transcripts For CSPAN Capital News Today 20090916

republican support. >> did you ask republicans and democrats with you today that they would be supporting the bill one by one? >> the door is always open. i am always hoping that all six will be on the bill. we are just going to keep working and discussing and try to get a bipartisan agreement. the american public would very much like democrats and republicans to work together by a large margin. i am working as hard as i can for that objective. we were pragmatically working throughout the years on the committee and very proud of the very strong bipartisan nature of that committee. i am hoping to maintain that throughout the health-care reform as well. . . >> senator rockefeller said he could not support your bill because of the same old issues. >> there will be lots of ideas and the lots of ways for senators to work their way. most members of the house and senate are optimistic. they tried to find solutions to help people. clearly, the senators are going to offer amendments to try to approve -- to try to improve upon the bill. i am quite confident. >> on tomorrow's "washington journal," we will talk with isaac eisenstaedt -- alex eisenstaedt. greg nichols is promoting legislation. rand paul will also be our guest. washington journal his live every morning at 7:00 p.m. -- at 7:00 a.m. eastern on c-span. >> next month, we have a unique look at our nation's highest court, it's traditions and history. >> this building would not be here if it were not for the persistence of chief justice taft. >> he believed that when he was president and when he became chief justice. it became almost an obsession. >> supreme court which has an said from historians and the justices. go online now for a virtual tour of the court, historic photographs, and more at c- span.org/supremecourt. >> we will hear from a panel including from the presence of the american medical association. this is just under three hours. i would like to thank your chairman. chairman waxman, the committee of jurisdiction, the chairman of the energy and commerce committee. i would also like to commend chairwoman louise slaughter of the rules committee who will play a very important role now. i want to thank chairwoman rosa delora. she and mr. miller, once again, are bringing this together. we had a hearing on this kind on the recovery package. it is reaping benefits for our country. we hope to be informed by our witnesses today. i want to thank all of them for coming. i want to congratulate them on their leadership in the field of health and health insurance and all the issues that relate to american seniors. the president has called for his principles to be honored in legislation, legislation that provides affordable, quality, acceptable health care to all americans. we are determined in the legislation that we are putting together that we will lower costs, improve quality, expand coverage, and make sure that people still have a choice. if you like what you have, you may keep it. if you want to change it, you may. if you do not have health insurance, you will get it. this is the essential. it is essential as a health issue, of course. the health and well-being of american families and of our country, a healthier america it is terrible. it is an economic issue for individuals and families. it is a competitive issue for our businesses. it is an issue for our economy and how we compete internationally and globally if we do not have health insurance that is affordable and accessible for our workers. and it is essential for hours -- forced to have this insurance reform for our budget before us to have this insurance reform for our budget. as president obama said, insurance reform is entitlement reform. we must change the spiral of costs and the additional burden to our budget and future generations. we have a moral responsibility to stop that and reverse that. we also have their moral responsibility to pass health insurance reform and we will do so this year. it is a moral imperative. it is a health issue. it is an economic issue. i believe that we can do so by increasing competition and by increasing competition, we will, again, improve quality and lower costs and expand coverage and maintain choice. i believe that a public option is the best way to do that. i look forward to hearing from the testimony of our expert witnesses. i look forward to benefiting from their wisdom. i come again, want to commend the steering and policy committee, the member center present. we have many chairmen of committees who are here. we will be hearing from them. right now, i want to hear from the distinguished chairman of the steering and policy committee. the chairman george miller. >> thank you, speaker pelosi. thank you for your help on health insurance reform. we have convened at a very exciting moment in the process of enacting meaningful health insurers reform, reform that will reduce costs and increase security for americans with coverage, and ensure access to affordable quality care for those without it. momentum is building stronger every day to pass this year a major health insurance reform. the progress being made is encouraging. in the house, we're looking to find a place together the bills that are three committees reported earlier this summer. they're talking to caucus members about concerns and issues. i look for to hearing from our panelists today about how it will impact americans who have insurance today and those were desperately seeking it. president obama has galvanized the nation once again in his stirring speech last week where he offered a clear and compelling case for reform. regrettably, previous congresses and previous administrations have tried and failed to enact reform. president obama made it clear. he is determined not to repeat that distort his -- not to repeat that tragic history. the cost of inaction over the years has been particularly devastating to small businesses. in 1993, 61% of small businesses offer employee health insurance coverage. today, fewer than 40% do. most small-business is do not cut coverage because they're opposed to offering health coverage. under today's system, they simply cannot afford it. president obama made health reform his top domestic priority because he knows that america's long-term prosperity depends upon shrinking long-term health- care costs, increasing the quality and efficiency of our system, and ensuring that every american has access to affordable, quality care. the american people are demanding change to our health insurance system. i am confident that we will respond to their concerns. i look forward to hearing from our panelists and i appreciate time they're taking to speak with us. i am pleased to recognize my co- chair on the steering and policy committee. >> i am delighted to join this important reform -- this important forum on the urgent need for health care reform. last week, president obama laid out a comprehensive plan for health-care reform. we applauded him because it is so desperately needed. the middle class needs more security and stability for those with health insurance, to provide those who lose it, and to avoid the skyrocketing costs to families, businesses, and government. it will protect the middle class and that will ensure that private insurance companies no longer drop you when you get sick and live up to their responsibilities. if anyone -- as anyone has sat at the table with a pile of medical bills, americans need stronger consumer protections in this area, similar to life and death. health insurance is supposed to provide peace of mind. but it is bringing the opposite. the establish a market rules, the creation of an insurance exchange, and a central benefit package and the provision for a sliding scale premium and cost sharing assistance would help those americans who are most adversely affected by the current health-care system. the cbo estimates that 30 million people would be covered through the exchange, much receiving some assistance. about 20 million would be enrolled in private plans. 10 million would be in the public health insurance plan. stability in coverage would be improved as people move or change jobs. in short, health provisions would ensure that no one becomes bankrupt from ruinous medical bills. it would also improve health outcome, the quality of care, increased efficiency, and this -- and slow the growth of the system costs. there would be new payment methods that would reward quality and efficiency. it covers prevention and wellness and eliminates city cost sharing. major new share it predict major new savings come from provisions, -- a major new savings come from provisions. it would slow the growth in federal health outlays from his medical health care savings provisions to 7.3% per year. the creation of the health insurance exchange and establishing a minimum medical- loss ratio would also help businesses and households. administrative costs for individuals would fall from 40% of the premium to 14% of the premium. administrative costs for small businesses would fall from 15% to 35% of the mediupremium to 5f the premium. there would be a review of premiums would go up 150% of the medical inflation. cbo estimates that a public health and churns op -- health insurance option [unintelligible] it would slow the annual growth rate in total health systems spending from 6.5% to an estimated 5.6%. i should caution you that cbo has seriously underestimated savings of three major health reforms in the last three decades. it has overestimated the cost. we do not know these things with precision. we're moving forward and it is important to measure our progress in order to make any corrections that may be necessary. congressional oversight will be critical. congress should ask the administration to set up a system to track the goal of the reform. if necessary, congress can act in future years to modify reform, including phasing in various provisions more slowly or more quickly or adding additional safeguards or savings. this is an historic opportunity to put our health care system on the path of high performance. the cost of inaction is high. the time has come to take bold steps to ensure that health and -- to enter the health and economic security of this country. health care reform is urgently needed. thank you. >> thank you. >> i appreciate the opportunity to provide the small business perspective as the house of representatives continues its work on health care reform. thank you, speaker pelosi, and could shares for inviting is here to help you complete this historic task. [unintelligible] we speak for the nearly 28 million americans who are either self-employed or own businesses of up to 100 employees. the organization sponsors scientific research to guide us and help us understand the interest of small businesses across the country. as president obama stated unequivocally last week, the health care status quo is absolutely unacceptable. indeed, our research shows that and in -- that enacting a comprehensive health-care reform is the number one need for business. 72% say that they're struggling to afford health insurance. of the madrid that do not offer coverage, 86 -- the majority that do not offer coverage, 86% said that it is because they cannot afford to do so. recent economic research conducted for us by a noted mit economist shows that, under the status quo, small businesses will spend two $0.40 trillion on health care premiums over the next 10 years -- will spend $2.40 trillion on health care premiums over the next 10 years. just last week, the commonwealth fund issued a report stating that small businesses stand to benefit the most from health care reform. the report noted that the 39 million americans that work for companies with fewer than 50 employees, that is 25% of them have health insurance through their employer. of the 45 million americans without health insurance in 2007, nearly 23 million were small-business owners, employees, or their dependents. behind the statistics, there are millions of individuals struggling with medical bills while trying to keep their businesses afloat. we hear stories every day from small-business owners who cannot get coverage because they have been sick or because the health plans they are offered are outrageously priced. one would-be entrepreneur in the pharmaceutical products industry had to give up on starting her own business just after a few months because she cannot get decent coverage. one company quoted her $1,300 monthly premium for herself and one employee. despite the confusing and distracting noise of the past month or two, we must remember, like the rest of america, there is widespread bipartisan agreement among small-business owners on the key elements of reform, setting up an exchange to purchase coverage, cutting costs, performing insurance rules, and covering everyone any way that is affordable. as evidence of this consensus, our polling of small-business owners in this summer found that 83% support the elimination of the insurance companies pre- existing conditions rules. 67% support the concept of shared responsibility among all stakeholders to finance the cost of health care. a majority [unintelligible] this broad consensus is underscored by the fact that our sample, as always, was overwhelmingly republican and independent. we complement the house committees for working hard to improve age 3200. we appreciate the effort of the committees and the house leadership to put [unintelligible] we are pleased that the process has produced a plan for a robust national exchange. wholesale insurance reform, a plan to cover everybody accompanied by a necessary guarantees. there is a sincere effort to accommodate the small businesses through reductions and tax credits. we also acknowledge the willingness of house leadership to listen to our strong recommendations. we hope that the house will give serious consideration to making these changes. now we must all focus our energies to complete the legislative process. all stakeholders must stay constructively engage with the congress and the president as this historic legislation moves forward. there are good ideas and all the plans. -- there are good ideas in all the plans. as the -- failure to act will devastate small businesses in many ways. jobs will be lost, which is suppressed, profits reduced, and business expansion of shock. we cannot let -- and business expansion shrunk. with hard work over the next two months, we will pass a bill that will ensure that affordable, high-quality health care is available to every small business owner, every small business employees, and, indeed, every american. thank you. >> thank you. >> to succeed, reform must be built on three strong pillars. personal responsibility, shared responsibility, and shared risk. thankfully, these are the three pillars of h.r. 3200. shared and personal responsibility means employers and individuals should be expected to contribute to the cost of their coverage. yet this responsibility creates a countervailing obligation on the part of the government. to ensure that workers and firms have a good, affordable insurance stresses that offer security and stability. the third pillar of reform, shared risk, requires a new national insurance exchange that allows workers, without secure coverage, to join a good group health plans with premium assistance to ensure affordability for middle-class and lower income americans. shared risk means that this exchange must include a choice of a public health insurance plan competing on a level playing field with private health insurers. indeed, the public health insurance plan is a lynch plan -- is a linchpin in this response. [unintelligible] in most of the country, a small number of large health plans are the only real choice. lacking effective competition and facing consolidated provider groups, private plans are passing on costs rather than improving their own efficiency. new rules for private insurance, such as the fine wines contained in a to 3200, will go in some way to -- contained in h.r. 3200 , will go some way. a competing public plan is a backstop to ensure that this will not happen. public insurance has lowered administrative costs. it obtains a larger volume discounts. it does not have to earn a profit. the experience of medicare suggests that it has a superior ability to control spending while maintaining broadaxes overtime. but for the public plan to work, it must have the ability to have an extensive network of providers immediately, providers who except medicare patients and be assumed to participate under the new plant with the right to opt out. the plan should be able to establish rates based on medicare rates, much like many private insurers do today. requiring the secretary of health and human services to figure out new prices from scratch and council -- and in consultation with providers is an efficient and gives private plans, which already have networks in place, an unfair advantage over the public plan. it also reduces the federal budgetary benefits of the public plan. some have said that we should wait to see a private health insurance turned itself around before we create a public plan. this would be a grave mistake. any reasonable triggered based on the failure of private insurance to provide affordable comprehensive coverage should have been pulled a long time ago. traders have not worked in the past. remember the medicare part to be trigger? -- medicare part d trigger? for most to support it, a trigger is just another way of saying, no, to public plan choice. the same is true of another alternative, original private health-care cooperatives. cooperatives, much like the nonprofit health plans that exist today, are not a serious means of reliably achieving any of the public plan's goal. they would not have the rich or authority to drive broadly payment reforms. they would face the same problems breaking into markets that other private competitors face today. make no mistake. americans want to have these rows of enrolling in a public health insurance plan. even after weeks of lies and misleading attacks, a strong majority continue to want a choice between private insurance and public plan. according to a survey just out in the new england journal of medicine, a strong majority of their physicians support the public planters as well. patients and doctors appear to recognize that such competition is the key to creating greater choice and accountability and increased -- and an increasingly consolidated insurance market. the three pillars of a distinctively american solution to our nation's health care crisis. we should not let the perfect to be the enemy of the good. but let us also not let the expedient be the ally of the terrible. [applause] >> thank you very much. thank you very much for your testimony. >> and did morning. i want to thank the speaker -- >> good morning. i want to thank the speaker. it sounds to me like all of you like the public option. that makes me feel good to begin with. i heard this morning that 60% if positions polled in the united states want this bill passed very badly. -- of physicians tpolled in the united states want this bill passed very badly. of course, we have the awful culminations this summer [unintelligible] could you give me some -- i know we are restricted in time -- but it would be unfortunate for me to hear from you about what to think we could do on the reimbursement part. [no audio] tell me about the way you think we could control the costs on the reimbursement rates. i would appreciate. >> that is an excellent question and one that i often hear. it should be said right off the bat that, despite some of the problems in the medicare reimbursement system, they have nonetheless performed quite well. despite the fact that it has done a better job at slowing the increase in costs, a provider participation has remained quite high and the beneficiaries are very satisfied with this care and have better access with the doctors and private insured patients. i think that the medicare payment structure requires substantial reform overtime. my comments are limited to the point that it makes sense to start of a building on top of the existing or an improved version of the existing medicare reimbursement system rather than have the secretary negotiate separate rates for the new plan. i think it is essential, as we have learned about the debate over medicare, that we do not focus all of their cost control efforts on the medicare program itself. we see this as a larger effort that will involve medicare, any public plan, and creating incentives for private insurers. i think that we could use the public plan much more effectively to innovate. there are important areas of h.r. 3200, things that many have argued for, like moving to bundling of payments, testing the effectiveness of new technology, moving to pay for performance, rather than simply paying for all care delivered, and shifting payments to all primary-care providers. that is something that i strongly support and believe that a new public plan that is treating elderly americans would be well implemented. this is an area where we should see this as a stepwise process. this new public plan will not come online immediately in any reform bill. therefore, we should first get legislation in place that build on top of the medicare payment system and, simultaneously, a thinking about what we have to think about how we could improve the medicare payment formula. i agree that it requires substantial reform as remove to a system that is better. >> thank you. >> i want to thank the speaker and view and rosa for bringing us together with such a stellar group to assure each other up. we're just so close to making history, saving lives, saving dollars, and, in the long run, saving our great country. i just cannot think the panelists enough for the contributions that they have made for decades. it seems to me that we have made our case. the biggest problem, dr. davis, that i find it was facing as lawmakers -- that i find us facing as lawmakers is that i have never seen a problem that we're facing now so openly and honestly being discussed from preconceived illnesses, which everyone has a horror story, to the question that our fiscal crisis. this has nothing to do with black, white, a democrat, republican. it has to do with the physicafil survival of our nation. yet, no matter which argument we present, the only part of this that i do not understand are the people who have made up their mind that it makes no difference what you say. i do not want to hear it. have you ever experienced anything -- and we're almost there and we have to get there. but now i have to rely on the experience of people who have seen things like this happen before. i just thank you for your great contribution over the years in this area and i just wondered if sometimes you have thought about this, as to what you can do to overcome the unfounded fears that people have for this important issue. >> change is always threatening. the main point to drive home is that we cannot continue on our current course. we have 46 million uninsured. if we do nothing, we will have 61 million uninsured in the next decade. we have 72 million people who cannot pay their medical bills or have accumulated medical debt. we have health insurance payments that are 80% of family income. that is the average -- that are 18% of family income. that is the average. it will go to 40% by 2020 if we do nothing. we have to continue educating each other about where we are going if we do not change course. i think that is a pretty compelling story. >> well, i want to thank all of you for the contribution you make. it is clear to me, dr. davis, that we do not have the right people sending out this message. there are so many people they're protesting and are concerned about cost, as though they have no idea about the extreme course in doing nothing. that just does not make sense. there is an emotional feeling out there that divides the common sense of trying to explain what you are doing, right or wrong. is it is building on something that, unless we get a handle on it, i do not know how we can move further. i wanted to take this opportunity to thank you for all those many years that have been down here, for the fight, the struggle, the support that you have given us. this time, we're going to do it. thank you. thank you mr. chairman. >> thank you. mr. waxman. >> thank you, mr. chairman, madam speaker. i think the panel for their presentation. in the people look at this reform of the health-care system as one little piece or one little aspect of it. we have to realize that this is a very comprehensive approach because the bill puts a great deal, first of all, of emphasis on wellness and prevention, something everyone argues that we need in our health-care system and in our approach to health care. we do things to keep people healthier. and then we improve the medicare system. we do this by reforming the payment systems, experimenting with and putting in place new payment ways, group physicians working together providing a more comprehensive and effective way of providing their services. we do things to improve, not reduce, medicare. we will close the doughnut hole and we will read to the physician payment provisions, including payments for primary care, putting in place real fixed and honest budgeting for the disabled growth rate. those are two aspects of it. but then, we reformed private insurance. we tell the private insurance market that they cannot exclude people for pre-existing conditions. we will set up an exchange which will be a new insurance marketplace to fix this dysfunctional individual and group plan market. we will provide transparency as well. in this exchange, we want as much competition as possible. one of the plans that we feel ought to be offered as a public option. -- to be offered is a public option. it is for individuals to get covered, for businesses to participate. we do not exempt all small employers. we tried to be mindful of the impact on the small employers. and then the medicaid program, which is to help the very poor, is expanded to cover people below 133% of poverty. this is very briefly stating the overall reform of the system. we hear so much talk about the talkoption. -- talk about the public option. or we hear a lot about the cost. us talk about the cost. the cost to be enormous if we do nothing. do you believe that the overall system, putting an emphasis on convention and wellness -- on prevention and wellness and reforming the health insurance market and experimenting with changes in the health care delivery system, will hold down the cost? will the increases in the future be less dramatic and closer to the inflation rate in your economy? >> absolutely. that is a great point to focus on. the total rate of spending in the overall system, including the government budget, but also the cost to employers and household, our model estimates that we could slow that down by at least one percentage point. that would be under the kinds of bills that are being offered through the congress through this multi-pronged system that you have gone through. putting all of these pieces together with slowdown the rate of growth. there will be a one-time shift upward to take care of the uninsured, but it would sustain the growth. [unintelligible] the secretary has the authority, under your bill, as you know, as amended, to test those very rapidly. if they succeed, according to the actuary, to sustain them and spread them, more importantly, in a public plan or a co-op plan could immediately start them with those reform payment methods. cbo gives you zero credit for saving on those pilots. i think there is one area where cbo is underestimating it. i think that the potential to achieve success at -- substantial savings, to improve quality, comes from reforming these payment methods. you go a long way to do that in your bill. >> a lot of people complain is on medicare. what will happen to medicare as we do not have any further reform? will there not be further pressures to reduce the medicare spending and just the medicare spending in coming years? >> absolutely. we all know that there will be budget pressures. the bill, as you know, does improve prescription drug coverage. there is currently a donut hole. but i think these reforms, slowing the rate of increase in cost by requiring productivity improvement from the part of providers, by leveling the playing field between medicare, medicare plans, and the rest of the medicare program, insur es the slowdown and that helps the trust fund. by starting now, it will prevent congress having to do very severe and very crude changes to medicare down the road. putting this off does not mean that it will not come home at some point. we have to do with it and begin now. >> thank you very much. >> i want to commend you and our panel for this very important hearing for this vitally important topic. we are discussing something that my dad and i thought for since 1935. i am proud to note that we are closer than ever before to doing the things that are necessary to fulfil our economic and moral obligations as a nation to ensure all americans, not just a select few, and ensure that we'll have a right to equality and affordable health care. h.r. 3200 is going through a transformative process, and open and a fair process. it has benefited from the deliberations of three committees in jurisdiction coming here in the house, to in the senate, and ongoing discussions in both bodies. these are all in good representation of the larger body of the house and the senate. the bill is better as a result of these discussions. all work will be done could i would implore my colleagues to continue the open consultative and constructive dialogue that has brought us to this point. this is the only way that it will be successful. it was hard for me not to applaud as each of you concluded your statements. i want to with this question on mr. john ayernmyer. thank you for joining us today. some people argue that mandating businesses provide health centers, even with the exemption for small businesses, will place an undue burden upon them. the employer requirement to provide health care in this economic climate in the nation will be further jeopardized by the house bill, making such a requirement. it will adversely impact on both productivity and growth. could you speak directly to these concerns and tell us the best way to combat these criticisms. ? >> obviously, nobody likes to be mandated to do anything. this is only one piece of a much larger bill. there is a funding need that all of you need to be aware of as you're putting this together. there's also a desire to encourage employee participation. i should point out that both the cbo and the bipartisan policy center and senate majority leaders have indicated that some kind of employer responsibility is necessary in any final legislation. our polling certainly shows that there's a desire for shared responsibility by small-business owners. as a gimmick of a certain percentage, but -- as you get above a certain percentage, about 4%, that abstract begins to drop off. we commend the fact that the committees have put an exemption in place. it would exempt 87% of all small businesses. of those who are not exempted, the vast majority of those already offered insurance. you're talking about a fairly small percentage of businesses who will be impacted by this. if you -- you have done a good job putting a sliding scale in. those who are infected by the% of liv -- the sort impacted by the 8% may have a smaller percentage. there is still a visceral reaction out there. we do a lot of meetings, a lot of conference calls with small business owners and small business grow to around the country. we have been talking with many of the national small business trips about this. there are fears that the cost control -- small business groups about this. there are fears that the cost control will not be efficient. the polling we have done shows that there are fears about part- time employees and have the tenant provision will impacted. -- will impact it. while there is reason to believe that some sort of shared responsibility can work, one study shows that it will produce a far better results than the status quo. the members of the committee working on this believe there is delayed mistral reaction out there amongst small businesses and we would urge all of you to continue to make sure that the affordability issue is really addressed and that nobody ends up with an obligation that he or she cannot afford. >> it would be fair also to observe that those small businesses exempted from participating in the bill may still do so. in doing so, they can expect fair and better treatment from the insurers, fair and better prices, and significant reductions in costs, including the losses of the 18% differential that works against them relative to between smaller businesses and big businesses. >> absolutely. as you suggest, the response but a provision is one small piece of a much larger effort -- th e responsibility provision is one small piece of a much larger effort. it would set of tax credits to ensure affordability, which we do not have it now. all of that put together means that the kind of system that is in h.r. 3200 will have a far better impact on small businesses than the status quo. this needs to be kept in mind. people tend to focus on one small provision in the legislation. we cannot forget that the overall result of this reform effort is going to be substantial cost savings for small businesses and for everybody. >> thank you. thank you, mr. chairman. >> jacob, did you have something to comment on his question? >> i wanted to say very briefly that i just moved from berkeley, calif. to yale. when i was out at berkeley, san francisco enacted its health- care plan. it does involve a fairly substantial employer responsibility requirement. a study has come not from the uc berkeley labor center that has shown no negative effect on employment or wages. it is worth noting that it is close to the world world example that we have -- the real world example that we have. >> thank you. we now have time for questions from other members of the panel. mr. anders, we will begin with you. >> i want to thank you and the speaker and the chairwoman for giving an honest and open and substantive process. i think is one of the main reasons we will pass this bill. i think the witnesses for the testimony. -- i thank the witnesses for the testimony. one of the reasons that cost is going up compared to wages is because of the lack of competition in the industry. responsible people, when they tried to address that problem of lack of real competition, offered three alternatives. the first is opening up more in a stiff competition so that private insurers can crossed state lines and compete. dr. hecker, at the end of your testimony, when you talk about co-ops, you're skeptical that clubs will succeed because they would face the same problem in getting into markets that smaller competitors face today. what are the major problems that private competitors face in breaking into markets that are not their home markets? >> the primary problem can be the chicken and egg problem. if you do not have a substantial network of participating providers, it is almost impossible for you to gain subscribers, much less to get good rates. but it is very difficult to build a substantial network of providers when there are several large insurers that dominate the market already. the largest insurer in rose 70% of the insured population. in alabama, that number is up above 80%. >> if i understand your testimony, you are saying that, because it is so difficult to build the provider network -- >> exactly. >> any insurer can -- if we said that any insurer could sell insurance in any state in the nation, that would not work request health insurance is a local -- will not work. >> health insurance is a local business. >> if we said let's have national co-ops or regional co- ops, within not fail for the same reason? >> this is the conclusion of investment analysts at the oppenheimer fund who said that they thought this would be great for managed-care companies to get off the ground. but they saw little chance of success. >> how does the public auction as proposed in h.r. 3200 get around this problem of building a viable provider network and inducing real competition? >> it doesn't quite simply by building on existing infrastructure -- it does it quite simply by building on the existing infrastructure of medicare. they would have the ability to opt out, as to providers who have in the past agreed to participate in medicare. >> the gentleman's time has expired. >> dr. hecker, thank you for your testimony. all three of you have provided excellent testimony. you noted the important study in yesterday's new england journal of medicine that three out of four doctors across america are telling us that we need to have a public insurance option in the insurance exchange. despite that, as you know, the insurance industry is spending over $1 million a day to tell us the opposite. they seem to have won over all republicans and even if you democrats. i want to ask you about this whole issue of blowing away the public auction with a trigger. basically, the insurance industry is telling the uninsured that we must deny you the right to buy into medicare or a medicare-type option. you should not have that choice. would do just be more specific about why a trigger is just another way of killing the public auctiooption rather than giving uninsured americans the right to access? >> as i said in my testimony, any reasonable trigger should have been told many years ago. a trigger that is based on the idea that a certain share of the population has to have access to affordable coverage in certain regions of the country and the public plan would only come on line in those regions, as is talk about, would be completely unworkable. i am certain that it would not be triggered at all. that is reflective of the fact that those who support a trigger are trying to gain political cover for their not supporting a public plan at all. that is the experience with medicare part d trigger. this is a decision that should be made by elected officials today, in today's context, based on the overwhelming evidence that it is time to have a competitor in this market. p a friend said that it should be based on the sun rising -- a friend said that it should be based on the sun rising and setting and we are off. [laughter] >> thank you mr, mr. chairman. i have only been around here 40 years. so there's a lot that i still cannot understand. would you just give me a yes or no response to the following? is medicare a public program? >> yes. >> is medicaid a public program? >> yes. >> is our veterans' health care system a government system? >> yes. >> is the nih, which does the research on health care in this country, are they a government or a private operation? >> yes, there governmental. -- they are governmental. >> what about s chip? >> they are administrative at times by government programs and sometimes by private. >> do all of the people in this country who are on medicare or medicaid or veterans health system, do they go to bed at night agonizing about the fact that they are covered by a government program? that is to the best of your knowledge. >> to the best of my knowledge, they do not. in fact, i think they go to bed a bit more soundly because they're covered by a government program. >> could you explain to me why there are so many people who are on those programs who seem to be highly concerned about the dangers of a government program? could it be that they have simply been misled by special interests with a lot of money who are interested in defending the status quo at all costs? >> that would seem a plausible hypothesis. i would also add that the government has a very bad reputation in the abstract in the united states. thus the people who are very happy with their coverage under medicare may not believe that the government can actually do things right. but it can. >> would you believe that people who are on these programs, if they'd actually understood what a public program is trying to do, they would be willing to provide the same benefits to their younger brothers and sisters and to their children as they receive themselves? >> it would shake my faith in america if that were not the case. >> me, too. thank you very much for u nconfusing me. >> there's a lot of focus on the public option. what are the specific provisions in the bill with respect to insurance reform that you would see is absolutely critical to helping us drive down the excess cost? that is number one. no. 2, with or without a public option, we have to change the incentives that are intensified by a a service medical system. what should be included in the bill to change those incentives? i open that up to all three panelists. . you would have medicare joined with private payers. one of the very important provisions in this bill is authorizing the secretary not only to keep those and spread them within the medicare program but to use them immediately and any new public health insurance plan such that it gets off to a starred in 2013 on the right foot with these new, innovative methods. >> thank you very much. >> it is important. but first of all, having health insurance reform where everyone is going to be in the system and limiting the inefficient spending right now where people are not covered, it is something that we are all paying for, those of us who have coverage, i think that the exchange obviously is competitive and robust, -- making it as open and robust as possible and with rules to encourage the maximum number of plans to truly come paid -- compete based on their services and real benefits that they are providing to their members. at the same time, costs keep coming up for small businesses. it is the single biggest issue in all of our polling. we need to continue to work as hard as we can to drive costs down, electronic medical records, reducing waste, fraud, and abuse, changing the way that hospitals and doctors are paid, a simple fine play work -- paper work -- this is all stuff that we need to keep our attention on. our fundamental ways in which health care is delivered in this country that we need to change. it all leads to work together. h.r. 3200 has started down on the path to do that. >> i want to add that it is often stated that the public plan and regulations are somehow mutually exclusive alternatives. in fact, they both have to be there. the public plan is a check and balance in the same way that our government has checks and balances. is said -- it is an institutional check that needs to be coupled with strict regulation on insurers. i would say that one difference between the united states and other countries, and their other country several like any on private insurance, is that our private insurers are quite different. they have a -- they are for- profit and have adopted an aggressive ways of shifting costs on to consumers. we need have not just a good set of rules but also a chair in the form of a public option in our hand to confront the lions. >> the gentlemen's time is expired. bubblers we talked a little bit already about what will happen to medicare if we do not do anything. but there are many peoples in the country and in my district as well that are worried about hearing about a lot of the savings coming out of medicare, that somehow that is going to mean that medicare will be automatically eroded. i wonder if you can talk about how we can protect medicare beneficiaries while getting savings out of medicare? >> about $200 billion comes from something over -- called productivity improvement. that means slowing the increases to hospitals and other providers by 1% a year. the hospital industry has said that it can live with slower rates of increase, around 1%. >> without damaging access? >> without damaging access or quality of care. spending is going up 6.5% a year, and we're talking about 5.5% a year. making improvements, adopting new technology, improving access and quality of care -- these are modest changes, and health system that is $2.50 trillion going to $5 trillion, 500 and billion dollars in savings, when we're talking about $40 trillion over 10 years? these are modest income -- fees are modest increases. they have said that they could do that. it's not going to harm the quality of the medicare program and it is going to be the high satisfaction of beneficiaries. greater choices of doctors, and medicare's track record of success will continue. >> let me ask about people under 65. you talked about modified community rating and there is an age rating and thus less inflation -- in this legislation. mr. hacker, if you could comment on that the ratio that older americans would have to pay more? >> yes, i think that it is clear that -- a strategy that relies on individuals, they are going to get coverage at the premium that is being charged to them by private insurance. we know that a large part of the uninsured are relatively young and need coverage but many face a higher cost, in the context in which all or change the same right. 21 strikes me as the outer bounds of what i would consider -- two to one strikes me as the outer bounds of what i would consider acceptable. we could go all the way to 7.5 to 1, including other factors? that would be a situation which the very people who we most need to ensure are going to be least capable of getting coverage at all. that is not reform, in my view. >> thank you. councilman edwards. >> thank you, mr. chairman, and thank you to the leadership and especially to our panelists. on a focus on the issue of costs and competition and the intersection between cost and competition. especially in light of the testimony that smaller businesses bear the brunt of a system where they pay are greater share than bigger businesses do for insurance, and can only answer only a very small percentage of their workers. the concern the small business has, which i think is very real, that without real competition and cost, what is the assurance that costs will continue to go up -- a cost will not go up even as they meet their shared responsibility? dr. hacker, if you could describe the intersection between cost and competition and the role that the public option plays in that formula, but for folks who had insurance currently, and those who would be participating as outlined in h.r. 3200. >> that is an excellent question. let me start by emphasizing something that does not get mentioned. while it is true that are relatively small share of the population would be in the exchange initially, i think that the legislation leaves open the possibility that the exchange might expand. it should be recognized, if you look at the different versions of allegis lies and even on the house side, that it ranges from 20 to 15 players. 20 to 50 workers in firms. if you look at higher, they are facing the same problems as mentioned. one important principle is that those firms that are facing these higher premiums and difficult situations should have access to the exchange. the other thing that you suggest, the effects of the exchange spread well beyond the market that it covers. there been a number estimates of this and overall health care costs could be brought down substantially with relatively little spillover. in stores in this market would be giving lower-cost. small business are a testament to the failure of the private insurance market due to consolidation. just six years ago, the typical market share of the largest insurer covering large business groups was 33% of the market, and today it is 50%. there's been a marked consolidation. if the public plan was in the mix competing with private insurers, there would be a great deal of pressure to get more affordable premiums for these companies and they would also added to gains of the exchange, spreading the risks more broadly and having lower administrative costs. as we mentioned, we're talking about administrative costs on the order of 30% to 40% in many cases. and we're talking with in the public insurance plan, it will be less than 10% and maybe even less than 5%. this would be a remarkable fourth step for small businesses. >> thank you for pointing that out. >> i am going ask that your time is expired. two more questioners, and van we will carry it to the next panel. >> thank you, mr. chairman. i cannot help but think that are late great friend senator kennedy would be very proud of how we're doing the deep dive on this and at the cost of his life is the cause of ours as well. professor hacker, you mentioned earlier co-ops. i do not understand -- the only friend reference i have for this is farmers and grain, etc. what can you tell us about how the transfer of that idea from farmers to health care would actually work, and how it would really replicate what we believe will happen or bring about with competition relative to the public option? i think we need to examine this. are there great pilots or examples that take place in countries that tell us that there are actual savings that come about as a result of them, or is this simply a transfer of an idea of from agriculture to help the question are >> i am afraid it is more the latter than the former. we have very little evidence that the strategy would work. in fact, quite a bit of evidence to the contrary. health care cooperatives have been tried in the past. the most extensive initiative was done in the 1940's by the farm securities administration. at its peak, this effort resulted in about 5000 mostly agricultural workers receiving coverage. it may sound impressive, and this was in 1947, the late 1940's. there is one surviving co-op from this initial experiment. it is group health cooperative. it is a very nice health plan. it is in two states and covers 500,000 people per the largest health-insurance, wellpoint, covers 33 million people. the strategy would result in large plans to compete with these large for-profit insurers, i think that is medical. i am not the only one who thinks it -- think so. senator rockefeller has engaged in extensive study in this issue. and everything that he has learned from people in cooperatives today, this is not something that would be able to stand up to the large insurance companies. even if you put aside a very low prospects, cooperatives have frequent problems. they are not going to be -- be able to create the will not be able to be created on the national basis. they simply are not going to be able to be adept -- to be able to adapt it types of reforms that are necessary. and most importantly, and this is really the center of the argument for a new public insurance plan, they are simply not going to be able offer competitive alternatives to private plans, a benchmark that will press private plans to improve their performance over time. there will not be a benchmark or a backstop, and they will all be a backup for very limited parts of the nation. dollars "the atlantic montha very important article. it had some shocking statistics. for example, about 100,000 people every year die of infections that they get in the hospital. tens of thousands died of mostly preventable blood clots. he also underscored what an uninformed consumer we all are in terms of care options as well as the real costs of that care. he offered some interesting options for providing health care. one of them is based upon a type of catastrophic insurance plan. but it was a whole new out of the box way of thinking. any of the panelists to actually read that article, i love to get some feedback from experts on that article. professor hacker, did you read it? >> i am afraid that i did not. >> that is the first disappointing thing i have heard you say. dollars i am sorry i did not disappoint you previously. >> very similar studies in 1999, they estimated end 98 days and people died each year. -- that is pretty close to 100,000. that is accurate. >> this bill has very important provisions to have transparency and public reporting. it will track our performances and would set up an assistant secretary of health for help in affirmation. it would make sure that the i.t. systems are tracking these types of indicators and they have publicly available information so that the patient knows before they go into hospital what of -- what the problems are with hospital infections. they now to ask their doctors to wash their hands and when that tossed -- and when that hospital has techniques like dispensers going into the room where that becomes an automatic practice. >> you do not get a chance to read that either? >> it is absolutely critical that these cost and quality issues that are -- many of which are contained in the legislation, these need to be communicated again and again. i will certainly speak for the small business community -- we have to look at the totality of legislation. it is clear that small business owners want reform and day and we need to understand all of the provisions that are going to improve quality, such as we ever talked about very the more that we can talk about that, and what is in this legislation that is going to radically reform the entire system, that is going to go along way toward doing what some of the perhaps concerns around financing. >> h.r. 3200 is designed to make us more informed consumers. bank. >> i want to thank the panel for your testimony and your responses to the members of the committee and help that you have given us in guidance as we have drafted this legislation. and now i will turn it over to congresswoman -- to the cochair. >> let me say thank you to the panel for your commitment to the issues and for sharing your knowledge, clarity of thought, and we're going to calling you again. -- we're going to call on you again. may i ask the second panel to take their seats. while the panel is changing, my colleagues who did not get a chance-asked questions on this first go round -- a chance to ask questions on this first go around, i hope that you will stay for the second panel. i will be happy to call on you first in the question and answer period. thank you. and mr. holt. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2009] we're going to get our oil sells under way. it is my privilege to introduce our second panel of experts. they will discuss stakeholders and our health insurance system. they all have far more credentials than we have time to describe here. we want to hear their testimony so i will be brief. my colleagues and others can read more in their biographies. a senior staff cardiologists at a clinic in temple, texas, who became the president of the american medical association in june 2009. he is actively involved in patient care, he works with a not-for-profit health plan that is nationally recognized for quality health care delivery. a chairman of the board of trustees for the top american heart association, and before joining cedars-sinai, he served in the executive staff of another hospital in pittsburgh. dr. marilyn comes as from the american nurses association, a nurse practitioner from illinois with over 30 years of professional nursing experience. formerly of president of the ongoing nurses' association, she is a founding member of the health care task force for our colleague, the seventh congressional district where she has served for 10 years. wendell potter, a senior fellow on health care at the senior for media and democracy. before that, working in health insurance industry as of former head of corporate communications and the chief spokesman for the cigna corporation. after a 20-year career, when the potter left his job to become communications for signet to help advocate for meaningful health care reform and other important policies. bonnie criminal, currently serving as the board chair -- bonnie kramer, a human experts as bird was the north carolina state government department help of human services and the governor's office of state budget and management where she served as assistant state budget officer for health and human services. she has received numerous awards for her work. i will ask the panel is to begin. dr. rohack, concise testimony, concise questions and answers. >> thank you very much, madam speaker. it is a delight for me to be here to represent the physicians and medical student members of the american medical association. i want to thank you to allow me to to talk about the important issue of health system reform. we appreciate a significant work that has been accomplished but house of representatives in developing h.r. 3200 and moving it through the committee process. h.r. 3200 is an important step forward in achieving critically needed reforms to improve the health and well-being of americans. last week the president outlined three essential goals that are vital to reform efforts. stability for those who have health insurance, access to affordable health care coverage for the uninsured, and a reduction in waste and unnecessary costs in the current system. the ama shares these goals and we have identified critical elements that should be included in health system reform legislation to achieve these goals. first, reform legislation must provide health insurance coverage for all americans and improve the health insurance market. the ama supported the provisions in h.r. 3200 that builds on the current employer-based system of providing coverage while encouraging news sources of health insurance availability for individuals in an improved insurance market. we also support advance of a tax credit so low income individuals to purchase health insurance and maintaining and strengthening public programs for those below the poverty line. our vision of health system reform includes giving patients more choice over their health insurance coverage and their own care while preserving and improving the patient-physician relations. we all -- we agree with the present that it is essential that helped care decisions are made by patients and their physicians, and not by insurance companies nor government bureaucrats. we're pleased that h.r. 3200 would not mandate medicare provider participation in a public insurance option, and that an amendment was adopted providing the physician payment rates in the public option would be able to begin negotiations and not directly linked to medicare rates. we viewed this as a significant improvement and urged congress to retain these provisions. health system reform should invest in and create incentives for quality improvement, prevention, and wellness. the ama continues to be committed to the development of initiatives to create quality care for patients h.r. 3200. we. including provisions that include the position reporting and is it as by requiring more timely feedback and an extension of bonus payments. these are welcome changes that will go a long way to help physicians participate successfully in this program. we also support a role for comparative effectiveness research. however, such research should not be used as a tool by government or ensures to simply deny or rationed care, nor to be used as a basis for medicare national coverage determinations. in addition, the ama strongly supports an increase focused on disease prevention and wellness, including reforms to reduce health disparities. we are pleased that h.r. 3200 addresses the issues. it is essential that congress permanently repeal the medicare physician payment formula that would trigger a steep cuts and threaten access not only for seniors but also for military families. an essential called the president outlined last week is to ensure stability for those who currently have health- insurance, including medicare. the ama greatly appreciates the house of representatives recognition that permanently repealing the existing growth rate formula is essential to achieving this goal. a stable medicare physician payment foundation is also essential for the new payment models and the liberal reforms that h.r. 3200 promises, to in cent highly -- high-quality care, promote primary-care and preventive service, and encourage will net -- well as initiatives. finally, we believe that we must take steps to address the unnecessary costs that make coverage unaffordable. the two areas that we think need focus on the unnecessary costs to the defensive medicine and the administrative waste that adds nothing of value to health care. the cost of our liability system -- defensive medicine at billions of dollars to care each year, which means higher premiums for patients. we are pleased that the president address this in his speech last week and support the amendment to h.r. 3200 to provide financial incentives for eligible states to conduct pilot programs. everyone in health system would benefit substantially from streamlining and standardizing health insurance claims processing that is going to eliminate the unnecessary costs and administrative burdens that we calculate will save billions of dollars. in conclusion, the ama believes that the enactment of the above policies will create a foundation for a better performing health-care system and reboot -- and improve access to high-quality care and reduce unnecessary cost. we want to reaffirm the american medical association's commitment to work with congress and the president to have and achieve health care system reform this year that will benefit all americans. >> many thanks. >> that is correct. thank you and good morning, other members that were here that margaret i am the president and ceo cedars-sinai in los angeles. i have the privilege of serving as the american board chair of the american hospital association, representing 5000 hospitals and other health care organizations. the people of our hospitals are fully committed to reform because we see every day how good our health-care -- are health care system can be and how much room there is for improvement. we commend the house committees for taking a major step in this direction by expanding health- care coverage for the uninsured. it was, meaningful reform first and foremost expands coverage to at least 95% of all those residing in the united states. achieving this goal requires the shared responsibility among all stakeholders. this includes an individual mandate, employer responsibility, and governments assistance for those who need it. we acknowledge that 100% coverage is unlikely. there always will be some who fall through the cracks and we appreciate that funding mechanisms such as disproportionate share hospital programs are preserve to continue to act as a safety net for those individuals. we applaud the the legislation restricts the ability of physicians to self referred to hospitals in which they have an ownership interest. as we saw and the new article, areas where physician-owned facilities floors tend have significantly higher health care spending levels. facilities koresh tend to have significantly higher health care's -- facilities flourish and have significantly higher health care spending levels. training the next level of doctors is critical. all of these issues are key to successful reform and we applaud the house leadership for addressing them. my written statement has more details but i would like to point out a few concerns that we do have about some other proposals. we continue to have concerns about tying the public option to medicare rates. it gives the secretary broad discretion to set our negotiate rates. we fear that there would be little incentive for the secretary to pay more than medicare rates. this could bring significant losses to hospitals as people an employer's role -- and role of the -- enroll in the public plan because of lower premiums which would be possible by the significant underpayment of providers. hospitals could have i -6.9% medicare margin in 2009, down from a positive 6.2% margin in 1999. that is the lowest level in more than a decade. our annual survey that are reveals that a staggering 58%, or 2840 hospitals, lost money serving patients in 2007. that is why we feel strongly that any public option should provide for negotiated rates without a link to medicare payment rates. one readmission, please know that hospitals are working hard to reduce their readmission rates. while we agree with the bills in tensions, we do have concerns with its methods. representing a potential cut and $19 billion, with higher than expected 30-day readmission rates for heart attack, heart failure, and ammonia, this cut would apply to all medicare discharges, not just readmission cases. preventing unnecessary preadmission is is a complex, system wide golden balls hospitals, physicians, skilled nursing facilities, and other providers to manage patient care as well as patients and their families. policies that provide incentives should focus only on on planned readmission better in fact related to debt and for which the greatest opportunities exist for hospitals to prevent reoccurrence. finally, the legislation permits medicare to pilot programs in which accountable care organizations are paid to manage health care of define populations. however, the ability to provide the leadership is limited to physicians or position organizational models. we strongly believe that all the qualifying providers, including hospitals, hospital/physician partnerships, to voluntarily form and leave these groups and sharing the cost savings they achieve for medicare. aco's offer an opportunity for real improvements to provide the organizational leadership structure that is successful will meet. in closing, let me say again how much we appreciate the opportunity share our views on meaningful reform and the leadership's work to achieve them. you have our commitment to work with you on reform it truly makes health care better for the patient, and the communities that we serve, and that helps us get care to all the needed. thank you. >> dr. maryland? >> i.t.. i'm bo>> thank you. speaker pelosi, a distinguished committee members, and congressional staff, i am married marilyn, a certified nurse practitioner speaking on behalf of the american nurses association. we're the only full-service organization representing the interest of the country's 2.9 million registered nurses. nurses know first hand and said heartbreaking consequences of patience -- and see this heartbreaking consequences of patients. we hold their hands when coverage has been canceled or denied. we even see deaths related to a denial of treatment. this is why we remain committed to the principle that healthcare is a basic human right and that all persons are entitled to access, readily available -- access to readily available health care services. we strongly support a public option as this -- as an essential part of reform. it provides broader choice for patients, increase the stability, robust marketplace competition, and ensures access to services. we support provisions h.r. 3200. that in discrimination for pre- existing conditions, cost sharing for preventive care, termination of coverage for those to become a hill, an annual lifetime coverage calves, and guarantees insurance renewable. this will bring a sense of security to patients who currently have insurance and those who may lose jobs or get sick. nurses are fundamental to the shift needed in delivery ships needed. it will transform us into a true health care system. the investment in the developmental work force program will bolster the nursing program. that will work to create -- it will enhance career mobility. in order to meet our nation's needs an integrated national work force must be worked -- put into action including advanced practice registered nurses to provide care at that has been widely recognized by patients and health care industry. h.r. 3200 clearly recognizes that the support, development, and deployment of this is essential for the success of the quality health care plan. we applaud the use of multidisciplinary team to support primary team to the medical home model. this model demonstrates a commitment to quality, coordinated care by all providers, and focus is not just on treating illnesses but on emphasizing wellness. h.r. 3200 we're especially pleased. , no. practitioners have been recognized as primary-care providers authorized to leave medical homes. it would allow patients to receive primary care in their homes and supports and disciplinary -- interdisciplinary model where they would practice collaborative lead to the full extent of their education and training on behalf of the patient. it recognizes the interval role that nurse practitioners play in bringing that focus on our health care back on where it belongs, on the patient and the community. ana is committed to strengthening medicare beneficiaries. we are pleased that h.r. 3200 requires public recording for nursing staffing and skilled care facility for its data and information will help consumers make informed choices and promote resonant safety. it is our strong stand that this requirement also be extended to acute-care settings as wellaasna straw is of course community-based and home-based care models such as home visitation programs health clinics. there are more than 200 nurse- managed health centers. they provide primary care to over 2 million patients and only -- annually. there partnered with the help department. thank you on behalf of the american nurses association. thank you for the opportunity to testify today. let me share with you comments from one of the thousands of nurses who wanted their story told you. "i am tired of wheeling patients to the door knowing that they are not ready for discharge. i am tired of finding out patients are not taking their medications because they cannot afford them. i am tired of families losing their homes and filing for bankruptcy because of medical bills. i am tired of insurance companies deciding what patients need rather than patients and providers making those decisions. our health-care system is not only in critical condition, it is on life-support. we need to change it and reported today." thank you. -- and reforming it today." thank you. >> thank you, members of the committee. i am honored to be here today to testify about the need for meaningful and comprehensive reform and about the efforts of an industry i worked in for many years to shape and form and in ways that will benefit it at the expense of taxpayers and policyholders. in the weeks since my june 24 testimony before the senate committee on commerce, science, and transportation, i expressed hope at every opportunity that this might be the year that congress will enact legislation to reform our health-care system in ways that will truly benefit americans for generations to come. but i've also expressed concern that if congress goes along with the so-called solutions, the insurance industry says that it is bringing to the table, and acquiesces to the demands, and if it fails to create a public option to create what private insurers, the bill as it stands might as well be called the insurance industry profit protection and enhancement act. h.r. 3200 encompasses a comprehensive set of reforms that addresses the critical needs for expanding coverage, lower health-care costs, and greater choice and quality. many legislative proposals would benefit health insurance companies far more than average americans. the practices of the insurance industry's over the past several years have contributed directly to the growing number of americans who are uninsured and to it even more rapidly number of americans who are underinsured. h.r. 3200 will go a long way to making a lot of the practice is illegal, providing much needed assistance to low and middle income americans who cannot afford the overpriced premiums being charged by the cartel of large for-profit insurance companies that now dominate the industry. h.r. 3200 would provide premium and cost sharing assistance to the health insurance exchange that it would create. it would require the help -- as secretary of health and human services to create a package of essential health services that all plants would have to cover. it would prevent health insurance from denying coverage. it would eliminate deductibles or copays for preventive care as well as the lifetime limits currently, and health insurance policies. the bill also would set an annual cap on out-of-pocket expenses that is more reasonable bet as other proposals. an important if not more -- and as important if not more important, h.r. 3200 would create a public insurance option to compete with private insurers. contrary to the misinformation being distributed, public insurance options will not have a competitive advantage over private plans. it would have to be the same benefit requirements and comply with the same insurance market reforms as private plans. as i told members of the senate commerce committee, insurance companies routinely dumped policyholders or less profitable or who get sick as part of their never-ending quest to meet wall street's illustrious profit expectations. what the proposals proposed would seemingly restricts the insurance companies' abilities to put their needs over those of the consumers, but that would actually try million more americans including many who have access to comprehensive coverage into the ranks of the under insured. an estimated 25 million americans are now under insured for two principal reason. many -- a high deductible plans that they have been forced into by their employers and health insurance companies require them to pay more out of their pockets where they can afford it and not. deceptive marketing practices as well. the insurance industry is insisted on retaining benefit design flexibility. those three words, seemingly innocuous and reasonable, by requires all of us to buy coverage from them, millions more buzz with little more all eternity to buy a policy that appeared to be affordable but will prove to be anything but affordable of the become ill or injured. they have spent billions of dollars buying companies that specialize in limited benefit plans. the underwriting criteria it essentially guarantees big profits. h.r. 3200 would ban the worst of these policies. it would provide financial incentives for employers offer bare bones plans that allows benefits -- -- it would actually encourage them. unlike h.r. 3200, these proposals would not require employers to provide good benefits or even to meet minimum benefit standards. they would prevent -- allow employers to saddled their workers with the entire amount of premiums, emphasizing the rapid shift to working men and women. the baucus plan also would allow insurers to charge older people and families 7.5 times as much as young people, imposing big fines on families, and would weaken state regulation of insurers. as a consequence, these proposals would do little to increase affordable insurance for those currently insured and would not stop the rise in medical bankruptcy's. they would insure a new stream of revenue -- it would actually gosh to insurance companies. much of that new revenue would go right into the pockets of the wall street investors who own them. of the past several weeks, i repeatedly told audiences around the country that a public option should not be an option to be bargained away at the behest of the insurance companies who are pouring money into congress to defeat substantial and essential reforms. a public option must be created to provide true choice to consumers to truly fix the root of the severe problems that have been caused by large -- in large part by the demands of wall street. it would restrict the insurance company's ability to enrich executives investors at the expense of taxpayers and consumers. h.r. 3200 will truly benefit average americans. the baucus plan would create a government subsidized monopoly for the purchase of bear bonds, high deductible policies that will truly benefit big insurance. in other words, insurers would win, your constituents would lose. it is hard to imagine how insurance companies could write legislation that could benefit the more. over the coming weeks, the people who hired you with their votes and others that you review -- a view this as a way made more money. thank you for considering my views. [applause] dollars mr. krame>> mrs. kramer. >> i am bonny kramer, an aarp volunteers and the chair of the aarp board of directors. i went back to you for your commitment to enacting health reform legislation that would ensure that older americans are not denied the affordable coverage and that will protect medicare benefits for seniors by eliminating the waste that is driving up the cost of health care for everyone. today i am proud to be here representing nearly 40 million members of aarp. half of them are over the age of 65 and participate in the medicare program, and half of whom are under the age of 65. both of these groups face serious problems in today's health care system. as many as 7 million of all persons aged 50-64 are uninsured today and losing jobs every day, and people in medicare are spending 30% of their income on health care. as you know, aarp greatly values the views and opinions of our members. we spend a good deal of time talking with them, meeting with them, and soliciting their input. just since august, aarp has engaged of 1 million of our members all across the country in town halls, and tell town halls, and community events. we have listened to their concerns, their ideas, and their solutions. as you also know, we her confusion, frustration, anger, and in some cases, desperation. many have hopes that it will help to solve their problems with health care system. at aarp, we believe that health care is not a democratic issue, it is not a republican issue, and it is not about political gamesmanship. it is about people's lives. that is why we believe that health care reform must fix what is wrong and preserve what is right. we have been working hard to cut through the noise and find the facts about what health care reform means for our members and their families. unfortunately some groups have been using scare tactics such as the notion that health care reform would ration care, what hurt medicare, or result in a government takeover. the statements are just a few of the many falsehoods that are being spread to block the true enactment of health care reform. our most recent bulletin which goes to war 40 million members helps to dispel many of these myths and i brought copies to share with the members of the committee. i was like to share with you what our members have told you that they want out of health care reform. first, we must end discrimination by insurance companies. like millions of older americans, too many of our members have been denied coverage because they have a pre-existing condition. others have fallen victim to insurance companies that use their age as an excuse to charge exorbitant rates that they cannot afford, leaving them without coverage. our members want the peace of mind that comes with knowing that health care reform will ensure that they can no longer be denied coverage because of their health and age. aarp strongly supports the house provision to limit 8 rating to no more than 82 to one ratio. we have serious concerns -- no more than 2 to 1 ratio. age discrimination is just as inappropriate as discrimination by gender or medical history. a r p believes that an age rating is not seriously constrain it is simply another way for entrance to write their policies and select only the healthiest and youngest individuals, leaving our members to face rates that many will not be able to afford. aarp also supports providing subsidies, included in the house bill, to individuals up to four under% of the federal poverty level. without the subsidies, many of our members will not be able to afford coverage or the cost sharing for coverage care. all income groups receiving the subsidy should continue to get protection on premiums up to 11% of income at a minimum. and that was provided in the original bill. we believe that efforts to increase the percentage limits or decrease the subsidy levels will erode the affordability and protection of the credits and will mean that overtime more people will find insurance unaffordable. second, health care reform must protect medicare by ensuring seniors get the benefits they have earned, plugging the medicare partd doughnut hole, and strengthening the health- care fund buy eggs -- by eliminating fraud and was full spending. protecting medicare in getting better value for both medicare beneficiaries and the federal government. pledged to our members that we will not support any health care reform proposal that does not protect medicare so that seniors continue to get the benefits that they have earned and their children and grandchildren have health coverage that they need when they retire. any final health care reform plan must use savings of removing waste, fraud, and inefficiency in the medicare program to close the part d doughnut hole so that our members can have access to the doctors that they need, to improve care by covering more preventive services such as cancer screenings, and to keep premiums there and hold down and out of pocket costs. third, health care reform must protect consumers and choices by making sure that no one will get between you and your doctor, not an insurance company cannot the government. and that no one will tell you which doctor or which treatments you should have. people's health should not be taking a backseat to health insurance or drug company profits. fourth, help care reform should ensure that all americans have the security of knowing that if they lose their insurance because they'd lose their job or because they change jobs, making it affordable, quality health insurance. i like to close by dispelling one more popular myth -- health care reform is too expensive and we cannot afford to fix it. if we do nothing to fix health care, families with medicare or with employer-based health care coverage will likely see their health care premiums nearly doubled again in the next seven years. if we do nothing to fix health care, the share of family incomes spent on health care will also nearly doubled in the next seven years. when one in three americans say that someone in their family skids' medication,'s ponds or cuts back on needed medical care to the costs, when countless bankruptcies are related to medical expenses, but when the number of uninsured continues to rise, when government spending on health care programs rises are rapidly that it jeopardize his other priorities, and when employers struggle to pay for the cost of health care, the fact is we cannot afford not to fix health care. thank you again for your continuing leadership to improve our nation's health-care system. i appreciate the opportunity to testify on behalf of the aarp's 40 million members. >> out as a thank-you to the entire panel. i want to run down quickly the list of members who have already asked to escort him. mr. dingell, mr. waxman, mr. scott, mr. tierney, ms. johnson, mr. holt, and miss davis. i am asking my colleagues to be brief. one question and i will ask the same of our panelists in response. mr. de sarah --becerra. >> thank you for your efforts on behalf of the disproportionate hospital care payments that are so important to a lot of our providers out there. i like to ask a question to mr. potter. you did an excellent job of trying to set the landscape for us in what we currently have and why it is so important to reform our system. let me ask you this. just this note mom-and-pop start a business to go bankrupt, just as no retailer tried to market a product that people who cannot afford it will shop for it, an insurance industry company gets in the business to offer insurance. the way you make money with insurance is that you reduce your risk. you reduce your risk by seeking out customers offer the least amount of risk. if you're going to be a health insurer, that means that you're going to try to ensure people who are helping, wealthy, or young. if you try to insure someone who is sick, and chances are you have to provide them with benefits. if they are poor, and chances are they cannot pay said the insurance company will have to provide more of the payment. and if they are older, they are likelier to be using more of our health care resources. you cannot blame an insurance company for wanting to seek out the healthiest, the wealthiest, and the youngest. we can try and make it so that they will try to compete for the business of every american, whether healthier not, richer not, or whether you are young or not. so when you mention the public option as a choice, i am wondering if perhaps with the public option does in a system where we rely on insurance to give americans access to health care, that what we're really saying, we want insurance companies to be profitable. we are invested in insurance company but we also want them to do and that is, to go to everyone and you have to give them incentives. >> i need the gentleman's question. >> thank you, madam chair. what the public option be a way to help make the private insurance industry truly compete for all businesses, not just the business of the richest, the wealthiest, and beyond as? >> yes, congressman, i think that it would. you have the situation now with the industries that dominate, many are just with seven of the largest companies. they'll look first to the needs of the shareholders and you are exactly right. they tend to avoid risk. you'd be hard-pressed to find -- they call them health benefits companies are something like that. a public option we go along way to providing some balance to the demands of wall street. if they are required to take all comers, as i hope the legislation finally forces them to do, a public option would indeed hold them more accountable and help to set some of the rules of the road. i think it would go a long way toward doing that. >> thank you. >> mr. dingell. >> dr. rohack, i like to commend you on several points. what gives -- what -- why is ama support h.r. 3200? we're hearing that it harms the relationship between doctor and patient? >> we appreciate your support of health system reform over the years. the ama, when we took a look at where the 21st century health care delivery system is, it is fundamentally broken for many americans. as a result of that, the positions felt that it was time that we stood up -- a physician felt that it was time that we stood up for the patients. our belief and support of h.r. 3200 was to continue the process moving forward, the status quo was unacceptable. with regard to the question, is there anything in the current version that we a scene of h.r. 3200 that would create the problem of interference between a patient and physician to determine what is best for that patient, and the current version we do not see anything that would prevent that doctor/patient relationship from continuing. . and so, asç we tookç a look aa comprehensive system reform bill, we thought it would be appropriate to have a conversation, not whq patientç arrives at a hospital, but the time that they are healthy so we can have a quality conversation about what a person believes,ç whatç they want, wt they want to agree with. this is at a time at catastrophe. çç>> and this causes you no fr about the safety of the patient? >> this is occurring every day, and we just think there isç a ãfetter way for it to occur, and that is as an outpatient at a time that the patient is not in a critically ill situation, where it is veryç difficultç o have a good conversation. >> mr. waxman? >> ççyou are a strong critic f the insurance industry, and you speak with some credibility. çwe haveç outlined a number of things that the insurance companies have done that we should not allow, but our legislation changes so much of whatç theç insurance companies have done in the past. we have a comprehensive package. ççwe regulate the way that thy operate, something akin to a begulated utility. çthey cannot have limited ratig variations. they have to go some exchange. ççand if they do not meet ther roles, çç so i think a lot of your criticisms will not be applicable, whether we have a public option or not. what we need, however, is competition. >> i agree with you. i think the house bill will go a long way towards that. other proposals i have seen would not. >> thank you. >> thank you. i just want to remind again my colleagues and the panel that we have to conclude the meeting by noon, and i want to make sure that we accommodate everyone's questions. >> thank you very much for your testimony. how to expand coverage by some 30 million or 40 million people and at the same time contain costs? the previous panel of witnesses came to say that if we implemented the recommendations they were ranking, over the next years, it 10 or 20, we could see a rate of increase -- the recommendations they were making, over the next years, o 210 or 20, do you have any confidence that that savings could be achieved in that time frame? >> as we presented to the president on may 11, we believe there is savings by eliminating unnecessary cost. part of that is a variation in caribbean part of that is the administrative burden and simplifying that. but part is also defensive medicine. -- variation, and that is a part of that. if we follow evidence-based guidelines that say if a person comes in with a headache, for example, that everybody needs to have a cat scan pre-empt under our current environment, people are going to continue ordering them -- that everybody needs to have a cat scan. >> do you think the pending bill, 3200, lays the groundwork for that? >> certainly, the simplification is in there, and the amendments talk about some pilots at least starting down the road to try to reduce the variation and then gives safe harbor protections if you follow and do not need to be pressured to order the additional imaging tests, which is the fastest rise in health- care costs. >> does the association take the same position? >> i believe the american auspices the asian shares the same vision of the ama, that we could contribute to adjusting the cost curve -- i believe the american hospital association has the same vision. >> one final observation. , but commonwealth series of recommendations, fraud, waste, and abuse, it does not include anything about the repeal of the prohibition on bargaining for pharmaceutical drugs. do you think that these if added back to the list would lead to additional savings? >> well, certainly, our ama policy has been that it is inappropriate, if the federal government wants to do that. it does it through the veterans administration program and the department of defense. with what was done in the stimulus package for electronic medical records, if we can get that interoperability standards, we do believe there is significant savings that occurs between physicians and hospitals where we cannot talk to each other, and doctors cannot talk to each other, especially if they are solo doctors, so as we look at ways to reduce the unnecessary costs, we're looking forward to continue this. >> if i might add, the american nurses association also believes there are cost efficiencies to be halved -- had in care. seniors awful -- often end up in given facilities with no way of sharing what has been done. using the technology could cut that waste enormously. >> at they are peak, it is important to m&a. we think that it makes important steps in terms of medicare, particularly. for example, looking at excess profits and the advantage plan, we look at that, excess profits with other providers, preventive care, which has been mentioned, and health information technology. now, as you know, we do support giving the secretary of 44 pharmaceutical drugs, and the cbo says there are single source drugs that do not have alternatives. in other words, there be savings when there is just one drug available. we also believe there would be potential savings for the other plans where the negotiating power is more limited when they have all available drugs in the categories. so we think we need to do all that we can. that would be one more tool in the arsenal. >> thank you, madam chair. thank you for putting this together. let me ask you about selling insurance across state lines, following up with the gentleman from new jersey. the public option is there for a reason. it provides a check on costs and a check on quality. they have a meaningful choice. if you do not have a public option, you have a situation where you are acquiring -- requiring people to buy products from essentially a sole source without any check on price. they can charge what they want. the public option puts a check on that. they have somewhere to go. now, the gentleman from new jersey pointed out is that the provider network may not be there, so they cannot effectively compete. are there other problems which selling across state lines? for example, what kind of oversight with their before a montana company selling something in virginia. if they are not doing right, what is the regulatory scheme to put a check on that, and what would that do to doctors' offices? instead of a couple of insurance forms that you have to be familiar with, you would have to train your staff, i guess, for unlimited numbers. can you talk about the other problems about some across state lines as an alternative to the public option? >> certainly, from the positions standpoint, i think you highlighted two of our concerns. number one, right now, it is difficult for physicians offices to keep track of the deposits and the different forms, and said to add a state line issue, where you can deal with 1500 different insurance companies and trying to keep track of all of that, the administrative load on the position would be untenable. the other reality is that each state has created its own patient protection legislation. each state has different pay rules, so part of our concern would be to make sure that there is not the consequence were someone is coming into a doctor's op-ed's with a blue car, and you think they have been underwritten in your state, your state always -- is coming into a doctor's office with the blue card. that could perhaps be solved by having some uniformity, but, again, that is the problem that we have about the state line issue. >> it gets to the need for administrative simplification. one of the challenges that is frankly driving up the cost is the work internally to make sure that we are complying with all of the regulations. i think there has to be a way to reconcile this. . if we want to keep this system as low as possible. >> they are likely to sell products across state lines. better patient restrictions. unless there was some prohibition, what they would do is based their domicile in a state with minimal regulations and patient protections and be able to sell those policies anywhere. so i think that would be a big concern, and they would be able to -- certainly one of the biggest complaints is what they refer to pejoratively as a patrick regulations. they would very much like to not have to abide by the regulations in those states. >> in terms of nursing, we have looked at interstate in many cases, where people go from one state to another, live in one and work and another. allowing them to enter into a compact where you can follow your patients if they have to be there. that might be a way to solve some of the problems. >> and i would just add one final comment to what has been said. certainly, some regulations could address this, but the healthier people did not go to the lowest cost plan and lead some states with an older, less healthy population. >> thank you, madam chair. since costs are being discussed as an alternative to the public option to instill competition and accountability in the private insurance market, i would like to hear the views of mr. potter and the doctor regarding co-ops and their ability to provide competition and accountability and for the doctor, especially in light of a recent poll of doctors indicating that over 60% of them support a public option, intent% of them support a single payer system, so let's start with mr. potter and hear his view on co- ops. -- and less of a% of them support a single payer system. -- and less of a percentage of them support a single payer system. >> i have made the point that where i work and where they are based in philadelphia, they would love to have a larger presence in the hometown, but the major players there are bluecross blueshield and aetna, which bought its way into the market by buying u.s. health care. that is that you get into these markets. you have to buy your way into them unless you are already there. , and they would not be able to come pete -- compete with the other big dominant companies. >> if the choice is a public option that has been envisioned, as long as there is not mandatory participation, and it truly provides toys, then that is an option that is viable. i think if we were back in this room in 1973 and 1974, that is the last time congress did something to try to control health-care costs, and that was to create health maintenance organizations, and if you take a look at the hmo's that are still in existence, that are community-based, you have a few health plans and some other community-based models that seem to work. it was only when the consolidation became a problem that we developed the current situation we're in right now, so that would be the only concern right now about co-ops. what would prevent them from consolidating and that tender 15 years from now we would be right back where we are, dealing with the large national companies that do not provide choice at a local level? >> the private insurance companies, my review of things, it looks like they have been pillaging the american consumer four years, and they have overpriced premiums where we did far the return for our dollars, and i think that the new rules we are putting in will go some way to stopping that. and that we will focus more on value rather than screening out, and there is one version of the bill where there is a requirement that a certain percentage of the premium dollar be spent on actual health care, and they have what is called a minimal loss ratio, and in some instances 56.1 cents get spent on health care, and the rest gets spent on something else, and we heard about $80,000 a day for one particular executive, enough for another executive to pay the entire medicare infrastructure for three months. , and of course, a lot of this -- would you talk to us about the importance of having a provision? i like to see a higher. >> i think it is important. it has declined from 95%, just around 85%. the amount of money that insurers pay out for the premiums they receive, for every $100 in premiums back in 1993, the insurance companies pay that in $1,995. it is less than that. one of the reasons for that decline is the consolidation in the industry, a move to for- profits that is, and the relentless pressure from wall street to keep ratcheting down this. and the way that different kinds of plans that are now dominant -- years ago, when hmos were operating in a way that they were truly health maintenance operations, there were a lot of staff model hmo's that had high loss ratios. they have gone by the wayside. i think it is very important that you have some kind of floor. the insurance industry will try to tell you that a significant portion of the administrative expenses is used to pay for things that benefit patients, such as disease management programs and customer service. there was a study done two years ago that showed that there is a very minor part of what they spend out of that. investors want, as i said, to keep that coming down. they will penalize the companies if they do not, because they want to have more money being available for shareholders. >> thank you very much. >> i have a question about the public option. i have thought about this a lot, and i think that a lot of the uninsured people need to be insured, and the insurance companies obviously do not want to insure them. is there an alternative to public option? >> well, the ama policy is to allow the individuals who are uninsured to buy into the federal employee health benefit program with tax credits that are related to their income. you have got an existing infrastructure. they are in all of the states. you decide how much you want to subsidize and, to one today, and you can have a basic level that everybody can buy into, and is not going to require a lot of infrastructure or political argument to try to get things up and going, so you have got things that exist that could potentially be an option for the uninsured to get into, because you already have the pooling, and it would not take as much infrastructure cost. i am also a professor, and i believe the attack that to get up and going, so if you want an additional option, that is our ama policy. >> what would you label it? >> whatever would make everybody happy. [laughter] >> that is tough to do. >> yes. >> i think from the standpoint, we are supportive of the notion of the exchange, and if a public option is created within that exchange, in the ultimate wisdom of this process, our main issue, as i mentioned earlier, is just to ensure that the was a mechanism that provides an adequate pay an amount that rewards the kind of high- quality, efficient health care that i think we are all seeking. >> very quickly. this would mostly require insurance on cars. is there a requirement that it requires a health insurance? >> massachusetts. >> is it working? >> well, i think will result mass., car insurance, sometimes people will buy a premium and not keeping it through the year. the other is that the infrastructure, if you suddenly loathed all of those people into the program, there is a surge capacity of people who have been getting their health care through the emergency departments and free clinics that suddenly want to all of a sudden get their care in the primary care services, and overloads the community. so if, indeed, there is a way to do this, then i think we can start looking at better ways to deliver care. congress is already invested with the electronic medical records with the community health clinics and other mechanisms. >> thank you very much. >> mr. holt? >> thank you, madam chair, and thanks to the panelists. meetings with my constituents, town meetings and so forth, we talk about the urgency of reform because americans are living sicker and paying more. i say the intention of these reforms are to provide better coverage and better care without increasing costs, and they say, "oh, come on, congressman. that is political doubletalk." how can you provide better care without increasing the costs to the ordinary american, and i say we are spending $8,000 per person for health care in america, more than ample to provide excellent care for all americans. i talk about redundance activities and unnecessary tests and procedures and financial incentives that are directed more towards corporate profits or providers' income than they are for patient health or the best outcome. i would like to hear it from doctors, hospitals, and nurses that the legislation in front of us in better patient care without increased costs. >> there are parts in there that will be helpful, but at the end of the day, 50% side of the health care costs are based on choices individuals make, and the reality is that we have an obesity epidemic, and people use tobacco, and there are some things that we are expecting hospitals and nurses to put back together again, so i think our american public needs to realize that they are going to have to help us in the cost control conundrum, but we are going to have to look at what we can do to make our communities healthier, places where people can walk in safe environments, people to make better choices as far as nutrition, avoiding the risky use of alcohol that currently occurs, so i think there is some stuff in the bill that will address that. >> reducing redundant activities and reducing unnecessary tests and procedures and removing financial incentives that are directed more towards profits and income than they are towards patient outcome, will that not help? >> well, certainly, there is some infrastructure in there to say how can we look at a better incentive model to align all of the incentives on the hospital side of the physician community, the insurance side to say let's keep the maximum amount of dollars in health care, and let's reduce the unnecessary tests that are ordered because of defensive medicine, and let's try to get people coming in for their wellness exams and their prevention so that we can take care of cancer at stage one and not at stage four. >> i think there are many elements in the registration -- legislation. i think hospitals share that same goal, changes in the payment system and some of the things that are mentioned as ways to export how to align the interests and incentives among patients, physicians, and hospitals. i think it will go along way. . we have a suggestion of how the method would be done, i think there is a lot of pieces that are in this legislation that could help achieve a goal that we are seeking. >> the american nurses association with similarly agreed. there are dollars in relationship to providing for more advanced practice nurses. there is a cost-effective way to give providers preventive services and primary care services in a least restrictive manner in terms of their practice. it certainly is a shared responsibility that we educate the public about their responsibility in maintaining normal weight, getting cancer screenings. it is important that we teach children to be healthy so we do not have six adults. if you think about private programs, when they are successful, they become models that can be duplicated and help of what costs would help us with costs. >> miss davis? >> thank you very much. thank you for having this hearing. i just want to ask, mr. kramer, first, we're all a little surprised by some of the comments were people told us to not let government get their hands on their medicare, and i am wondering, do you think that that is partly because so many people or a large percentage of people have medicare advantage? have coverage with private insurance? why do you think that was such a rallying call? >> well, i have to tell you that i think we were surprised, as well, and we do think with the tremendous amount of education that has occurred during the month of august that we are making a dent in having people understand that. my own view about that now at aarp, throughout the country, people are so concerned about the economy. job loss is a tremendous concern, as you know. that is a huge impact. we think that, of course, there is a lot of misinformation that people have repeated. but we think that it is with that backdrop of tremendous concern about every part of people's lives is moving in terms of insecurity, financial insecurity, health and security, in terms of increased health- care costs. medicare beneficiaries. they are very concerned that a % of their income goes to that. this is not a wealthy group on average. on average, more than half have average incomes below $25,000 a year, so it is a tremendous insecurity i think this is driving so much of the inability of people to get below the basic issues. we do think we are making progress on that. certainly for aarp members, but we do know that those individuals who are in medicare beneficiaries who are not aarp members, we have not reached the threshold of support for health- care reform. >> thank you. i appreciate that. you do not support arbitrate across-the-board cuts, reducing benefits, etc., and you say, in fact, this bill does not have that as a policy. but you also and do suggest that there are some ways where we would be able to address that, and i would just hope that we move forward and find a way, because as i understand it, a lot of the plans are not terribly transparent about how these are negotiated, so, in fact, even though there may be some very slight reductions occurring, people may read that or see that as something that is part of the plan itself, and argue all addressing that? how do we do that? you're talking about dealing with some of these other areas and making sure that access to care is there. >> as you said, we do not support across-the-board cuts, because we think that access and quality are such important issues for many of our membership, as we all know in rural areas, particularly, access not only to physicians but to primary care physicians. that is becoming a greater problem. it has been a major problem for many years. it is growing. have access to other health-care providers, so we need to pay attention about access and quality. those are things that we need to continue to work on, and that is one of the reasons why we do oppose across-the-board cuts. >> they keep. >> mr. mcdermott? >> thank you, madam chairman. i saw you, mr. potter, on bill more years -- moyers' show. many states have utility commissions where they have to go in and justify the rates that they justify -- that they charge, and if we have the worst case scenario, we come to the end of this process, and we have raised $2 trillion worth of taxes to cover the health insurance -- this is all going to insurance companies. we have no public option. that would be the worst-case scenario. now, what would be wrong with limiting their profit, say to 10% on what they take in? tell me the problems of turning them into utilities and putting them under public control. they would still be a private company, but they would be under public control. >> i think it would be a good thing to consider. i had a financial communications. i am done that for almost 10 years, so i know the expectations from the shareholders and what they need to do to meet those expectations. that profit motive is not going to go away. regardless of the regulations to pass, one thing they know how to do is make money, and what they are doing now is always anticipating what medical costs are going to be and pricing the premiums beyond that. that makes business sense. that is what wall street expects, and they have to do that. they have pretty much given up on being able to control costs, like they said they would be able to do. like when they moved us all to managed care plans. that would be a way we would achieve long-term savings, but that did not happen, as we all know. the rates started going up and up and up, so their solution right now is to shift the cost from them and to the employers to individuals. it is part of the great shift that the doctor has written about, and it is going on and on and on, and it cannot be sustained. i think this is something that should be considered. >> does anything make this possible? could we simply put it into the bill that -- how would we do that in the bill? >> i am not an expert on that. i would certainly have to defer as to would be the best language to do that. that would be worth considering. >> thank you. >> just so that we let people know, we have these other people, and i know what to ask you to be very quick before i turn this meeting over to the speaker for some final comments. >> the thank you. i want to thank you for the very important issue. let me ask though, a real quick question. if we do not have a chance to answer, maybe i could see your responses in writing, but this is about two groups. one is about agencies, and those who are citizens or residents of the territory, how are they able to take advantage of this? >> i believe that that is consistent with regard to the first question, the first part of your question, congressman, with regard to the position, those individuals would be covered consistent with our recommended approach. in terms of employees of community benefit organizations. i have to admit that i would have to do some research on the second question. i just do not know that right now. >> we would agree. it would be up to congress to say whether or not they expand it. certainly from the american medical association standpoint, we treat them as members of the state delegation, so one would expect that they would be able to care for their patients under similar models that they have with the medicare program. >> the american medical association position with that these would be covered, and part of the rationale for that is that people do not do this wherever they live or wherever they come from, and they bring that risk with them, so it makes sense to cover a person. >> i believe a distinct advantage of h4r 3200 pertains to the territories. >> i agree. i think everyone should be covered, and i think a public plan would help to do that and make that more likely. >> thank you very much. in order to have a robust public option, it would appear that it would need to be linked to an established provider system, which, of course, medicare would stand out as one of the better ways, i believe. the medicare provider network. and it would need a rate structure that was trusted and accepted by the medical industry and providers, so could you comment on that? will they, if they are offered an option to opt out of the public plan, would they, do you believe opt out, or do you believe that they are there to support it? >> so the question as far as the physician community, if congress does not permanently repeal the payment formula and january 1, 2010, that is looking at a 20% some cuts and more over the next few years and then are expected to participate in a private public option plant where rates are tied to medicare. i am sorry, you do not have to be an nba. you will not be able to keep your options open -- you do not have to be an m.b.a. de-linking from medicare rates and making sure that this medicare payment formula is fixed will reassure the community from the positions standpoint that congress is serious about trying to get this thing fixed. i think they can comment. if you're looking at physicians participating in medicare as an aspect of access, that may not reflect what reality is. many primary care physicians are no longer accepting medicare because they cannot afford to keep their offices open, and with these rates that are real, if congress does not act, that will be problematic, so i think, again, we would have is to fix the formula permanently, and if you are considering making sure that it is a voluntary position that you can opt out. i think you had then a win-win. it will not be received well in the positions community. -- physicians community. >> that would go for the nurses community, as well -- physicians' community. we have to make sure that we are not paying too little, as well. >> they want to serve the hospitals in their community and especially the medicare population. i said earlier about kind as payments to medicare rates because of the current underfunding that they are experiencing in this regard. negotiations might be a better approach, and one that i have learned in this role is that this is a large and diverse country. this could be better if it were based on what is real on the ground in various communities. >> thank you. >> mr. johnson? >> thank you, madam chair, and i want to thank the panel for this most important topic. with the financial pressure that the doctors have been feeling from private insurers as well as from treatment for medicare and medicaid patients, i imagine that there has been some decline in the numbers of students preparing to become doctors. do we have enough doctors and other medical-care professionals? there are the uninsured. 95% of that, -- >> i think you raise a critical point that deserves commentary. first, with regard to physicians, with the funding, i think it is critical. there are discussions about expanding the slots with a particular emphasis on promoting primary care. we believe there is serious consideration that should be given to that, as well. there really is a chronic shortage. 60% of the operating costs are people. there is an interest of keeping costs low. having an adequate supply of people in these positions is critical. >> what are the projections, if any, -- ? >> there is an anticipated need out there, but i think as tom mentioned, the problem is we create more medical school graduates, but there is not graduate medical education slots because of the freeze in 1997 in the number of physicians. how do we train them? medical school is only halfway through their training to create a physician, and the opportunity to get that in environments where people are practicing, hospitals, ambulatory care centers needs to be recognized. >> what is that? >> there is where you get your degree, your m.d., and then there is where a person gets the expertise of the specialty, primary care or other specialties, and that is where congress is not -- has not allowed an expansion since 1997. >> this would facilitate getting more nurses and nursing faculty. right now, in the nursing schools, we have students that are applying. indeed, we need to be able to expand the faculty members. >> i am sorry we cannot accommodate more questions. we do have a deadline of noon, and i will turn the program over to the speaker. we're on the verge of success, and thank you. >> thank you, very much, madam chair. i thank you and the members of the steering and policy committee for this very important hearing today. i want to thank all of our witnesses. so for the work that you do to make american healthier than for the presentations that you made today, it is, as i said earlier, an historic opportunity for us to do something great for our country, to lacoste's, to improve quality, and if you like what you have, you can keep it, and to expand coverage. we want stability, accessibility, and we want to lower costs. it is clear from the testimony and the other information that we have that the status quo is unsustainable. not only is an unsustainable, the cost of it would just get worse, for individuals, for families, for businesses, for the family, and for our national budget. the president said, and i repeat, health-care reform is entitlement reform. it has to happen, so i he which you are saying about the value of what we get for the dollar spent. not the volume. it is about quality, not quantity, and that is how we will keep costs down. electronic records and information technology that will enable us to lower costs. mr. potter, you said it well when you said that if we do a plan that does not really achieved its goals, and you cited the public option as one way for it to reach its goal, we will be passing the private insurance profit perpetuation. we have no intention of doing that. we want the private sector to thrive. we do not what our members to go into an exchange where they only have one choice, where they are sole sourcing. this is only one part of our ongoing situation that many of you have been engaged in in your organizations in the country. we are enormously grateful to you for that, and i want to thank the chairman for his hospitality in this very fine venue, allowing some of our members to participate for most of the meeting and for others to come and go as their other committee assignments made demands on their time, but i want to thank all of our colleagues and all of you for making this a very valuable meeting with the intellectual resources that you have brought to bear and the experience that you know well for how we can do better. thank you all very much. again, i think our chair. -- sank -- thank our chair. [captions copyright national cable satellite corp. 2009] [captioning performed by national captioning institute] >> up next on c-span, hhs secretary kathleen sebelius talks about how her department is preparing for a possible flu pandemic. federal reserve chairman ben bernanke comments on the u.s. economy, and the house debates a resolution disapproving of congressman joe wilson's outburst during the president's speech. on c-span3 tomorrow, the senate judiciary committee hears testimony from fbi director robert mueller. live coverage of this oversight hearing begins at 10:00 a.m. eastern time. and later, another senate hearing looks at the future of manned space flight. we will hear about a recent nasa review for options of the u.s. space agency. that begins live at 2:30 p.m. eastern also on c-span3, and you can watch all of our live events on our website, c-span.org. >> congressman ron paul wants to hold the federal reserve accountable for the country's economic crisis. even more, he wants to end the fed. sunday, he talks about his new book on c-span2's "b ooktv." >> next month, we talk about the history of the court. >> the reason the justice would not, is because he said the building was so a labyrinth, it would go to his head, and he was right -- the reason the justice would not come here is that the building was so of labyrinth, it would go to their head. -- it was so elaborate. >> c-span's offers free teaching resources on our judicial system. -- c-span offers free teaching resources. >> now, kathleen sebelius and the topic of the h1n1 swine flu and the flu season. henry waxman chairs this two- hour hearing of the energy and commerce committee. vices secretary. she'll talk about preparations for the h1n1 swine flu season. meeting will please come to order. today's hearing on the 2009 pandemic h1n1 flu is a continuation of this committee's ongoing interest in learning more about and staying on top of this developing and concerning situation. the hearing builds on the work of chairman palone's house subcommittee which held an additional meeting on the issue earlier this year. since then, one thing has become crystal clear. even as events continue to evolve, as a nation, we must be prepared for whatever the h1n1 virus brings in its path to fight it as best we can and to ensure adequate and appropriate resources to treat those who fall seriously ill. we are especially pleased to have as our witness today the secretary of health and human services kathleen sebelius. secretary sebelius will share with us the government's plan for addressing this enormous challenge. when the house subcommittee first met six months ago, there was much we did not know about h1n1 virus. we didn't know how dangerous the virus was, we didn't know if there would be a vaccine available, we didn't even know if the virus would return in the fall. many of those questions have now been answered. we know this outbreak won't be the false alarm of 1976 when the surge of swine flu cases never materialized. indeed, we are already seeing a large increase this cases, a pattern that is likely to continue. the epidemic will undoubtedly lead to hospitalizations, schools may close, health care facilities may become overwhelmed, and almost certainly, there will be some who will die. but there is also good news. this administration has carried on the efforts begun several years ago to prepare the country for the very situation we must now tackle. the plans developed appear to be unfolding appropriately and experts tell us that so far the 2009 h1n1 epidemic will not be anything like that which occurred in 1918 when an unusually dangerous flu virus devastated our nation. more good news was reported just last week. we not only will have an effective vaccine in place, studies now indicate that the vaccine will probably require only a single dose rather than the two doses many had predicted. as a result, i hope secretary sebelius will report today that across the country, we'll have a good supply of vaccine, allowing us to avoid both the additional cost and the additional needle stick that a second dose would mean. i expect that we will hear more about this as well as other h1n1 flu activities from secretary sebelius. i know all of us are particularly interested in getting the secretary's perspective on not only the progress we are making in taking on this virus, but also the difficulties we surely will face along the way. but as we make preparations and carry out detailed plans for dealing with this new virus, we must also take heed of the battle we confront annually against the seasonal flu. each and every year, some 36,000 americans, mostly among the elderly, die from this preventable disease. we can and should do much better than that, and i hope secretary sebelius can also share with us the administration's thinking on addressing this concern, and in particular, how that approach relates to its h1n1 strategy. with that, on behalf of the entire committee, i want to thank the secretary for a before us today. we all look forward to hearing from you and learning about the h1n1 challenges that lies ahead. but before the secretary will be recognized to make her statement, i want to call on several members of the committee to make opening statements, and we'll start with mr. deal. >> thank you, mr. chairman. i want to thank you for holding this hearing on the examination of the nation's preparedness of the h1n1 flu virus as we approach the flu season. i look forward to secretary when speaking to scientists, researchers, health-care providers, and other experts in the field, i truly believe is not a matter of if a flu pandemic kits. it is a matter of when. we need to have the greatest protection possible when the situation arises. we all recognize that is not a simple matter. since the first reports of this novel strain began to surface earlier this year, u.s. and international authorities have taken steps -- and this has taken the cooperation of all of those involved, both private and public sectors, particularly as the infection rates have increased as my home state of georgia and others have noticed, this h1n1 strain continues to spread, particularly as we have now begun school somewhat earlier than in other parts of the country. we all recognize that this is a real threat. i have been in contact with my state agencies,