>> Welcome to the panel discussion healthcare
reform at the state versus national level.

My name is Brian Jacob.

I'm Director of CLOSUP, the Center for Local,
State, and Urban Policy here at the Ford School,

and we are cosponsoring this event
as a series of panel discussions

on various policy issues we've put together
over the course of the academic year,

and I'd like to give a special
thanks today to Matt Davis,

and Helen Levy for putting together all
the substantive parts of this panel.

I'll be passing the microphone along to
Matt shortly to introduce the panelists.

I also want to make sure I recognize the
Ford School of Public Policy as a cosponsor

and to give special thanks for funding,
in part, to the Gilbert S. Omenn

and Martha Darling Health Policy Fund.

And, finally, I'd like to thank some
of the CLOSUP and board school staff

who put together the logistics here, Bonnie
Roberts, Joe Crane, Beth Ryder, Tom [inaudible],

but they've all been incredibly efficient
and productive in putting together the panel.

So I look forward to a great and lively
discussion that is just incredibly timely now.

It was very convenient of the
legislature to act when they did.

And so now I'll pass along to Matt
Davis to introduce the panelists.

Thank you very much.

>> Matt: Thank you, Brian,
and good afternoon everyone.

We at Ford School take it as a point of pride
to be as timely and relevant as possible

in scheduling our events , and so it's no
surprise that we are gathered here today to talk

about healthcare reform, where it's possibly
the most momentous day in the last 18 months

of struggle regarding healthcare
reform in the U.S. Whether you are for

or against this legislation,
you could probably agree

that to have the Congress actually pass
legislation and agree on legislation

about healthcare is a truly, perhaps once

in a lifetime opportunity for
many of us to live through.

Of course, [inaudible] to actually sign it,

but [inaudible] actually President Obama signing
this legislation is less immense in a way

than Congress actually agreeing
on it and passing it.

So, I've been [inaudible] of
healthcare reform in the past,

but it is even a greater pleasure
today to be moderating this panel

of a truly multidisciplinary group
of talented researchers and thinkers

that constitute healthcare reform.

Each speaker that I'm about to introduce will
have 15 minutes to talk about what they see

as most salient issues regarding not just
federal policy that we've all heard so much

about in the last 18 months, but also state

of the policy particularly in
our fair state of Michigan.

Following each person's 15 minutes of
presentation, then we'll have what I [inaudible]

to be a lively Q&A discussion period.

Let me introduce our speakers now.

Our first speaker is Tom Buchmueller who's
the Hildebrand...Hildebrand professor...

Hildebrand professor of Risk Management and
Insurance at the Ross School of Business.

He has been and used to be the recent
Associate of the Bureau of Economic Research

and has also been a visiting scholar at
the Federal Reserve Bank of San Francisco.

We've invited Tom because
I think today for his work

and his incisive thinking regarding
state level policies regarding expansions

of coverage to vulnerable populations.

Our next speaker will be Marianne
Udow-Phillips who's the director

of the Center for Healthcare Quality...

yes, the Center of Healthcare Research
[inaudible] You are transforming.

[Inaudible] It's not right
here, but it's right here.

[Laughter] So, Marianne is the director of this
innovative center, which is a collaboration

between the University of Michigan and Blue
Cross Blue Shield of Michigan, and, in fact,

Marianne was Vice President at the Blue
Cross Blue Shield of Michigan for many years

and then [inaudible] under Governor Granholm.

Marianne has been a tremendously strong
leader in the last couple of years now

at helping shape the debate within Michigan,
where to go for healthcare, and how to...

how it should look in the future, and
we've asked her here today to contribute

to our discussion of state healthcare
issues regarding the insurance industry.

Our third speaker this afternoon
will be Dr. Joe Schwartz.

Dr. Schwartz was trained in otorhinolaryngology,
or as we better know it, ENT, ear, nose,

and throat and had a career in the Navy
and CIA before joining public service

in the [inaudible] capacity
and Mayor of Battle Creek.

He subsequently served in the Michigan state
senate and thereafter in the U.S. Congress

as a representative from the Battle Creek area.

More recently, Dr. Schwartz has graced our
faculty and spoken to many Ford School students

about legislative issues at
the state and federal level,

and that's what we've asked
him to contribute today.

So, of course, the speakers may overlap in terms
of their topics, but in general what we've tried

to do is cover the broad waterfront today on
issues of state and federal health policy,

and we look forward to your
comments and questions.

I'll now turn it over to Professor Buchmueller.

[ Applause ]

>> Buchmueller: Thanks, Matt, and I
have to say the timing is unbelievable

to get the day just right between
the day that it's passed in the House

and day before probably the
President's going to sign it.

It makes the job of the speaker very difficult
because there's still a lot of uncertainty

that has made this talk kind of a moving target.

It seemed like just a couple of weeks
ago, this was going to be a post mortem,

and we were going to be talking about how
after the failure of federal healthcare reform,

the states would be taking up the
pieces, and they'd be finding elements

of the reform passage that they could...

that they could enact...

could enact.

And I think there are some things
that on the current bill that build

on what other states have done so far, and we
might see more of that, but I think in terms

of coverage, which is what I get to talk
about, the impact would be pretty minimum.

The bill that was passed yesterday
will have a bigger impact on coverage.

I think the estimates are about 31
million people will gain insurance,

and there's really 2 main mechanisms for this,

two main ways that insurance
is going to be expanded.

One's an expansion of the Medicaid program,
which is the joint state-federal program

for low income people, and the other is
establishment of health insurance exchanges,

which would be a new marketplace
where people who qualify

for federal subsidies can go
buy their insurance coverage.

Now, these two pieces have comparable
estimated impacts on coverage.

So I've got 31 million people that
are expected to gain insurance.

It's estimated that 12 million
will get Medicaid coverage.

The Medicaid expansions will
essentially extend coverage

to adults up to 133% of the poverty line.

So for a family of four, that's
a family income of about $30,000.

About 12 million people are expected to get
individual insurance through the exchanges,

and the remainder would be people who
would gain the full responsible insurance.

There may be some people in
this room, one of the elements

that [inaudible] insurance is a
new policy that would allow parents

to keep their adult children covered under
employee sponsored plans up to age 26.

And so they're expecting less of a need to
go out and find a job after grad school.

[Laughter] I want to talk about the two
main pieces of the coverage expansions,

the Medicaid expansion and the exchanges,
and this very briefly describes three sort

of key things to look at as
these policies are implemented.

Before I do it, I think it's useful to just
sort of lay a little bit of background.

Among the non-elderly population, I
think the current estimate is around 17%

of the population is uninsured, and
that varies tremendously across states,

and I think if you think about how this...

these policies are going to effect states, it's
going to depend on the current state of affairs.

So if coverage...

the state with the highest
rate of insurance coverage,

the lowest percentage uninsured is
Massachusetts, and the current estimates are,

I think, around 3%, and the
uninsured rate is highest in Texas

where it's up around 27, 28 percent.

And if you look across the map, coverage
tends to be highest in the northeast

and the upper Midwest, and coverage tends to
be the lowest in the south and the southwest,

and there's several basic variables
that explain that variation of coverage.

There's policy variables, demographic
variables, and economic variables.

The key policy variable is how generous
state Medicaid programs are to date.

So northeastern states tend to have
more comprehensive Medicaid programs,

and in the south coverage is less generous
both in terms of the number of groups

that are covered and the income level
where the income thresholds are set.

A key demographic variable is immigration.

States that have high numbers of
immigrants, high percentage of immigrants,

tend to have lower rates of coverage.

And so taking those two variables,
states that now are...

have ungenerous Medicaid programs, we would
expect to see a large increase in coverage.

On the other hand, states
that have lots of immigrants

because the new expansions don't
apply to undocumented immigrants,

I think there's still going to be a large
percentage of people that are not covered

and are going to be going
to safety net providers.

In terms of economic variables, it's
important to keep in mind that 90%

of private health insurance coverage is
employer sponsored, and so the factors

that explain variation in insurance coverage
are industry and job characteristics.

Large firms are more likely to
provide insurance than small firms.

Manufacturing firms tend to have high rates
of coverage, whereas service firms tend

to have low rates of coverage, and
unions have been very successful

in bargaining for health benefits.

So that explains why historically,
Michigan has had high rates of coverage,

but that coverage is eroding,
and that's where I think

that the insurance exchanges may be
particularly beneficial to Michigan.

Now, in terms of the Medicaid expansions, the
Medicaid expansions for adults really build

on two decades of expansion of
public insurance for children.

Going back to the mid 1980's when
Medicaid and cash welfare were de-linked,

the income threshold for
Medicaid coverage were increased,

and then in 1997 there was the establishment of
the Children's State Health Insurance Program.

As a result of these expansions, in most
states, children with family incomes up to 200%

of the poverty line are eligible for public
insurance, and as a result we see that the rate

of uninsurance is much lower among
children than it is for adults.

You take that 17% figure that combines
a 10% rate of uninsurance for kids

and about 20% uninsured rate for adults.

And even among those uninsured kids,
a lot of those kids really are covered

or would be covered if they showed up
at a doctor's office or a hospital.

So the program, these prior
expansions of Medicaid,

which throughout the expansions had pretty
strong bipartisan support can be seen

as a really important policy achievement.

I mean, I think it's been a gradual increase in
coverage, it may not have gotten the attention

that some bigger policies have,
but it has been very successful

at increasing coverage and
increasing access to care.

Now, Medicaid as you probably know,
is really 50 different programs.

It's jointly funded by the federal
government and the states and with a lot

of the coverage decisions
being made by the states.

And one of the variables or one of the decisions

that is really critical is determining
whether Medicaid coverage leads

to better access is decisions about
how much the program pays providers,

and one of the big problems with Medicaid
and one of the reasons we might be concerned

that increasing insurance coverage, increasing
the number of people with a Medicaid card,

might not increase access to care
is that Medicaid rates are very low.

They're extremely low relative to what private
insurance companies pay, and as a result,

a lot of people with Medicaid
coverage have trouble getting treated.

So a recent study that [inaudible] did a survey
in Michigan, and I think the figure was 35%

of people with Medicaid coverage reported

that they had difficulty
finding a provider to take them.

You may have seen just last week there
was a big article in the New York Times

about this problem, and they focus on Flint as
an example of a city where because of high rates

of unemployment, a lot of people on
Medicaid, and very low provider fees,

that more and more doctors were saying
that they couldn't afford to take Medicaid,

and so there's a real access problem.

And this access problem has gotten
worse in the last recession,

both because the Medicaid roles
have expanded and because states,

responding to budget problems, have cut their
fees, and so this is an issue that's going

to need to be addressed if this
increased coverage is going

to really lead to improved access.

Now the second piece of, big expansion
piece, is the insurance exchanges.

Insurance exchanges are basically a
new market for individual insurance.

It's based on the model of managed
competition, which, again, is not a new idea.

Managed competition has been at the center
of health policy proposal for about 25 years.

Managed competition was a key element of
the Clinton plan, Medicare reform proposals,

and even Medicare Part D, is based
on the idea of a managed market

where people would have subsidies and they
can go choose from a menu of private plans.

So these exchanges would be a mechanism
for distributing the subsidies,

providing quality information about
the plans, standardizing benefits,

enforcing the new market rules, and essentially
trying to harness the market incentives as a way

to expand coverage and encourage
competition among insurers.

Now the best example that we have of what an
exchange would look like is the Health Connector

that was established as part of
Massachusetts' reforms a few years ago.

Another example is the Employee
Benefits Program of the University

of Michigan and a lot of large employers.

In fact, it's on the basis of the experience of
these employers that we have a pretty good sense

of how these exchanges work, and I think the
research shows that when consumers are faced

with a menu of plans that provides
apples to apples comparisons,

clear information about price and quality, that
people will choose on the basis of price and,

you know, migrate to those plans that
offer better value and switch plans

when premiums change, and this
has the potential to be...

to encourage price competition
among insurers and be something

that can constrain the growth
of healthcare costs.

Now the Senate and the House bill
were very similar in lots of respects.

One area that they differed
was that in the House version

of the exchanges, there was a national exchange.

In the Senate, there are state level exchanges.

And so there are tradeoffs
between these two models.

I think, you know, a larger
exchange is going to mean more...

great potential for economies of scale,
but perhaps a state level exchange is going

to allow policy makers to tailor their
organization to the specifics of the state.

In thinking about how the
exchange is implemented...

I should say also, one of the things that's
key about the exchange is that the rules

within the exchange are going to
be very similar to what they are

on a large employer sponsor driven.

So insurance companies will not be allowed
to deny coverage based on health risks.

They're not going to be able to drop your
coverage when your health risk changes.

There'll be limits on how much they
can exclude preexisting conditions,

and there's going to be limits in the extent
which premiums can vary with health risks.

And so the hope is that because consumers
will have these apples to apples comparisons,

they'll choose on the basis of price, and
because insurers will not be able to deny people

or will be less able to compete
on risk selection,

that'll also encourage price competition.

I think one of the key policy design
features that could vary across states,

and I think it's worth looking at
as states implement these things,

is how active an agent the exchange will be.

So I think the way that most proponents of
the managed competition model picture it is

that the exchange is a very active
negotiator with the health plans.

Ok, so the exchange is going to take
bids from the health plans in terms

of what the premium's going to be, what the
benefits are, and then go back to the plans

if they think the premiums are too high and
basically force the health plans to compete

to be on the menu in the first place,
and then once they're on the menu,

there will be competition among those plans.

And so the idea is with that active role of
the exchange, you're serving a vetting purpose,

you're limiting the number of choices,
which should make the decision making easier

for consumers, and, you know, I think
the thought is that that's going

to be more effective as a way to deliver value.

The other extreme would be sort of to
be the Travelocity of health insurance,

basically to say that the exchange is open to
any insurer that can meet minimum standards,

and the exchange would be very passive,
and this is more along the lines

of what the Medicare program does with the
prescription drug plan, Medicare Part D,

and so you could end up with the situation where
there's a huge number of plans, and, you know,

it doesn't really take much to be on the menu,

and then competition takes
place within that menu.

The argument against this, I think, is
that it can lead to information overload

and complicate the choice decision for
consumers, and you lose the ability to sort

of control costs with that
upper level of competition.

Marianne's going to talk
about more about the details

on how these insurance market regulations work.

That's actually a very significant change,

and that combined with the individual
mandate could have potential to really clean

up the market, and I think Joe's probably going
to talk more about what the reimbursement issue

for providers means on the provider
side and on the policy side.

So I'll leave it to both of them.

[ Applause ]

[ Pause ]

>> Marianne: Well, I'm totally with Tom.

It's an incredibly exciting time for those
of us who are healthcare junkies whether you

like this bill or you don't like this
bill, but I have to stay I stayed

up way too late last night watching all of this
exchange because it was just fascinating, and,

you know, as we all heard in that dialogue,

this is one of the biggest
changes we have seen certainly

in our lifetimes and particularly in healthcare.

So it's a really wonderful day to be here
to have a chance to talk with all of you

about what this legislation could mean and a
little bit to reflect back on why we need it,

and that's part of the piece that I want
to talk about, sort of building on some

of the pieces that Tom spoke about.

Before I launch, and, you know, Matt asked
me to talk in particular from the perspective

of the private insurers,
and so you know, I think,

that the private insurers were
totally the bad guys in this dialogue.

It's what got everybody focused on
what the need for healthcare reform is.

So I always sort of feel badly when I'm
up here sort of being the spokesperson

for the private insurers, but you have to say,
and, that we would not be here today talking

about the fact that we have healthcare reform
had it not been for the private insurers,

and in particular, I think we owe great
thanks to Anthem Blue Cross in California

because if it had not been for their very well
timed announcement of their 39% rate increase

in the individual market, we would
definitely not be here today talking

about the passage of healthcare
reform last night.

I truly believe-and Joe can speak to this from
his years in politics-that policy is often,

often turns on that one very
significant symbolic thing that happens

that makes everybody think about
something a little bit differently.

We thought that happened when Scott
Brown got elected on January 19-oh,

eons ago in our political history-but,
in fact, I think it happened

when Anthem announced its rate increase because
it both got everybody focused on what was

at issue, and frankly, it gave the
Democrats a very clear talking point

that people could understand about
why it is we need healthcare reform.

And so let me talk with you just a little bit
about what the private market looks like, and,

again, I'm going to talk some more about
why we need health insurance reform

because that's really my angle on it, and then,
just briefly cover, in addition to Tom's points,

what the bill will do, you know, in many
ways, very quickly in the private market

and some pieces a little bit further out there.

So let's start by taking a look for a minute
at the private health insurance market.

Private health insurance, about
67% of U.S. population is covered

by private health insurance, most, as Tom
said, through employer provided coverage,

but quite a few, actually,
through the individual market

where they purchase it themselves, and that
ranges just like the uninsured numbers range.

It ranges by state.

I think the lowest in the country is
New Mexico at about 54%; the highest,

at least in 2007-2008, highest
was New Hampshire at about 79%.

Michigan ranks thirteenth at 74% in terms of
the percentage of our state's population covered

by private health insurance, and that is
very much the legacy, as Tom mentioned,

of the strength of labor in our state

who made health insurance really
a premier bargaining component

of their benefit packages,
really from the 1940's on.

It's only until this most recent period of time
where we've seen benefits being cut actually

for those represented by organized labor, and so
it's been a very important part of our history

and the reason why we have a very high rate
of private health coverage here in Michigan.

But, despite that fact, and
certainly nationally and in Michigan,

we've seen lots of people both losing coverage
and also having to pay more for the coverage

that they have, and so just
looking at Michigan since 2007,

11% of employers have dropped
private health coverage.

Now that's in part because what we've seen
to the extent that we've had any growth

in the economic activity in our state.

It's been mostly in the small
business sector, and, as Tom said,

that's the sector of our economy that
tends to offer much less frequently,

offer health insurance much less frequently,
than do large employers, and so more

and more employers in the state of Michigan
are not providing a health coverage,

and the picture is looking different
than it looked historically.

So people in our state and in
every state are losing coverage

because employers have been
dropping that coverage.

But even people with private coverage have been
facing enormous challenges in getting access

to care even though they have coverage.

Tom gave you the statistic
on those with Medicaid.

They've got coverage, but they can't find
a provider who will take that coverage,

and I know Joe's going to talk about that from
first hand experience in much more detail.

So let me talk a little bit about those
with private health insurance coverage.

In the same survey where we had the 35%
finding on Medicaid, we found that 17% of those

with private health coverage
said they had delayed needed care

because they couldn't afford it, and I
think you had that personal experience,

and it's because what we've
seen, and I'm sure all of you

in this room have had this
experience, is that co-pays

and deductibles have increased
significantly, people's premium sharing

where they're paying a portion of the
premium has increased, and so people even

with coverage are delaying care that they need
because they can't afford their deductible.

In Michigan in just 2 years between 2006
and 2008, deductibles increased 38%.

Now we're still lower than the U.S. average,
and that's again that legacy of labor

who was always violently opposed, frankly, to
co-pays and deductibles, but it's a 38% increase

in deductibles in a 2-year period, and
so people even here are delaying care

because they don't...

can't afford that deductible, and some people,
even though they're offered health coverage

by their employer, can't afford to
pay their share of that coverage.

On an average in Michigan for a family plan,
it costs about 11,000 and change-11,300,

I believe-for family coverage, and people
in Michigan pay for family coverage

on average about 10% of that cost.

And there are a lot of people who can't afford
that component of their cost, and so, again,

more people are losing coverage, and even those

with coverage are having difficulty
getting the care that they need.

Now I want to spend a little more time on the
individual market, and I'm not actually going

to talk about Anthem's 38, 39% rate
increase because I don't know enough

about the specifics in that market.

I want to talk instead for a minute about
Blue Cross and Blue Shield of Michigan

and their requested 56% rate
increase in the individual market.

And some of you who have been following
healthcare might have seen those two compared

in the run up to healthcare reform, and some of
the politicians using Blue Cross and Blue Shield

of Michigan as another state that's an example
of the problem of unjustified rate increases.

But I would say to you that in fact what
happened in Michigan is a different issue,

very different issue, than what happened
in California and really an example

of how broken the individual market has been.

Blue Cross and Blue Shield of Michigan is
unique in the state and really now unique

in the country in that it is required and
has always been required by state statute

to take all comers regardless of health status.

They cannot what's called medically underwrite.

They cannot exclude people based upon their
health status, and they have very strict limits

on the preexisting condition waiting periods
that they can apply for the non-group market.

Their individual rates are regulated
by the State Insurance Commissioner,

and so they have to get approval
to have their rates approved.

Those requirements do not apply to any
other commercial insurer in our state,

and I don't think nationally anymore,

and they apply in a much more limited
way to HMO programs in our state.

So nobody has the same kind of responsibility
to be the payer of last resort that Blue Cross

and Blue Shield of Michigan does, and
it does, for many reasons, good reasons.

It's a nonprofit, has tax breaks from the state.

The state feels very strongly that it
needs to provide subsidies as a result

of those tax breaks, and I don't have time to
go into the total numbers to see whether...

how those balance out, but I would still
say to you that this is a unique market,

and we need to look at it in that way.

What's happened as a result of the unique
approach and the fact that Blue Cross

of Michigan's the only pair where
these requirements, is that over time,

only certain people have bought their individual
health coverage from Blue Cross and Blue Shield.

Frankly, they're the sick, or the
ones who think that they're going

to use health coverage in the future.

If you are healthy, if you are young, you can
get your health coverage much cheaper elsewhere,

and so what's happened is that over the years,
people who are healthy and young have moved away

from Blue Cross and Blue Shield, leaving behind
the sick and the older segment of the population

and have created what is called an actual
rate spiral in that segment-adverse selection

in that segment of the business
for Blue Cross and Blue Shield.

So their request for 56% rate increase,
which they didn't get-I think they got a 24%

or something like that in the end because
there's politics involved with that,

too-but their request for the 56% rate
increase really had to do with the fact

that they were reflecting that the individual
market has broken down in our state.

They are an example of why we need healthcare
reform, of why we need the individual mandates

that healthcare reform requires, of
why everybody has to be in the system

because insurance operates
on a very simple principle.

It's a sharing of the risk and a pooling of the
cost, and if you only have people in your pool

who are going to use your services, then
you have nobody to share the cost with,

and eventually, you have no insurance, and
that's what we really saw here in Michigan,

and so what came through in this healthcare
reform bill is a way to address that breakdown,

particularly in the individual market.

And there's some technical components to it,
as Tom said, in terms of getting your coverage

through the health insurance exchanges,
and there's a lot of requirements

on those exchanges, but essentially
going forward,

every insurer in this country will look closer
to Blue Cross and Blue Shield of Michigan

than the other insurers that
are out there today.

And, in fact, that's going
to happen pretty quickly.

So almost immediately insurers
are prohibited from recision.

That's the practice of going in taking
back your coverage because you got sick.

Gee, what a surprise.

You have coverage to cover you when you're sick.

And that will be eliminated almost immediately.

There is a limit to almost
immediately in effect in the bill.

Our... it's an elimination
of lifetime limits coverage.

Again, I didn't talk about this because
it's not so much a problem in Michigan,

but it's very much a problem in other
states where people have coverage,

but it has a fixed dollar amount of how
much that coverage will pay in a lifetime,

and I've had and you've probably had
experiences of being on the phone with people

who have hemophilia or heartbreaking diseases,

and they've exhausted their health
coverage, and they didn't even know it.

They thought they had good
coverage, and they did not know it.

And so that goes away almost
immediately in these bills.

There are limits on preexisting
conditions almost immediately,

exclusions for children no longer than 6 months,
and for everybody else, those provisions will go

into place by 2014, and so you're going
to see a huge change in the marketplace

and the approach to health insurance coverage.

Now, in return for that, and the complaint
that you heard from the insurance industry

on this bill, is the insurance industry wanted
all these things, and yes, their market's going

to grow, and it's going to
be good for their business,

and Matt has some comments on that, and they...

that's true.

The insurance industry's
concern is that the penalties

for not purchasing health insurance
coverage are actually pretty low.

For an individual it grows to-it
starts much lower-but it grows to $695.

I told you 11,000 is what insurance costs,
and, yes, there's lots of subsidies.

It's very complicated to figure out
what will really happen in the market.

It is a big bill, and it's
very complicated to...

lots of moving parts to figure out what will
happen, but the concern is that the healthy,

many of you, will choose to pay the penalty
in your taxes rather than actually go out

and get the coverage even with
the subsidies that you get.

So that's something we're
going to have to see over time.

Market's going to change.

It's very exciting, and I think
it's a great thing, very exciting.

Ok? And I'll turn it over to Joe.

Thank you.

[ Applause ]

>> Joe: Thank you very much.

I lecture in this room sometimes, and the sweet
spot is right down there where you can stand

and be heard, but I've been told by
the powers that be that if we step away

from the microphone then this
penalty...punishment will be swift and sure.

So I will not step away from the microphone.

I always kind of laugh when someone
tells me you're going to have

to give a talk at 4:30 or 5 in the afternoon.

It's not as bad as giving a talk at 7:30 or 8
at night after an hour's worth of cocktail hour,

but nevertheless, you do get the impression
sometimes that you're talking to the society

for the study of sleep disorders when
you are talking at this hour of the day.

I will try, however, not to be a soporific
to all of you and to interest you in some

of the political issues that we're dealing with.

It will involve lowering the level of discourse
a little bit than what you've been hearing,

but nevertheless that's the
way these things happen.

I was, in my mind yesterday trying
to imagine the adversary in Congress

over the last week and especially the weekend.

As you know, members of Congress
like to get out of Dodge

on Friday morning, some on Thursday evening.

I never did that because I didn't want
to get trampled by my own colleagues

at the airport trying to get
an airplane to get out of town.

So I used to leave on Friday morning, but
Congress in town over a weekend is a rarity,

a true rarity, as was last weekend.

Now on the Democrat side, I can well imagine
what the freshmen and perhaps sophomore members

of the Democratic caucus were going
through as they tried to line up the votes.

I have a feeling that Mr. Clyburn,
the Whip, and his assistants,

may have literally been using a whip on some
freshmen because some freshmen Democrats

who voted yes yesterday literally
put their seats at great risk.

There's utterly no question that they did that.

I give them a lot of credit for
courage in making that vote.

I can tell you that they
were leaned on very heavily.

They were leaned on heavily to the point of
saying we're going to take you off one committee

and put you on a lesser committee.

They were leaned on to the point of a
Democratic poobah saying don't expect quite

as much money in your campaign this year.

The pressure was tremendous.

If you think that is not true, I would like
to introduce you to my friend the tooth fairy.

[Laughter] It is true.

On the Republican side it may have been worse.

Having been on the Republican side
and really cast out as an apostate

because I was a moderate Republican,
the Republican side was worse.

What is done in the Republican caucus is
equal to what the Democrats did but worse,

and I noticed that there was
not one Republican yes vote.

I am not surprised at that, but if you're
threatened with sudden and horrible death,

you apparently will vote the way they want
you to vote, and that's what happened.

Thirty-four Democrats voted no.

Thirty-four Democrats voted no.

I tried to compare that list with the
list of Democrats who are retiring,

and interestingly enough,
there's not much of a comparison.

A couple who are retiring voted
no, but what I did find is

that 21 of the 34 were from the South.

Very few were from the North and Northeast.

There was a New Jerseyite, a New Yorker.

There was one from Illinois, one from
Massachusetts, which surprised me a great deal,

but Democrats pretty well hung together, and I
will tell you I believe each and every Democrat

who voted no got a "Mother may I" to do so,
and these would be people who had been very,

very difficult reelection campaigns next
year, and I can also assure you that the Whip

on the D side counted to 216 before
he let anybody say they were going

to vote no, and so it happened.

There are 4 vacancies now.

That's why it was 216.

I was disappointed in the physicians in
Congress, and there are now 8 or 9 physicians

in Congress, because they were not
out there in front in the debate.

I have been disappointed especially in the
Republican positions, numbers of whom I served

with in my days in Congress, because they did
not seem to be and weren't again interested

in healthcare-anything else but healthcare.

Some of the real hard core, I will use the word
conservative is an acceptable political term.

I would use another word were out
having a couple of beers with somebody.

[Laughter] Some of the hard
core conservatives, physicians,

don't for some reason espouse any
change in healthcare in the Congress.

Many of them also are from the South.

As an example, the Georgia delegation, which
I believe is 14 or 15, has 3 physicians in it.

They are all three hard core to the right,
and I'm disappointed that the positions

in Congress did not take a
greater part in the debate.

I think they could've added something to
the debate had they desired to on both sides

of the aisle, and they didn't do it.

So without a single Republican vote, which is
historic, without a single Republican vote,

a milepost piece of legislation
passed the U.S. House,

and at least part of it has
gone to the President.

But even the Lyndon Johnson programs
of the 1960's, when they went through,

the Great Society programs went through, there
were Republican votes-significant numbers.

Now what does that tell you?

It tells you that the polarity in
Washington has become terrible.

I can tell you that from personal experience.

The Republicans and the Democrats
are at antivities with each other,

and until that changes, things are not
going to get a lot better in the Congress.

There are numbers of retirements this year,
and I am hopeful that the people who come

and replace those retiring or running for the
Senate or running for governor of their state,

will have a better opportunity to get to
know each other and to be more productive.

It doesn't work if you don't talk to
the guy on the other side of the aisle.

It doesn't work.

This was a great example of that, and I have
to give President Obama a great deal of credit

for his perseverance in this because
he stuck with it and stuck with it

and stuck with it and stuck with it.

I have no idea what he voted...

what he offered some of the members
of the Democrat side for their vote.

I think they're going to find some nice things
in their district, but he did persevere,

and I give him a tremendous
amount of credit for that.

In the state of Michigan we are going to see
what happens now that the result of the bill

that passed yesterday flows downhill, and
thus we see what happens in each state.

We have a situation in our legislature
where first they almost never talk

about healthcare issues, and I might
add that when I was in the Congress,

they almost never talked about healthcare
issues as well, which was a surprise to me,

but in our legislature, they don't.

There's a health policy committee
in both houses.

They deal with issues that sometimes you
say, "Why are they dealing with this issue?

This really has not much to do with the
general healthcare in the United States."

The Senate health policy committee in the
Michigan legislature now is dealing with trying

to eviscerate the embryonic stem
cell constitutional amendment,

which passed in November, 2008, and they're
spending virtually all their time on this.

So it is...

One wonders why.

There is not a lot of knowledge about
healthcare in people who have never been

in a healthcare profession
or followed it very closely.

This is why Congress is the way it is.

This is why our legislature is the way it is.

There are 1.8 million people
in Michigan on Medicaid.

There are going to be more, several hundred
thousand more, with this bill-adults,

people over 21-and I believe
that's a good thing.

Medicaid...

the state costs for Medicaid in Michigan
is now over 3 billion dollars a year.

It is the biggest item in
the General Fund budget,

larger than corrections,
which is about 2.9 billion...

excuse me, 1.9 billion, and larger

than the University budget,
which is now about 1.65 billion.

It wasn't when I was in the
legislature, but it is now.

These are going to be huge, huge issues
for our legislature to deal with.

What services are they going to offer

when you have several hundred thousand
new adults coming onto the Medicaid rules?

We cut out hearing.

We cut out chiropractic.

We cut out podiatric.

We cut out vision.

We cut out dental, which was a mistake.

So what services are going to
be...are going to be given?

And I believe that we have to look at least
a couple of those and put them back-dental,

especially dental, hearing and vision perhaps,
but our legislature has big decisions to make,

and I don't know if there
is the will to make them.

I hope that there is.

The former Assistant Secretary of Defense for
Health, who is a Professor at the University

of Texas now, said that he felt that Congress
would be better off if they did this,

and this is what he said people really wanted.

They want exchanges, purchasing
pools, administrative simplification,

malpractice reform, efforts to
reduce errors, waste, and fraud,

and no federal funding for elective abortions.

Many are ok with expanding Medicaid and Chip,

but most do not want any
increase taxes or deficits.

About 40% would pay a few hundred dollars a
year if that would cover all of the uninsured,

and 50% are ok with higher taxes on
million dollar incomes and on cigarettes.

The others want the uninsured to be
covered by savings that could be generated

by reducing fraud, errors, waste,
and the defense of medicine.

That horse is out of the barn right now.

I'm not sure where it's going to go, but I
would guess that there will be a drawback

to something similar to that when all this
is put to bed and we find out what part

of the bill that passed is effective.

I agree with the near-universal
coverage that we have now

and one of my credos politically has
always been universal access to healthcare.

I agree with the insurance reforms.

I agree that this is a start at cost control.

I agree that no one should be exempted
because of preexisting conditions,

and I agree that this does help the individual
market, and God knows that we need it.

What I don't know and I think what all of
us really don't know is where we're going

to be 5 years or 8 years
or 10 years down the line.

I would suggest that you elect to the Congress
and to the legislature people who are conversant

with healthcare, with healthcare economics,

and with providing the best
possible healthcare to Americans.

If we don't do that, the spirit
of this bill won't be fulfilled.

By and large, it's a good bill.

There's too much in it.

I probably, and you're going to ask me this, I
will tell you, I probably would have voted no,

but I probably would've come
right back the next day and said,

"Here's the parts of this
bill that are really good.

Can't we do this?"

There probably is going to be a little of
that going on in the Senate now as well.

We'll just see what happens.

Thanks very much.

[ Applause ]

[ Pause ]

>> I'd like to thank all of our
panelists for a great beginning

to our discussion this afternoon.

They've really given you a wide set of ideas
to chew on and opinions to think about.

So I'll now open up the floor to questions.

Please raise your hand and I'll call on you.

Please speak loudly and I will rephrase
the question for purposes of [inaudible].

[ Inaudible ]

>> The question is what are the key
decisions at the state level that people

in Michigan are going to need to make or people
in other states are going to need to make

that may strongly affect the way in
which the federal legislation is going

to play out at the state level.

>> Go ahead.

Go ahead.

>> Well, you mentioned the one is what
are these changes going to look like

and how active they're going to
be in term management competition.

It's not even clear that these
will be at the state level.

They could possibly be at the sub-state
level, which is sort of hard to imagine.

That seems like not a very good
way to achieve economies of scale.

I don't know...

I mean one of the areas, the
big areas, where the House

and the Senate bill differed was the
House bill had the public option,

and the Senate bill doesn't.

I don't know what the potential is for
something like a public option to re-emerge.

>> Marianne: Well there is a co-op that got
inserted in the bill that actually can be put

into effect almost immediately, and that
was what some people suggested could be an

alternative to the public option.

It's... I will be amazed if
any state actually does this

because what it is a member-run health plan.

We've had member run health plans, Group Health
of Puget Sound, Kaiser, to some degree, right?

We've had a few.

I really just don't see that
they'll be able to compete,

and so but that could be
put in place pretty quickly.

>> Texas had a co-op, and it went broke.

It did my heart good that something
went broke in Texas, but [laughter].

>> Are there other key decisions
besides [inaudible] the exchange?

>> Marianne: There are decisions.

Yeah. As Joe said the...

in terms of Medicaid expansion, they do, they
will require essential benefits be covered,

but there will be some decisions
around what else is covered.

The exchanges can be either a non-profit
or a state run entity, and so there'll have

to be a decision, and we were talking
beforehand about the fact that we're

in a governor change timeline here in Michigan,
and who's going to actually make that decision?

You know, it's going to be...

we're going to be behind the curve here
because it probably won't be this governor

who decides whether it's going to be public.

So there's quite a bit actually.

>> There's also transition issues as you
move from the current non-group market,

which is regulated in very different ways
across different states to putting people

into the exchanges, and so, you
know, the underwriting regulations go

into effect right away, but the exchanges won't
be up for a couple of years, and so there's talk

about high risk pools as a temporary mechanism

to provide coverage for people
who are uninsurable.

The state experience...

the experiences of different states with
high risk pools has not been very positive.

They tend to be underfunded and still
very expensive [inaudible] leads.

So I'm not sure it's clear how exactly
that's going to play out, and as I said,

different states will be farther
along the curve than others.

>> Marianne: And in Michigan, this issue of a
high risk pool is going to be very interesting

because the high risk pool goes
into effect almost immediately.

It goes into effect, I think, within
90 days of when the President signs.

How it goes into effect is very unclear, and
as Joe said, the Michigan legislature has been

in discussion about insurance reform because
of this issue of the risk [inaudible]

for Blue Cross here in Michigan,
and so how they...

And payers have been arguing for a high
risk pool, but whether it looks exactly

like what was intended by
Congress is not clear yet.

[ Inaudible ]

So if you're wealthy enough to
have insurance, you're paying less.

So I have two questions.

One is in this first case of the person who
is really poor, how long will it take before

that person is free of that debt?

And number two is, once these exchanges go into
place, are there going to be any requirements

for the insurance companies
to pay the same amount?

Will... If you go and buy the lowest price,
will, from a company, will you suddenly find

out that your doctor or hospital
won't accept that?

>> So the question is a multipart
question that asks us to distinguish

between how a hospital works with an uninsured
patient versus an insured patient and whether

or not where the exchange is plans will be held

to the same agreements with
healthcare providers.

>> You go ahead and take that one.

>> Marianne: So, first of
all a couple of things...

You know that issue of the hospitals
charging more to the uninsured got a lot

of attention a few years back, and there
actually have been some legislative changes to,

and pressure, informal pressure
to require hospitals

to charge less to the uninsured than they have.

Nevertheless, your point is correct.

Unfortunately there is nothing in the bill

that standardizes payments
from health plans to providers.

There is, however, within the
exchanges, the expectation

and in fact probably will be regulations
that require insurance commissioners

to oversee the rates that are charged
by health plans, and they require a,

what's called a medical loss ratio, a certain
percentage of the dollars have to be spent

for medical care, not for
profits and administration.

For large groups, it's 85%.

For small it's 80%.

And so there'll be some regulation on those
lines but not on standardization of price.

That is definitely something that did not
get included, and so we'll see over time.

I don't know the answer to your
question about how long it will take

for somebody to work out that debt.

That's a huge problem, I'm sure.

And, of course, I think Tom
said, this bill will cover...

I mean, the expectation is the estimate is
that it will cover 91, 94% of the population.

So we'll have many fewer
uninsured in the future.

[ Inaudible ]

>> Oh, that's a question that, you know, as
Joe said, there are a lot of moving parts.

That's a question we were talking about earlier.

I's a little unclear.

We think it'll lower, uncompensated care,
because we're getting payments from people

who are currently not paying at all, but
they'll be getting more Medicaid payments

which are very low, and so how
that washes out, we don't know.

[ Inaudible ]

>> Two very good questions.

The first is distinguishing between
the terms access and coverage

and why those two are used often
interchangeably, especially by those

in politics, and perhaps by us here today,

and then the question is why use this poverty
level metric when we know it's not only archaic,

but perhaps a mistake in terms of
the overall burden [inaudible].

>> I'll take the first part of
that having to do with access,

and that's one thing I felt very strongly
about for years and years and years,

and that is that there should be...

you can describe it any way you want...

I say universal access, call
it whatever you want,

which means that everybody should have a door
to walk into to get primary care and know

where that door is, and it's not the
emergency room door at 3 in the morning,

and that is one of the reasons I'm a very strong
advocate for federally qualified health centers,

FQHC's, a program first advocated in Lyndon
Johnson's war on poverty and has been supported

by every President, Republican or Democrat,
since then, including George W. Bush

who increased the numbers of
FQHC's from 1100 to over 1300.

This is not a partisan issue.

The concept works.

FQHC's are locally organized 501c3's that
follow certain government regulations,

and they do get significant subsidies

for just those same self people
who did not have access before.

There are about 30 of them in Michigan.

They do very well.

Why am I strongly in favor of them?

I work in one of them, and I know they
work, and I see people with Blue Cross,

I see people with commercial insurance, I see
people on Medicare, I see people on Medicaid,

and I see the people with nothing who would
have no access, but on the basis of income,

according to federal law, they are given a
25, 50, 75, or 100% sliding fee discount.

So anybody that comes to the
FQHC, any FQHC, does have access,

and that concept should be enlarged, and
instead of 1300 of those in the United States,

maybe 13,000 of them would be better.

There are 50 of them in Chicago doing very well.

Unfortunately there are only 3 in Detroit.

There should be a lot more in Detroit,
but it's an idea not whose time has come

because they've been around a long time,
but it's an idea that people should espouse,

wrap their arms around, and we should
increase those numbers for access.

>> Marianne: And there is 11 billion dollars in
this bill to expand community health centers,

and the National Service Corps over 5 years.

>> There's another question about why you need

to pay these policies to
the federal [inaudible].

Tom, would you answer that question?

>> Tom: Oh I think everyone knows that
the poverty levels are a flawed measure,

but it's the only thing we
have, and so it's convenient.

I think one of the things about this bill is

that currently states implement these
[inaudible] in very different ways in terms

of what income they count
and what they disregard,

and two states on paper could have what looks
like the same income eligibility threshold,

but they're actually quite different in
practice the way they determine what's counted,

and I think there's going to be a
standardization there so that, you know,

whatever the income threshold
is, it's probably going

to be effectively somewhat higher
when you account for disregards.

[ Inaudible ]

>> So there are two questions.

One is referring to the Reconciliation
Bill, which attempts to address some

of the Medicaid disbursement disparity we've
been talking about here today by specifying

that primary care providers under Medicaid
should be reimbursed at higher Medicare levels.

The question is how would
that play out in Michigan?

In other words, what might the effects be?

Number two is for a well off individual
earning more than [inaudible] of poverty,

how would they be eligible for plans in the
healthcare reform package going forward?

>> Marianne: I'll do the Medicare
one, and you do the other one.

Ok? So on the Medicaid one,
and I do want to clarify, Max,

it is not all payments to Medicaid providers.

It is, as Matt said, it's just primary care
payments that get equalized to Medicare,

which is a great thing, and it's a start.

We need to do more than that because, as Tom
said, we have a really serious access problem

when it comes to Medicaid because providers...

because they pay so little.

It's 100% funded by the federal...

that piece of it is 100% funded by the federal
government, and so it's no cost to Michigan.

So I don't think that piece, at least for now,
it's a little bit unclear what happens in 2019.

You know, the other piece that's
100% funded by the federal government

until 2019 is the Medicaid expansion.

So for the people who are at 133% or less of
poverty, the 500,000 or so in Michigan who are

at 133% of poverty or less and not currently
covered, that's also 100% federally funded

but until 2019 when it shifts to 90%, and
it's a little unclear what will happen

to that primary care Medicare payment in 2019.

You want the second part?

>> So I think people who are uninsured and have
family incomes above 400% of poverty represent

about 10% of the 46 million
people who are uninsured.

So it's a relatively small part of the uninsured
population, and I think it's a mix of people

who either are uninsured by choice, I
mean, they're sort of taking their chances

or are unable to get coverage because
they're not in an employer group

and they're considered high
risk by non-group insurers.

So all these people will
be subject to the mandate.

They'll have to go out and buy coverage.

They won't get income based subsidies, so
they'll have to pay the full premium themselves,

but to the extent that they were
excluded because they're high risk,

they will benefit from the new consumer
protections and they will be able

to buy insurance in the exchanges.

So if you're somebody in that category, and
you just, you know, you're young, invincible,

and deciding not to get coverage,
this is going to be a new requirement,

and the the question is whether the stick
of the penalty's enough to get you covered.

If you're somebody that's been sort of
priced out of the market or excluded

because of medical underwriting,
then this will be a real improvement.

>> Marianne: You know, the exchanges have
5 benefit packages-bronze, silver, gold,

platinum, and the catastrophic, and I...

the catastrophic was designed for the
young invincibles, and I think it has a...

I think it has an age limit
if I remember correctly.

>> 26, maybe?

>> Yeah

>> No, 29.

[ Inaudible ]

>> Marianne: We will know when we see
the regulations with thousands of pages.

>> These are hardship cases.

>> Marianne: Yeah, there
are some hardship, you know,

subsidies beyond the other
subsidies that are in the bill.

So we're going to have to
see how that plays out.

[ Inaudible ]

>> The question is for individuals considering
medical school or other professions,

how we think this healthcare reform bill's going
to effect decision making for those individuals?

>> You can only conjecture on that.

I'll tell you what I think,
and I could be dead wrong.

I think it is for all the good things, I think
it is going to further depress the numbers

of people who go into family practice.

I think that's going to happen,
and that's unfortunate.

Family practice, general internal
medicine, general pediatrics,

I think those numbers will continue
to go down, and they're now only 2%

of medical school graduates anyhow.

So I think those numbers will go down.

I think that physicians will look at the various
specialties, and there will be some picking

and choosing done as to what specialty to
go into because of reimbursement levels.

I can't believe that won't happen.

It's human nature.

I can't see it enhancing numbers of
people going into family practice,

which is where we really need people.

I think it will continue to depress the
numbers of people going into family practice.

[ Inaudible ]

>> Other questions?

>> So in the U.S. there's often tensions between
federal versus state authority for intervening,

and I'm wondering if [inaudible] challenges to
any part of the giant healthcare reform bill.

In particular, there's rumblings out there

about that the private health insurance mandate
is actually the federal government doesn't have

a legal authority to issue that, whereas
states could, like Massachusetts.

>> Interestingly enough, some states have
had constitutional amendments offered

in their legislatures, and there's one written
in Michigan that hasn't been offered yet,

and I hope it won't be, but it's been written,
which basically goes back to Andrew Jackson

versus John C. Calhoun and
nullification that the states...

but the states don't have to accept what the
federal government mandates upon them even

though that mandate is a legal mandate.

I believe at some point that
will end up in the courts.

I hope it doesn't, but I think it probably
will because some states will persist in this,

but we've seen this before, and it's a return to
the doctrine of nullification out of the 1820's

and 1830's, which I find mind-boggling.

>> Marianne: I was going to say, you
know, it's great not to be an attorney

and answer your question for an attorney,
but I have seen a lot of attorney analysis

on that point, and most of the
attorneys that I've seen have said

that the states' bans are not going to work
here because really the way this is going

to be implemented is a tax code change,

and it will not be prevented,
but because it's not really...

We talk about it as a mandate.

That's a little bit...

It's kind of like access versus coverage.

It's a slip of the tongue really.

It's not mandating so much as
it is applying tax penalties,

and the federal government
has the ability to tax.

>> I hope you're right.

[ Inaudible ]

>> Good question.

[Laughter]

>> Yeah, the question is one that has
[inaudible] health care reform [inaudible]

in all of Washington which
is you probably heard news

that a national for-profit hospital
chain has purchased the Vanguard Center,

and the question put to the panel is what
makes a for-profit business think it can run a

profitable medical center in Detroit?

[ Inaudible ]

>> Marianne: Well, I'll tell you what I
told the Cranes today, which that, you know,

the way for-profits are very clear.

I mean they are responsive
to their shareholders.

There's a lot of research out there

that says for-profits do not provide the
same community benefit that non-profits do,

and the way they make money
is to not cover people

or not provide services to people who can't pay.

So to the extent...

What I'm concerned about for Detroit is to
the extent that we have a for-profit moving

into the city, and I know why DMC wants
Vanguard because they do need capital infusion.

It's really a challenge.

I think we've got to watch as a community
to see whether DMC and Detroit Receiving,

which is the insured last resort, the a
safety net, which is still going to be needed

for quite some time, is still
going to serve that population,

and will healthcare reform help them?

Yes, because it will reduce the
number of uninsured, but, again,

Medicaid is a very low payer, and to the extent
we're covering, as Tom said, half the population

that gets coverage are going
to get it through Medicaid,

that is not a profit center for any hospital.

I can tell you that.

So I'm very concerned.

>> There are some in this room who are
old enough to remember about 20 years ago,

a little less perhaps, when there
was a movement to sell the University

of Michigan Medical Center to a private entity.

University of West Virginia had already done it.

There's a couple of others, but West
Virginia is the one that sticks in my mind.

Now, I have criticized the
legislature to a fare-the-well today,

but now I'll say something good about
the legislature and about a governor

who was not particularly popular in Ann
Arbor because that governor and myself came

to Ann Arbor when that idea was mooted, and we
spoke to the people in charge up to the big guy

in charge and said not only no, but hell no.

You cannot do that.

Our attorneys say you can't do that
without a constitutional amendment.

You say you can, but it is not a good idea
because the people of the state of Michigan,

if there's one thing they wrap their arms around
and hold as their own, it is the University

of Michigan Medical Center, and,
fortunately, the people here in Ann Arbor

who thought the idea was a good idea for
a short period of time backed off on that,

but it's a different scenario than DMC.

DMC has had fiscal problems for years and years
and years, and they were going to continue to,

and they were not going to be able to make
the investments that they needed to make,

and I believe that for DMC, and ultimately if
watched and controlled, for the city of Detroit,

this will end up being a
good move and not a bad move.

I hope it is.

[ Inaudible ]

>> If a unified Republican party
takes over the U.S. House this year

in the November elections,
and what was the second part?

[ Inaudible ]

I think implementation would be difficult.

I think perhaps, depending upon who's in
leadership, depending on personnel changes,

and there will be a lot of them, it will
either be very, very difficult or difficult,

but perhaps no better than just
difficult, kind of your B-,

C+ difficult, but it will be difficult.

[ Inaudible ]

>> Ok, so a three part question.

One issue is whether the current healthcare
reform bill includes anything regarding tort

reform, whether the bill does anything regarding
[inaudible], and does the bill currently

under consideration of being signed

by the President do anything
regarding Medicaid solvency?

>> There was talk there...

>> Marianne: It has a little
bit, and there's not much.

There's some pilots.

There's...

>> Court reform.

>> Court reform, I'm sorry.

There certainly are some ideas in there about
trying different approaches to tort reform, and,

but it doesn't have a huge wholesale change
to tort reform now, and on Medicare solvency,

we could probably all give you, I mean, you
know, the CPO has said this budget, I mean,

this bill will reduce the deficit, and
that is important for Medicare solvency.

You know, it depends on if you believe
the CPO numbers or not, and, as Joe said,

we're going to have to see
over time how it plays

out because there are a lot
of assumptions in there.

On the tort reform, we probably
could all three could give you our

on whether how important malpractice reform is.

The, I think, the data's pretty clear that
actual malpractice is very small number

in percentage of healthcare
spending, and when we look at states

where they have actually
implemented tort reform,

even though there's physicians will also
talk about this issue of defensive medicine,

and if we could get rid of defensive medicine,

we'd save a lot of money,
and that's probably true.

The problem is when you actually look at
states where there has been tort reform,

the healthcare spending has not come down.

And we also know about malpractice
that many more people are injured

by the medical care system than
ever in the malpractice system,

and so if you really were devising a system
that compensated people for injuries,

you'd actually be spending more than
we spend today, but you may disagree.

>> Other comments?

[ Background noise ]

>> [Laughter] Tort reform is an issue.

It is an issue in some states more than others.

Michigan has a pretty good tort reform
reform bill that passed some years ago.

It's probably about as much
reform as we are going to get.

It does force some physicians,
I say some physicians,

into practicing defensive medicine
when perhaps they don't have to.

We're... If you take a look at where Michigan
was 20 or 25 years ago with malpractice

and with tort reform, we were horrible.

We were utterly horrible.

It was awful.

Physicians were leaving Michigan in droves.

We did pass a tort reform
bill in the legislature.

I can't remember whether it was John
Engler or Jim Blanchard that signed it,

but it was right about that time, and actually
our tort reform legislation now and the laws

that you have to follow when you file
suit against a physician are pretty good.

I think they're pretty forward looking.

For instance, if someone's going to come in and
testify for the plaintiff in a malpractice suit,

that individual who testifies for the plaintiff
has to be a physician in the same specialty.

You can't bring a dermatologist in
to testify against a neurosurgeon,

which is a ridiculous example, but that's...

that would have been allowed
prior to the passage of our law.

So we're not in bad shape in Michigan.

We could be better, but we're not in bad shape,
and I don't see it as an issue right now.

>> I would disagree that the evidence is not
strong that these laws have a big effect,

but to the extent that they do, there
has been a lot of state activity.

So most states have done
something in tort reform.

So any incremental gain in
terms of cost control,

even if those laws have been
effective, is probably pretty small.

>> Ok, we're going to go
with one last question here

to the very patient gentleman
in the blue shirt in the back.

>> Thank you.

This is a one part question.

[Laughter] You mentioned that there
are 50 different Medicaid programs.

In some states there's less competition
and for some there is competition.

Would the bill encourage
competition in regard to Medicaid

in states where there is less competition?

[Inaudible] like Alabama.

>> So you're talking about competition
in the private insurance market?

>> Yes.

>> I... So there are really 2 different pieces.

The competition would be in the
exchanges among private insurers,

and I think that the exchanges do have
the potential to increase competition.

It's a way for smaller insurers to get in
front of consumers and to be part of the menu

of options, and also I think it's going
to change the nature of competition.

I think as Marianne discussed,
right now in the individual market,

insurers have a strong incentive to compete
on the basis of, you know, cream skimming

or cherry picking and trying to pull
off the healthy risks and spend a lot

of resources avoiding covering high cost people,

and so the exchanges create a level playing
field that's going to be a disadvantage

to those, kind of, disreputable insurance
companies and sort of force competition based

on price, quality, network size, and
I think that will all be positive.

You know, obviously there's going to be more
competition in states where there's lots

of serious carriers, but I think to the extent
that it weeds out carriers that are, you know,

competing in ways that are not socially
desirable, then this is a positive thing.

>> Well, I want to thank you all
for your very wise questions,

and I want to thank our panelists
for a fantastic discussion.

[ Applause ]

This is a very complicated topic, and
I really want to thank our panelists

for describing it in ways we can all understand.

You will be able to tell your children
and grandchildren that you were here

in 2010 for the healthcare reform.

[Laughter] And I hope some
of this sticks with you.

Have a good night.

[Background noise]