 Good afternoon. My name is Mark Siegler, and on behalf of the McLean Center for Clinical Medical Ethics, I welcome you to today's lecture in the series on ethical issues in healthcare reform. Today's talk, as many of you know, is the fifth in a series of twenty-eight Wednesday noontime lectures on the topic of health reform. Last week, you remember, Dean Polanski talked to us about how health reform will affect the mission of the University of Chicago Medicine, and next week, Jim Madeira, the CEO of the AMA, will speak on the American Medical Association and the reform of healthcare. Today, it is my absolute pleasure to introduce our speaker, Helen Darling. Helen Darling is president and CEO of the National Business Group on Health, which next year will celebrate its 40th anniversary. The National Business Group on Health is a nonprofit organization representing large employers' perspectives on national health policy issues. In 2013, its 377 employee members, employer members, included 66 of the Fortune 100, and that group purchased health and disability benefits for more than 50 million employees, retirees, and dependents. Helen Darling serves on the Medical Advisory Panel and Technology Evaluation Center of the Blue Cross Blue Shield Association, on the Institute of Medicine's roundtable on value in science-driven healthcare, on Medicare Coverage Advisory Committee, and is on the board of the National Quality Forum. Miss Darling has been featured on many TV stations, CNN, ABC, NPR, discussing trends in healthcare costs and benefits, and her observations are often quoted in the major newspapers, like The Times and The Journal, The Economist, The Washington Post. In 2009, Helen Darling was given the World at Work's Highest Honor, the Keystone Award, recognizing her contributions to health resources and benefits. In 2012, she was given the National Committee for Quality Assurances, Health Quality Leader Award. In 2011, 2012, and 2013, Miss Darling was named one of the hundred most influential people in healthcare in the United States. Today, Helen Darling will speak to us on how large employers are responding to the ACA, the Affordable Care Act. Helen Darling. This legislation is the single most important thing that's happened to our country since 1965 in terms of healthcare, and our view as an organization, as I say, we don't lobby, but we have certainly a set of principles, and they include the expectation and the hope that every resident of the United States will have access to affordable health coverage, and so we work to make certain that anything that's happening that will contribute to that, to try to make it more effective, is what we should be doing. So that's what we do. I'll try. All right. So first, I'd like to give a little bit of context to what employers, and I'm speaking mostly for large employers, but frankly, the concerns of employers are very similar. They may be different what they can do about it if they're large or medium or small, but the concerns are not that different. So I think the most important context of fact is that most employers feel that the cost of health benefits for their employees and family members have become increasingly unaffordable. Just to give you some numbers and give you a sense of what we're talking about, the cost of a family of four in a PPO in the United States today on average is over $22,000. And if you know that total household income in the United States overall is slightly under $50,000, we're talking about an increasingly large proportion of all money and benefits that are given to employees are going to health care, and that's part of what is a source of concern. You can see that the cost per employee, so this adds together dependents and employees together, the total amount then divided by the number of employees, so it's a per employee number, is over $13,000 in 2013. So if you hire 50 new people and you multiply that times $13,000, you're talking about what it cost if you want to hire 50 new people. And as you'll hear some more, that's one of the reasons that most people who are following this are very concerned about the impact on jobs. And that's generally true. I'll say this throughout. Most of the stuff that's being talked about and charged if you will with the Affordable Care Act has nothing to do with the Affordable Care Act. It's been going on for years. There have been all sorts of problems. The Affordable Care Act is trying to fix them, and I won't say exclusively good things about it because a lot of things didn't happen that should have happened. But the aim of the Affordable Care Act was to solve some of these severe problems that we have no matter what, even if we didn't have the Affordable Care Act. Now one of our concerns is if you just look at this figure, between 1997 and 2007, health care consumed almost 36% of the real increase in per capita income. And I've actually seen some figures, and if anybody's really interested I could find them for you, that show that at the rate we're going, including in this instance the cost related to the Affordable Care Act, that anyone who's in a household that is at the median or below in this country would be spending 150 to 300% of their income on health care. Because the income isn't growing anything like health care. And that's part of what everybody's alarmed about. Now no matter what, employers care a lot about the health, safety and productivity of their employees and their family members. Why wouldn't they? They give them a paycheck to come to work. They give them a paycheck to be productive. They don't do it just because they want to be nice people. They like to be nice people too, most of them I think, maybe not all of them. But they do care about the health and productivity of their workforce. So they have a good reason, a completely selfish, if you will, business reason for investing in health care. Now this just gives you a picture of what's been happening overall and you can see that in 2014 it's estimated most our large employer members are budgeting 7% for the increased medical claims costs. And I do want to mention our members do not deal with insurance companies except as administrative forces. They write checks out of the corporation or the employer's bank account directly to providers. All they do is pass money back and forth. The employers may buy services from them. They may say, oh well you know, we'd like care management. And then they can decide to buy it from the insurance company, the big health plan, or they can buy it from a special divinder. And that's the kind of stuff they do all the time. So we're not talking about insurance companies and we're not talking about premiums here. And that's another important point that gets horribly mixed up in the discussions that are going on. Kathleen Sebelius you all may know is being grilled today by the House subcommittee. It is the worst example of our political process imaginable. It's painful when you know the subject to watch this stuff because the misinformation behind the question and the ability to answer it without sounding like you're being preachy. And I've been on the other side of these a few times and it's very hard to not just want to stop and say, excuse me, would you like to know that we're not talking about insurance company? We're talking about the cost of medical care and we're talking about this. But if you do that and I watched her a little bit this morning, when she tried to do that as diplomatically as possible, it's hard. You just have to kind of shut down and take it and just hope you get out of their line. So anyway, so this is what we're looking at. Now, as I mentioned, one of the biggest concerns, especially that I think everybody has right now, at least in terms of families and households, is we are now, just now in 2013, beginning to be where we were as a country before the financial meltdown and the great recession. We're really sort of a back to 2000. So if you've got kids who are older, or you're one of the younger, younger adults yourself, if you think you're better, you're worse off today than you were in 2000, you're right. Everybody's worse off except a handful of the 1% and it's less than 1%, by the way. Almost everybody else is definitely worse off. So their household income and their ability to bear the cost of the cost sharing that they have to have has declined dramatically. And this I'll talk more about that in the context of increased costs. Now, here I want to say that the Affordable Care Act, whatever its other strengths and weaknesses, and it has plenty of both, I want to be clear, it will cost a lot of money. And this particular table's only purpose is to show you what the additional, these are just on top of everything else, fees, taxes and costs that are going to be related to the Affordable Care Act and where they're going to fall. Now, there's no way we were going to cover originally 32 million more people, most of whom have no money without spending a lot of money. But this just gives you a picture where it comes from. It can't come from the traditional sources because the traditional sources are already bankrupt. We're way in national debt. So this is sort of on top of all of that. And I'll talk a little bit about the Cadillac tax. I assume everyone in the room knows what the Cadillac tax is. Is that okay? Good. So somebody's saying no, so you don't mind my saying it. All right. So one of the big reason, one of the big ways to fund the Affordable Care Act is to say to health plans and employers, anybody who's buying insurance, that if you have a health plan that is very rich, and that's why it's called the Cadillac tax, then you're going to pay when you hit a certain number and for individuals is $10,200. So if your health plan in 2018, it doesn't come to 2018, but we're not far from that now, then every dollar after $10,200 for individual and every dollar off from a family plan that costs more than $27,500, you're going to pay or your employer or your health plan or somebody is going to pay a 40% tax. It's an excise tax on so-called Cadillac plans. Now the original idea behind that is not a bad one. Economists have argued for years the fact that health benefits are tax protected, tax free, actually fuels inflation and fuels insensitivity by those who deal with it, whether the consumers or employers or insurance companies. As long as it's free and you're trying to decide what you're going to give to somebody, then that's, you know, you're not going to really care. And that's, there's no, they're wrong. I mean, they're right about the fact that it does fuel inflation. But right now what we're talking about is what many, many people in rich plans will have to pay this tax. Now interestingly, here's the irony. The richest plans in America are local and state health plans for public employees, the richest plans in America. So the people who get hit first are the public employees. And I'm sure you've been following these stories about bankruptcies. If you look at places like Detroit, they've probably already qualified for the Cadillac tax now because their plans are so rich. So those are some of the things that are driving those bankruptcies. But you can see some of the other ones, like the health industry surtax. It's believed that almost all the taxes that are being put on somebody who's selling something or providing a service will in fact be passed on in the prices, which is not surprising. What else could they do, right? But it just does mean that that means costs will go up because of these taxes and fees, if for no other reason. And then you can see, because you all probably hear a lot about that here, is we have at the same time we have Medicare spending cuts. So we're having a kind of, if you think of it like a pincere movement, very much like a war. You sort of come in at the beaches of Northern France or the beaches of Italy and you sort of squeeze towards the middle. And that's really what's happening and will happen more of. And it means that there will be more cost that then will have to be paid. So there'll be less money for the things you want to pay for other things. At the same time, the revenue for that's being cut. So there going to be double hits in here and that's another reason we're all very worried. Now I'm going to show you a number of surveys or data from surveys that we do with our members and other large employers, just to give you a picture of what they're thinking about too. So this particular graph shows you that even after 2014, that most employers believe that providing subsidized health benefits to active employees is very important and that they're going to keep doing that. There's a lot of talk about, well, would employers stop covering people? That's, I get that question a lot. And the answer is not unless something changes pretty dramatically. It's still very important. But most employers, more than two-thirds of employers provide no retiree medical benefits. But those who do are saying in the next subsidized health care benefits for retirees, they're saying they're going to do less of that. If anybody's left out there paying for retirees, they're going to be less likely to do it after 2014. And that's another one, by the way, that gets lured into a lot of the public sector when you see these articles. Just keep in mind, an awful lot of that is promised benefits that are unlimited, unbelievably rich and unlimited, that you are paying for as taxpayers. You can also see in this last graph that improved workforce health and productivity will continue no matter what to employers to be very important. So whether they're the ones who are actually providing the benefits and the future that may change, but it will never change that they care about the health and productivity of their workforce. So as you'll see, one of the ways they're doing that, we're seeing more and more employers putting in on-site medical centers, providing those services that improve safety and health, flu shots on-site, they're looking at all sorts of new ways to access health care. So we also ask employers what they thought about the public health exchanges. So these are now the state exchanges. I'm switching gears again. We're saying, do you think some populations might be better places? You, the employer, think these groups would be better places for these groups through the public exchanges. And you can see that 41 percent thought that for those who today would take Cobra benefit, which is very expensive, as you know, under Cobra, you're allowed to buy back. I always think that sort of, aren't you lucky, right? You get to buy back at 102 percent the health plan you had if you lose your job or you lose coverage either through death, disability, retirement, termination, divorce, a whole bunch of things. So for Cobra plan participants, it's very likely that the exchanges, the public exchanges, will provide a more attractive option. If they don't, there's probably something wrong with the exchanges. So the pre-65 retirees is another group. As you know, you don't qualify for Medicare until you're 65, but some people still retire in this country, though by the way, fewer and fewer before 65. So there's this feeling that some people will go to the exchange and if they have low income, they might even get a substantial federal subsidy. Part-time employees, spouses or dependents, seasonal temporary workers, interestingly only 12 percent of the people surveyed in this, the employers believe that full-time employees, current full-time active employees, might be candidates for this state exchanges. And mostly that's going to be in companies like retail, retail, which is usually low wage and relatively low education, a lot of turnover and that sort of thing, and also hospitality. So people who work in hotels, who are especially the low-paid workers, might be much better off in a public health exchange. So we also ask our employer members, what do you think you need to be doing, what's most important, and what are the three most effective ways to control health care costs? And you can see that the top group in total, which is about, I think, 58 percent, I've got my numbers right, think that having wellness programs and initiatives to improve employee health most important. And then the second most important is consumer-directed health plans. These are plans mostly with higher deductibles and higher cost sharing. So these are the plans that more and more people will be in. And I think you'll see a big increase. Most employers now, almost all employers now provide at least one consumer-directed health plan as an option. And about 20 percent of large employers provide only a consumer-directed health plan. So you will see more movement, to extend, if you're dealing with people, you will see more people who have higher deductibles and higher cost sharing. And those things should also drive down, put more pressure on health care costs, because people will not pay those costs if they have a choice. In fact, we know in Massachusetts, at the connector, when people were choosing the plans, the vast majority of them chose either the cheapest plan, I should say, because there are a lot of different versions. So when people are paying, if you will, with their own money or more of their own money, they choose less-rich plans. So we also ask them, what do you think the marketplace is going to be like over the next five years? And you can see that it's very likely that we are going to see lots more health care price transparency. There's going to be a lot more mobile apps. So for example, we already have employers who provide, through the health plan, a mobile app that allows you to compare prices for certain services. And also, they even have some that you can, for example, has a GPS capability, and it will tell you how to get to an urgent care center or a retail clinic or to a primary care physician's office. So they actually have all that information built in. And we also see that new technologies will become more and more important. Alternate ways to get health care are going to become much more important, and they are going to compete with each other on price. So if somebody's sitting there trying to decide whether they're going to go this place or that place, they're going to be looking at what the per visit charge is, what's the cost sharing and what would be paid for by their plan. We see also much more value based design and things like that. So just in terms of what employers are worrying about right now in doing, they're first and foremost trying to stay up to date with the Affordable Care Act, the amount of administrative requirements are huge, even for large employers, even those who are not using the public health exchanges. Because their plans, they have to be sure to be in compliance with the law. And that means that there's a lot of work to be done. I can go into more detail about that later if you're interested. We also see educating consumers to be more informed and because they're going to be making a lot more decisions, that they're going to have to learn more. And it's going to be less and less possible for them to just say, oh, well, I don't need to know because they actually are not going to have that choice anymore. And then also, most employers are saying, we want employees and their family members to understand that most of what drives their health care use, they have control over and that they can do things that will make a huge difference in whether they need to even see a doctor, whether they need to go to an emergency room. And for the first time, it will really matter to them financially. It's always mattered to them. You all know that because you probably see them all the time. But the difference is it hasn't mattered to them. They wander into an emergency room because it's their convenience on a trip and instead of maybe calling a help advice line, they actually go to an emergency room. It would be 100% paid by somebody else. So they didn't need to worry. Then they started having little co-pays and they're not very big, I might add, still not a big deal. But now they're going to be dealing with health plans and cost sharing that are very much different and they will change. It may not always be what you want, but they will change. So I mentioned price and quality information. We're going to have more and more of that. We also are seeing another big trend that's important. And I'll mention this in relation to the Affordable Care Act. Employers have been for the last five to 10 years depending on who they are, how advanced they are, putting in programs to help employees and their family members live and choose healthier lifestyles. They're doing things like paying the money $100 to do one thing, another 100 to do another, another 100 to sign up to a walking program, I mean all sorts of things. But what we're seeing for the ones that started before, they are now moving away from the positive rewards to essentially what look more like negative rewards or penalties. So for example, instead of giving you $100 to take a health assessment, they might say, we'll deduct $100 if you don't take a health assessment. A small number are saying, if you want to be in the best health plan, you have to do these things. And if you, in a very, very few, very few, but I think more will do it, if you want a health plan at all, you're going to have to do these things. Now in all instances, these are not achieving health outcomes. It's just saying, you have to participate in these programs. The only one that, well, even nice about to say tobacco, we're seeing a big increase in tobacco surcharges or non-smoker discounts. These things are called different things depending on the audience and the workforce. Some people take more kindly to carrots than sticks. But either way, you lose if you don't do certain things. So we're seeing a movement away from the friendly or easier just do this to the, if you don't do it, this is what's going to happen. And in some instances, it's going to be a lot of money. It may be $50 a month now for a tobacco surcharge. It's going to be $100 a month. There will be new requirements. And mostly, we do have a handful of people who don't do whatever they're supposed to do. But they will pay more and more for not doing that. So I've just got several charts here. I won't go through them because of time. But we have a long list of things that employers are doing. And if anybody's interested in those details, especially the different ways that they are controlling health care costs, and ideally also helping to support payment and deliver reform, and even things like reform of the health care legal system, which we all believe is crucial, especially to trying to really do something significant about overuse, which is another one of the big problems. So this is a long list of those things that employers have to work with partners in order to accomplish. But if we don't do these things too, we're not going to solve all the problems in the health care system. So it's not just enough to charge more, get people to take a health assessment, or try to do everything you can to help them to live and choose healthier lifestyles. We also have to transform a system that's dysfunctional beyond belief and doesn't basically serve anybody's interest. So I'm going to switch now to a very specific look at what today, well, actually starting about two years ago, but right now, large employers are sitting down and trying to decide how they're going to deal with the Affordable Care Act in terms of their own employees, whether or not they're interested in public exchanges for their employees and if so for whom, and then if not, how about private exchanges and I'll explain a little more about what they are, or are they just going to stay the core? So this shows you in the three tracks and I know this would be available to you all if you want to look at it in more detail. So a typical head of human resources and a large corporation is sitting down and saying, do we just do what we've been doing for a long time? Do we move to private exchanges or do we move to public exchanges? And you can see there, out there you can see the Cadillac tax looming. So the Cadillac tax is actually causing everybody and was starting in about 2010 to begin doing more and more to try to control health care costs because at that time, everybody I know who's in this business said, we're not paying the Cadillac tax. And we've only got between now and 2018 to slow down cost growth enough to avoid it for at least three or four or five years out from 2018. Now that's going to make a huge difference. It will also again make a huge gap between the public sector and the private sector. In this case, I mean mostly state and local government. The federal government, interestingly, does not have an excessively rich program. They figured this out about 20 years ago and they have a program that is much, much more like the private sector, interestingly. I might add, no one in Congress gives them credit for that. It is very frustrating. And in fact, I was once invited to come and testify. And you all probably know this, but anytime you're invited to testify, the first thing they do is call you in and find out what you're going to say, because they're not fools, right? Well, maybe they are, but they're not stupid. But if, so if they don't like what you're going to say, I don't care how objective or fair-minded it is, you don't hear from them again, right? So I went there, I was asked about a year ago, somebody was trying to trash the administration. So I was called in and asked if I would come and talk about, sort of, compare what the federal government does for its employees and the private sector. So I went in and I just said, well, actually, I think they're doing a really good job. And I said, they're actually very enlightened. And I, you know, I'm on a chapter and verse and chapter and verse. And you could see the person's face just go from, hi Helen, welcome to, oh, really? Oh, yeah. And I said, yes. And I said, I, you know, I can show you the data. And they said, oh, OK. And you could just see the face just sink. And if I never got called, you can imagine. And a lot of people did. Who knew nothing about it? But they were willing to say all the negative things. So it's this Kabuki theater of Washington. So I'll just do a little more on this just to give you a picture. So here are the kinds of things that employers are looking at. So most of them want to maintain ERISA and to be sure that they get protected from state encroachment. That's the biggest problem. This is a federal law that allows them to give uniform coverage. The tax advantages, they would vary. They would look at what their obligations are under the Affordable Care Act. So they weigh each of these different things, administrative burden, purchasing power for employees, et cetera. So you can see, and this is again, if you get a copy of this, you can see in more detail. But you can see that on staying the course, we're thinking about doing the things I've already talked about just more of them. But an employer would mainly be responsible for making certain every detail of the plan is what they wanted for their employees, at least as long as they could. With the private exchanges, and these are brand-new things. Only about five or six years ago, four retirees were created. It's a private exchange. It's a marketplace in which human resource consulting firms or companies basically bring together multiple health plans and then an individual would go into the private exchange. And just like the public exchange could make multiple choices. So your employer could choose a private exchange and the advantages you could see is and they're now doing it for active, just starting, just this year, brand-new this year. But it would give them more choice. So right now, you only get what your employer gives you. Whereas in a private exchange, you might have five, 10, 15 choices. You would have some, the employer would still give you the same money. But you'd be dealing with the exchange, not with the employer more. So there's less administrative burden. And then the third is, of course, the state exchanges, which is, you know, are operational, total mess at the federal government level. And the amount of, I don't know, shot and froid, for those of you who know that word, that's being, you know, the Republicans were really pretty devastated by what happened to them after they thought that shutting down the government would make everybody like them. And I'm not sure why, but anyway, they thought that. So they got in trouble and they felt really like they had maybe gone a step too far. And of course now, with the debacle on opening the website, they're sitting back hoping that that will take the attention off of them for a while and put it on the administration. But we will have state exchanges. And a number of the state exchanges, like California, are doing relatively well for something that big and that hard to do, especially if you're gonna connect with Medicaid programs because Medicaid programs have some of the worst operational systems imaginable. It's hard to deal with them and it's very hard to connect with them. So that's probably one of the toughest challenges they've got. So employers are asking these questions. So I won't go into this in more detail, but this gives you the breakdown of all the things the employers have to consider and all the timeline that they have to consider it. And this is very active. This is going on almost every day in a company around the US. So I won't go through the saying in the course because I think that's obvious. The private insurance exchange is what we'll see is starting in about 2014, 2015. If they're successful, we will see more employers using private exchanges. If they're not, they'll just either go back to staying in the course or some alternative. Maybe somebody will invent something new. So this is the state insurance exchange timeline. So this is most employers do not have to pay a lot of attention to this because they're too big. As you know, the public exchanges are only for two groups, individuals or small employers. And they define small as really small. We call that tiny. Under 50 or the state can go to under 100 employees. So it will be years possibly before they could go over 100. So for large employers, the public health exchange may not be possible ever. So I will skip those. So I would just end with a comment about what employers are left with. Well, first we have tremendous uncertainty about the future. There is more change. I've been in this field for over 30 years and many of you perhaps have too. I've seen more change in the last five years than I saw in the prior 25. There's mammoth tectonic changes going on every day and what's a provider? Where do you get care? Where's the best place to get care? What does it cost? What's it gonna cost individuals? What do we, how can we not do some things? How can we change the way teams and primary care works? Are we gonna sort of disaggregate everything? So people will instead of, will go actually the opposite of where we are going. We were headed, people were saying we want more integration. Well, at least on the private side we're gonna see more dispersion of everything. When people, consumers can walk, if you will, and make choices, they're more likely to go where it's convenient for them, including whatever they can access through a smartphone or whatever the new technology is that hasn't been developed yet. At least we haven't been told about it yet. The cost of health benefits continues to be top of mind for CFOs and frankly for most people at the top of the country. And we have done nothing to solve that problem. This is something I get asked by reporters all the time because the president and other people are saying costs have gone down, they have not gone down. That is just not true. And they frankly haven't gone down for anybody. What they will go down for though is one group and I think only one group. And that's the people who are going from the most dysfunctional individual insurance market on earth to the public exchanges. So for individuals where they won't be selected against, they won't be underwriting, they won't be any of those things, individuals that definitely be better off. But everybody else is gonna pay more. And maybe that's the right thing to do, not making a judgment about it. It is gonna cost more. Everybody else is gonna pay more. And maybe it's good if it is spread around enough that nobody feels it too painfully through one pocket or another. But that's the fact. And right now we hear these comments, it's maddening because the law does nothing to control cost by itself. And as a consequence, people are deluded when somebody says, we're gonna cost have gone down, they haven't. Even when they say that, they mean the rate of increase has gone down. That's not the same thing as cost going down. I've just mentioned all the other pressures that are going to be putting significant downward pressure on cost. So if you think some of the cuts and things like that are going on now are bad, it's gonna get worse. So the need to actually make the kind of dramatic transformations that are needed through things like lean manufacturing and business process re-engineering, all that's gonna be done to try to re-engineer cost and inefficiencies out of the system are gonna be essential. Otherwise, a lot of things that need to be done will not be done and will just all have a kind of miserable, inefficient world. Consumer cost sharing is going to increase significantly. And the political outlook, I think probably the most heartbreaking thing from where we sit is the Supreme Court's decision about Medicaid. Again, whatever you think about the Affordable Care Act or whatever you think about anything else, the belief was that there are millions of very poor people in this country, very low income people, who for one reason or another did not have health coverage and didn't have access to it. And of course the original idea of the Affordable Care Act was that a big chunk of those people were gonna be covered by an expansion of Medicaid. And now we have this peculiar, really shockingly sort of messed up situation where just take the state of Texas as an example. State of Texas has, they fight with California where there were number one and number two of uninsured people. They also have millions of very low income uninsured people. But they won't have access to Medicaid. So millions of people won't have access to coverage. But that's not the worst part. The law doesn't let them even buy into the exchanges. So they're cut out of the exchanges and they're cut out of Medicaid. So we're gonna be left with at least half, roughly half, I mean it'll depend. Half of the people that were going to be covered under the Affordable Care Act will remain uninsured because of that one decision. And if that doesn't get fixed and given the politics what we're living through, something that big probably will be very hard to get fixed. That's probably the worst thing because the political outlook for solving that problem is pretty grim. And unless, I just don't think it's possible. I don't even know how it's gonna happen. At some point, places like the state of Texas, providers and others will help the state understand that it's literally giving away billions and billions of dollars that come from other taxpayers mostly to Texas to cover those who would be Medicaid eligible for the expansion and maybe that will do it. We do know that in the state of Kentucky and the state of Ohio are two states where there was every effort to not have exchanges and expand Medicaid. The forces that understand the craziness of that as a decision at least got two states to turn around. And so maybe within a year or two or three have a little change in the politics and things like that. But that's the most frustrating last piece. So with that, I'll end and I thank you very much. I know we have time for questions. So I think we'll see a lot of activity. So just think retail and hospitality. And the good news is for again, this law does make possible the millions of people who have low wages in this country, they're not gonna get paid more. I mean, if anything, what we see other than the sort of regular if the economy pulls up, they'll get more. But they don't have a high school education, college education, that sort of thing and they are in certain jobs. Those jobs will mostly probably, many of them will go away and the country will automate out everything that it can because of labor cost. And we've seen many, many jobs go outside the United States. They're gonna go anyway because we're in a global economy. It's not related to the United States. It's most of the companies actually are bigger outside the US than inside the US. IBM, for example. So what we're seeing, we're gonna see a shift in the labor force and we're gonna see much more reliance on technology to replace people. Does single payer get into your discussions internally at any time? Not really. Yeah, so the question about single payer, first I think generally most business people are very nervous about anything that's run by the government. Just, you know, they don't trust it. Unfortunately, the whole debacle about the exchange hasn't helped, I might add. But there's sort of generally a fear about that, that somehow it will become, it will be driven by a government agency and they don't like that. We do have a couple of places in the United States, Maryland's one of them, in which we basically have a single payer system. I think they're more comfortable with that kind of system, but I don't see it happening politically. So we don't spend much time on it. Yeah, I'm good. Great talk and I'm curious about health care as an industry and the role that it plays in the national business group on health. I recently had a chance to spend some time with David Lansky at the Congressional Budget Office and then started learning a little more about the Midwest business group on health and as I looked through the membership, I was struck how prevalent the participation of major health care organizations is in these business groups. And I wondered if you're able to talk anything about the dynamics as a sort of business leader who is just a purchaser of health care interacts with a business leader who is really a provider of health care and on the other side of the market and what that means about sort of the politics of this process as we go through it. Yeah, great question, thank you. So the national business group on health is mostly very large employers in the private sector but increasingly we have members who are earning their living so to speak from health care in one way or another, health industry. But we do not by our bylaws have anyone in the health industry on our board. And we set that long ago because in the early days there was a bigger schism really. We have a lot that are members because they're large employers. I mean some of the largest employers in the United States are in the health industry in one form or another. And they have some of the biggest problems. I mean health systems have some of the most complicated employee benefits issues and HR issues on earth. So we do provide value to them but no one from a pharmaceutical company or any other health industry can be on our board including insurance or health plan. Now just to give you an example of where that's really important mostly I don't think it would matter very much. But I do think there are different issues that we take positions on that if they were on our board they would not let us cause we have a board that operates by essentially consensus. When drug re-importation was a hot topic. You know what we try to do is look at it again from the employer standpoint and for employees independence. Do we think it's good for them? We don't worry about it if the industry that's involved doesn't like it. And so we took the position that drug re-importation was a good idea as long as it was from safe countries and things like that. But I mean the idea that we somehow wouldn't want something that came through the UK was just laughable. Now I would worry about China's whole different thing but anyway we said yes we want this and if we wouldn't have happened if we hadn't had to be on the board. We also take very strong stands on things like requirements that if you contract with a network a hospital for a network we say that the hospital should meet certain criteria and we've even said that we think the exchanges when they're behaving as exchanges should be actually using their power as purchases to drive quality, safety and efficiency. So I don't know if we had somebody on our board in that industry they might not be real thrilled to have us be really pushing but we do take very strong stands in that sense. As a follow up to David's question our Dean Polanski has just left so he won't hear the answer to my question. Tell me about universities. I pointed out to you that the University of Chicago is the largest employer on the South side employing more than 15,000 people. Have universities become members of your business group? Yeah we just have one university right now the University of California President's Office is a member. We do have a number of like we have three church groups their pension and healthcare funds and we have a number of non-profits but we just frankly haven't reached out to universities for the most part although it's an obvious candidate but historically I think one of the problems we find is there's certain industries that for one reason or another are not ready for innovation in healthcare and health benefits. Point out some of the reasons. One clarification is that the University of Chicago is a member of the Midwest business group. So but not the national. Yeah but we're very different. Very different I understand. But so the reasons are historically universities have been pretty slow to move on anything. So yeah so you know taking them good ideas that they're not gonna use for 10 years isn't gonna help. But I think the other thing is that they are dominated by faculty. And faculty like to control everything. So you know putting in I mean this actually just There's quite a number in the room. I know I know but I'm just being honest. But we had a recent example. Penn State you may have seen the stories. Penn State tried to put in the kind of programs corporations have been putting in for years. And it was a very benign one. It was like you get a hundred dollars off if you didn't do some things like you know take a health assessment, promising confidentiality. I mean doing everything right. But they just didn't like it. So they you know Penn State had put it in and they went to a lot of trouble to try to defend it. UVA by the way put in something too recently. And within I would say maybe 10 days you know we suddenly hear that Penn States decided to back down. And it was so benign what they were trying to do. But it was just offensive to the faculty. They just you know how dare you ask us these questions and that sort of thing. So that's why I think we don't have many. But universities and church groups actually have very high use. They're very expensive to cover. And in fact some of us used to joke if you know which groups, which were the worst groups in terms of overuse of medical care. Especially mental health benefits. And law firms and universities. And public employees at the state and local level. Big users. And they're very expensive. I mean my guess is that most of the public employees have already hit the Cadillac tax. So they don't have to pay it till 2018. But when they get there they're gonna be paying 40% on every one of those extra dollars. Unless they can talk the president or the next president into changing it. Thank you. My question is about the trend you mentioned towards consumers or employees being encouraged either by the characteristic approach towards healthier lifestyles. I was wondering what's the approach that employers are looking for the future to monitor that. Tobacco is one example. You could check off a box saying I'm not smoking anymore. And if it's worth $100 a month there's gonna be a lot of incentive to do that. So there's a bit of a controversy now about exactly how to do that. But I can tell you that most employers already have, there's an attestation. And it's true you can lie on it. You can also lie on your travel expense. But the Senate also says you understand that you can be penalized up to in including termination if it's found that you're not telling the truth. Now something like smoking is actually the easiest one. The bigger problem with some of the other things. But for the most part, most of the things that employers are asking people to do like talk to a nurse or talk to a coach or talk to a nutritionist about their obesity is things that they should probably be doing anyway. And they're being given the services for free. So they could lie about it, but apparently most people don't. I mean, for one thing, an amazing number do it. Now they can always quit and they do that too. I mean, they tend, all these little rewards don't get you very far. Frankly, people kind of do the first few things. That's why we've moved to the more penalties because using loss aversion theory we're saying you're gonna have to pay a certain amount. And you're right, people could lie about it, but for the most part at least so far they don't and they do have to say everything they signed says they could be terminated if it's found out. And you'll know if somebody participated because you'll have a record. I just had two questions. The first question I think a couple of years ago there were a group of Fortune 500 companies who banned together and decided not to go, decided to I guess buy directly their healthcare services with hospital system. I think one was the Cleveland Clinic or maybe the Mayo. So I didn't know whether or not, is that in combination with their own private insurance exchange or is that something different? Is there another alternative way of how they're managing their health dollars? And then the second question is there are a lot of employers who are using high deductible plans to manage the cost. Are they gonna continue to use that in private exchanges too? Are you gonna see more models like that in private exchanges? So, well first, yes, there will be high deductible health plans in the private exchanges and in the public exchanges. So we'll see more of those definitely and more employers are offering them. In terms of direct contracting, those of all members of the National Business Group on Health who contracted with the Cleveland Clinic, PepsiCo contracted with Johns Hopkins. The Cleveland Clinic now as you all know probably is moving into other jurisdictions. We will see increased direct contracting and I think we'll mostly see it in areas where there's a large location. So for example, Seattle and Boeing does things in Seattle that it doesn't do maybe in other places. Although it just joined the Lowe's Home Improvement Company with the Cleveland Clinic. In Walmart you may have seen the story just identified six hospitals, health systems in the country that they're doing for knees, hips, and a couple other very specialized procedures. Some of our survey data which I could share with anybody who's interested recently suggests that if employers pay for all the cost sharing and the travel expenses to a center of excellence of any kind that most people will use it but they have to pay all the cost sharing to get them to move even when they know that the center of excellence actually has much better outcomes. So it's kind of ironic that better quality safety and improved downstream benefits don't get you anything but money does. Great fine. As you're aware, this is a seminar on ethics and healthcare reform. So I was wondering as you were talking what you thought might be the single most significant moral question that an employer faces in providing healthcare to their employees in the era of the affordable care. Oh, well I think probably the most important one is or the way to pose it is to think about every decision you make as an employer about the extent to which and ideally you make sure it does makes it possible for people to get the evidence-based appropriate medical care that they need in the most cost-effective way. So for example, let's say a center of excellence. So you're helping someone to get the procedure especially if you're paying the cost sharing that is going to be better for the employee or the dependent. So setting up those kinds of programs would be good. Making decisions based on scientific evidence and ensuring that individual patients and this is a key difference have access to what they need as an individual patient more like precision medicine. I think that that's gonna be the big moral question because right now we kind of cover everything for everybody and they get a lot of things they don't need some of it's downright harmful. We also we have new drugs and technology emerging that may be beneficial for a small number of people but right now wouldn't be because it's they not approved for everybody it's also not available to the smaller number of people who might benefit. So somehow making certain that what is covered in the plan what the cost are another example would be specialty drugs putting a cap on the out-of-pocket cost of specialty drugs. That's the kind of thing. So making certain that all benefit design and delivery issues are made within a moral and ethical framework and that every attempt is made to ensure that people have access, affordable access to the care that's appropriate for that individual and that is medically appropriate. So not necessarily and this is by the way this is a debate I've had with some of my friends who work in the field if the patient wants it but it's not clinically appropriate should you pay for it but the patient wants it and there's some people who say I mean if you read some of the literature they'll say well if the patient preference the patient wants it but if they if it's not medically appropriate then I think it shouldn't be paid for and that's kind of that's the point at which we have to think about it but that's the biggest struggle right now between those two it's easy to make a case for doing more for people because everybody wants that seemingly and they are deluded into thinking that most of what's done to them is actually always beneficial including mammography of things like that I mean so you have these debates I mean what's going on right now as you know with the U.S. Preventive Services Task Force decisions and you know right now health plans are saying oh no we're gonna pay we're gonna pay don't worry and in fact that's also encouraging people to think that it's always medically appropriate so somehow we have to sort all those things out but in a way that ensures that precision medicine individual medical needs and appropriateness are the key factors not all these other things does that answer it sort of sort of okay okay good. Yeah this is sort of a spin on Dan's question also I'm trying to put myself in the mindset of a CFO not very successfully I don't think but are you saying that as I'm considering what kind of decisions to make in the upcoming years I should consider it unethical to put into place policies that make appropriate care for my employees unaffordable for them. Unaffordable? Unaffordable, that would be unethical. I didn't I don't think I said I said just the opposite I use the example of capping the specialty drugs I mean capping their costs I said out of pocket cost so I'm not sure I understand. Well I understood you to say that it would the ethical framework would be to make appropriate care accessible and so it just seems to me that the flip side of that would be there would be unethical to put into place policies under which appropriate care would be unaffordable by my employees. Right well I think mostly if you define unaffordable as they have to pay anything yeah but we have to balance the affordability so everybody's gonna have to pay something if we're in cost sharing if we're gonna afford everybody to have everything they want so that's just like take the Medicare program this example and part B premium I mean is it unethical that they charge for the part B premium if you think that's unethical then that I guess I am saying that but I think it's it should be small amounts and particularly all of our members have out of pocket cost limits they have caps you can't they can't they don't have to pay more than a certain amount total out of pocket limits most of them also now have caps on specialty drug cost sharing so if you have a drug that's $200,000 a year you don't pay 20% of $200,000 a year you may pay 20% of some amount up to $8,000 or $5,000 or something like that so that's you know it's it all has to be balanced because they as you can see even with these with what we have what it cost I mean we would soon be at the point where we literally do give people more in health benefits than we do in wages if we didn't have some cost sharing I don't know that I'd say that there's a level no but I would certainly say there should be limits and it should be based on what it is too I mean you get into this with almost anything that has infinite expansiveness to give you an example we had no limits on mental health services when I had health benefits at Xerox we also had a big group of people in Palo Alto, California and because we had no limits if people know Palo Alto, California we had families who had the all the children in psychotherapy once a week both parents in psychotherapy and my all time favorite was we also paid for a consultation because of the individual psychotherapists had to meet with them and we paid a hundred this was a while ago we paid $125 an hour and these were for people now I'm sure they had their issues but they were not they were these were not severe psychiatric disorders and the question then would be for example we had a total amount of money we spent we actually spent one of the highest any place in the country overall and we were you know the company was getting to be in trouble so we had to put in limits and the only the reason we had to do that is because we had people using those kinds of services at that level where there was no limit and we had other people that we were saying no we can't afford to cover some things and I'll buy whether your premium's gonna go up they paid 10% of the premium because of these so at what point do you balance that? The question came from the psychiatrist I knew that I could tell Marshall so historically when legislation of this magnitude has passed it becomes a period afterwards where both parties will work to fix the problems in the legislation so that's not happening anytime soon but if it did occur what are the two or three most important fixes that your organization would want to focus on to fix the current form of the legislation? well I think the most immediate would be the Medicaid, the problem of all the people who are left out and the ones who weren't included because the original law at its best was only gonna cover about two thirds of the uninsured at the time and now it's less than half so the biggest thing to do we go back and solve that every resident of the United States should have access to affordable health coverage so that would be step one but simultaneously and this is a key difference would be they would have to put in ways to control cost and there's a long list but they would need to be in there and they need to be there up front and sit in none of this five years down the road stuff I mean simultaneously because if we don't do that we can't afford it and that's exactly what's happening so yes those are the two big things that we do would it take a change in the Supreme Court or could you do this through legislation? or they could do it through legislation I mean they could find another way but all they have to do is change the law and say somebody who doesn't have it through Medicaid can get it through the exchange I mean that's a easy fix at least in concept Last question I enjoyed your presentation on the topic of Medicaid and moral imperatives I'm from Louisville, Kentucky and a state where two very high profile Republican senators have been focal opponents of AC but yet we have a Democratic governor who was highly motivated because he called it a moral imperative and he said he didn't want to leave all these federal dollars on the table given the large employers that you represent have a lot of political clout in a governor's office like perhaps Texas or Florida what kind of collective political pressure could your members take because the tone of your presentation suggested that you don't feel very good about this Medicaid decision especially in states like Texas that have six million uninsured That's terrible Well thank you Well I think that we can continue to do what we're doing which is say what we say and among other things point out that we need to make the system work and this leaves a lot of people uncovered Most large employers especially these days are very hesitant to go to something like a governor or a state legislature or frankly even the federal government and lobby on topics like this because of two things number one they probably already have a lot of really big issues of their own before those different bodies and second they know especially given just coming out of the great recession and the financial meltdown that there is so much antipathy to business some of it probably well deserved some of it maybe not well deserved but nonetheless they're not eager to be out there doing something that's gonna get somebody saying well we would need Medicaid if you paid your employees more things like that and so it's not likely that they're gonna take this on and that's actually why organizations like ours as a group can talk about these things and can testify and give information everything because it's hard for them to do it themselves directly and they don't mind at all and the other thing we say all the time we take positions and have points of view and work on policies all the time that would be helpful to them but it doesn't necessarily mean that every one of them agrees with everything we do and that's very important so we don't want somebody for example we might cite, let's say take the Medicaid example well maybe somebody has got before the state of Texas an application for something that's crucial to their business and then for some reason somebody decides okay picks up the phone and says don't you come up here this has happened to me by the way don't you come up here talking about this stuff or you're dead I don't mean dead literally I don't mean kill but you mean dead in terms of your ability to influence so there's an awful lot of really kind of meanness sometimes in politics and it can get pretty ugly so I think it would be really hard to get them to do it in the way you're suggesting but certainly we're working with for example some of the big companies in Texas and providing them with information so if they just happen to be sitting in an advisory group or just happen to be sitting next to a CEO because they're big shots too they'll at least know the answer and have an opportunity informally to do something but formally would be really hard Please join me in thanking them