tv Discussion Focuses on the Future of Medicaid CSPAN November 8, 2016 9:00am-10:01am EST
>> after i came up with this idea, i did research information. this is definitely the case with a lot of pieces that will be done for this competition but mental illness specially. it is a complicated issue. it is so multifaceted that i had to research to get a base knowledge of what i wanted to talk about in this piece. obviously, it is so complicated that i can't talk about it all in 5-7 minutes. >> pharmaceuticals is a really broad topic. i thought it would be nice to have a vocal point that i wanted to focus on. before i started interviewing my parents and before i went and got the internet and started shooting, i researched this topic extensively. >> this is my dad's pharmacy. i talked to the pharmacist there and my mom and her colleagues and co-workers. i did a lot of internet research and went to the library. >> a lot of internet research to find facts, data, and statistics
of employment of those with development disabilities to see what was going on. >> most of the information that i got off of the internet came from government-founded websites have the that's how i knew most of the information i was getting was legitimate. >> this year's theme, your message to washington, d.c. tell us what is the most urgent yoi issue for the new president and congress to address in 2017. it is open to all middle school and high school students, grades 6-12, with $100,000 awarded in cash prizes. students can work in a group alone or up to three to produce a five-seven minute documentary. include c-span programming and explore opposen opinions. the $100,000 in cash prize will be awarded between 150 students and 53 teachers. the grand prize will go to the student or team with the best
overall entry. this year's deadline is january 20th, 2017. mark your calendars and help us spread the word. for more information, go to studentcam.org. >> in the latest edition of "time" magazine and available online at time.com. how the media got smarter about calling elections. haley sweetland-edwards is following this. let me begin with that question. how so? >> in the early 2000s, you might remember, the media, they messed up a lot in calling the 2000 election for gore, for bush, for neither caplizing this electoral crisis. they put their meds together and changed a few things. the first one was that they formed the national election pool. they changed their name.
hired a new pollster. they hired edison research. they pledged to congress they would not poll an election based on exit poll results before the polls had closed. that was amy juror difference begin ng 1980. networks would call election before the polls had closed. then, the last thing they did that was really interesting is, instead of allowing exit poll data to leak, to become available to reporters and anchors. the pressure to report on that is huge. they actually chose to put it into quarantine. so the five big news outlets, abc. nbc, cbs, fox news and a.p., send people, data analysts and
stat at the tigss with no phones or rooms or tablets. they look at the data all day long, analyze it, make sure it is row bust before reporting back to their individual outlets just before the polls clothes. >> this begins at 6:00 in the morning east coast time on election day and continues throughout the day. how does edison research determine where they send canvassers and what are they asking? >> that's a great question. it is an absolutely incredible army of people. edison research sends out about a little bit more than 1,000 surveyors and a.p. has their own army of stringers and members. they have about 4,000 more people reported back from county seat. between the two of those outlets, there is an absolutely enormous number of people on the
ground. edison, for its part, is hired by the big media outlets as part of that national election pool. they -- the national election pool actually comes up with the questions on this questionnaire, this exit poll questionnaire. it is just a two-page -- a one-page questionnaire with two sides or two pages. about 20 questions, 15-20 questions. we don't know what those questions are right now. they were, again, arrived at by committee with abc, nbc, cbs, everyone else. they will go out to randomly selected precincts. they won't choose key precincts in key swing areas. they are randomly selected in these states. that will be -- whatever data they get from there, these surveyors will talk to about 100,000 people leaving the polls. that information will be combined with telephone poles that edison research has been
conducting over the last week with people who have voted early and absentee voters. >> so is this to learn not only who voted on election day so that the networks can call it early but also why they voted the way they did. >> yes, exactly. on that questionnaire, front/back questionnaire, we don't know what exactly is on there. we know generally. we know that every voter who is called ahead of time, an ab sen see or early voter, or who is asked at the polls when they are leaving, they will be asked who they voted for in the state and national elections. they will be in gubernatorial races. they will be asked why. they will be asked their general feelings about the major candidate. they will be asked about which issues are important to them. so on this particular questionnaire, there are questions about debt, questions about pension, euthanasia, marijuana, big top line issues like that.
>> so haley sweetland-edwards, you hawe have come a long way since they declared dewey over truman. >> there was a chicago headline that says dewey defeats truman. it is the specker that hangs over the media on election night. you don't want to screw it up that badly again. there is a very robust understanding. i talked to a lot of people who will be in that quarantine room. there is a very profound feeling that this time, they have absolutely got to get if right. if there is a question. if it comes down to these very close calls, most of the vote has been counted but it is a tight race and the loser could still pull it out, they are not going to call it. haley sweetland-edwards, thanks for being with us. >> thanks so much for having me. live this morning to a
conference on the future of medicaid and the health care systems. this is just getting under way. >> blue states and red states, not just east coast and west coast and pacific coast but also a debate about who has got the best beaches and who has the warmest states and who has the best state to move to. the two of them will take turns to speak and i am excited about this. i will get off the stage and out of the way and turn the microphone over to ian morrison and say, welcome, thanks for coming. >> thank you very much. what a pleasure and honor to be
here on a moment tuous day. my definition of a futureist is an economist who couldn't handle the calculus, basically. i'm in the sweeping generalization business. my major was geographic and economic change in scotland, 1580 to 1830, which is incredibly useful. as useful training, i've been a student of structural change in society for 40 years. i left scotland in the late '70s, moved to canada and they let me in partly because i had an urban planning degree. they didn't need them in vancouver where i moved to. they needed them in the yukon.
i was not going to the yukon. i ended up getting a job with the management 13.1. the canadian equivalent of the kgb, spent seven years in an academic medical center doing clinical reengineering before it was called that and working on my doctorate in health policy and economics. i got an offer to join the institute for the future, the modestly entitled institute for the future to work on a project called look ago head with american health care. i basically have been doing that ever since. i have been looking ahead at american health care at the institute for many years. i ran the health program there. i was ceo in the '90s. i have been a free-floating radical for most of the years. i come in for a day, insult people and leave. it is about like newt gingrich but at a lower price point.
i don't consider myself a deep expert on medicaid. i work mostly with the private sector players, whether provider systems or health plans. it is an honor to be here. i care a lot about medicaid. i was on the board of the california health care foundation for a dead okayed. obviously, we were very interested in that. i currently serve on the board of the martin luther king hospital in los angeles. medicaid is the gold card for us, mlk. i set on the long-range planning committee at the stanford children's hospital. i do care a lot about medicaid but i don't consider myself a deep expert. let me share with you the basic rules for futureists. you should make forecasts for things that are far off so people can't tell if you are right or wrong. make so many forecasts one of them have to be right. never give people a number and a year in the same sentence.
that's a very important one. whatever you do, don't talk about elections the day of an election. it is kind of a stupid thing to do. i'm going to violate that by talking about the election. i want to give you a sense of what i think is going on in the field in health care, more generally. i think we are making progress. i'm more excited now than i have ever been in my 30 years in the u.s. i will close by giving you my, as an outsider, the takeaways for medicaid and then we will hear from our distinguished colleagues. elections matter. i'm in a partnership with the harris poll and the harvard school of public health for 30 years. harvard always says that elections matter. by the end of the day, which is by the most overused pundits on cnn. at the end of the day, we will know whether it is a blowout for
hillary clinton or whether it is brexit. brexit is particularly poignant for me as a scot, because you will recall that the scot's voted overwhelmingly to remain in the european union. it was the rest of britain, particularly england, that voted against it. i will remind you that donald trump visited turnberry not by accident, i would say, the day after the brexit vote just arrived in scotland. the place is going wild over the vote. about to take their country back, just like we will in america. no games. you have to remember that the scot's voted overwhelmingly to remain. my scottish colleagues raised the bar in terms of profanity and creative use of the english language. if you go on twitter, i wouldn't read them all.
they were not particularly impressed by that. it is instructive to look at what happened with brexit. a vote about the future and the people that overwhelmingly voted for this were old people. they are not going to be in the future very much longer. yet, the vote was amongst young people disproportionately towards remain. what we saw in the brexit was the places with the most elderly people and fewest college graduates and people identifying most as english, set a nationalism where the areas that went towards brexit. there may be a metaphor and mr. trump has said brexit times five. we will find out by the end of the day. as i mentioned, i've had this partnership with the harris poll in harvard for a long time. my colleague, bob landon, who has this great new project he is doing with politico, did a survey a few weeks ago, which really captures the differences and the deep divide in the country with regard to how the
electorate think about the affordable care act. trump voters disproportionately think it is going very poorly. clinton supporters are on the other side of that argument. it turns out according to bob's analysis that the fundamental dividing line is attitudes towards the role of government. if you believe that government should play a bigger role, you think the affordable act is doing okay. if you believe the government should play less of a role, you think it is doing horribly. it is not like you have made a systematic judgment based on evidence. it is more about the attitudes towards government and the role of government in health care. that spills over into what should happen to the affordable care act. people that are supporting trump generally want to repeal it or scale it back. people supporting clinton want to build on it or go even further. so those are the divides in the country. as bob caught, as all of those of us that had the opportunity to work with him over the years,
the only time you see major changes in health policy is when you get one team running the table. the question is, is that going to happen this time around? let's just play the extremes. if democrats were to win and win the senate, unlikely they will win the house, you would probably see an expansion of subsidies to shore up some of the affordability issues. you would probably see subsidy toss shos to shore up the health issue. perhaps expansions for groups previously not covered. more funds for prevention and attitudes naturally favor action on pharmaceutical pricing. the cadillac tax interview, the group i work with, basically, is not ever coming back, no matter who is running country. there may be a lot of talk about public options and single pare but they wouldn't do anything. the real question, i think the question for the country that
will be decided by this election. maybe more states will expand medicaid. we will hear from our good colleagues in a second as to whether that is real or not. if republicans were to win and run the table, i think they are going to get rid of obama care. they are certainly going to change the name. i can't imagine trump is going to talk about it. it will not be hugely popular to call it obamacare with trump in the white house. it is hard to know what they would do really if you want to go on my website, i did some fake interviews with donald trump i found amusing. anyway, again, i think the mandates would be gone. it would be shifted to the state level. we are going to get rid of the lines and it is going to be beautiful, beautiful, beautiful. i'm confident in that. the real question is, are rich people going to keep writing a check for poor people? are we going to see coverage
continue and subsidies exist going forward? if hillary wins and we have team "a" in the white house, coverage might be expanded by a further $9 million. if team "b" wins, we may lose 20 million uninsured. that would be sad. i think we have made significant progress. like it or not, obamacare has reduced the uninsured across the country. i spend a lot of my time in board rooms with large provider system. you can see it, depending on which state you go to the impact this has had. it has been achieved through both exchanges which have had a locky time in this third or our third year now. mostly, through medicaid expansion. that is the big story. very few hospitals will say, i have seen a huge number of exchange people coming through. not so much in florida. it is a big deal in florida and texas. whoo thwhat they really have se
is an expansion of medicaid. you have heard from the officials at cms and other experts, is this massive move toward payment reforms, which i think is irreversible and will continue under any political scenario. partly because it has been reenfoers reenfoe reinforced by the behavior of people on the grown. the people i work with, the large integrated delivery systems are quite committed to a move away from unfettered fee for service. the fact that dan malton runs memorial herman is retiring and was replaced by ben chu who ran kaiser. joe allison, the great ceo of baylor, scott, and white, is retiring and they have recruited jim hinton, who ran presbyterian in albuquerque, one of the large integrated systems in the
country. that is a signal that the boards of these major institutions see a future very different from the past. the other thing we are seeing is this massive consolidation going on across the country. i will say a little bit more about that, both at the plan level. more importantly, at the provider level. we sometimes forget that there is this enormous long-term secular shift away from inpatient to the ambulatory environment. this is very profound. my wife had knee surgery a couple of weeks ago. i dropped her off at 7:00 in the morning. i didn't just drop her off. i waited until she was out of the o.r. i had to go to another meeting and a friend picked her up. she was back home by 11:00. if you had knee surgery in scotland, when i was a kid, i would be in hospital for six weeks. so the world has changed significantly. the other big change we sometimes miss that was really generated by the affordable care act -- not the affordable care
act but the stimulus bill on the high-tech act was the ubiquitous deployment of electronic health record. we at least got into the 20th century, if not the 21st century. the work that needs to be done in my view is enhancing the consumer and provider experience in health care. what we have seen is a megatrend, particularly in the employer-sponsored insurance market, is the shift toward high deductible care, which is a very blunt instrument in my view and has not been particularly effective. it has been effective in containing employers cost but it has not necessarily been the best thing for the people who are receiving care. the other point to note is that we in health care, we don't exist in a vacuum. i live in menlo park, california, ground zero of google and facebook and venture capital. a massive amount of money has been put in consumer facing apps, partly because we in health care. think about how you run your own life. everything you consume or
interact with your family or reservations for travel or restaurants is done through your phone. yet, when you have to deal with health care, you have to step back into another century, deal with people who are writing things on white boards in babylonic cuniform and faxing things to each other. the fax machine should have been out of business 25 years ago. it is the life blood of american health care. you have to show this in some states to prove that obamacare did work in terms of reducing the uninsured. the biggest reduction in the uninsured since lbj. the uninsured reduction was more significant in states that expanded medicaid than states that did not. that, i think, is the important back drop on this election day. so from my perspective, here are the stories i'm seeing and hearing in my travels across the
country. some of this is just based on what i'm hearing. this partnership, we survey every year doctors, consumers, employers and hospital leaders. i am going to give you greatest hits about those and spend a little bit of time on shallow pocketed consumers. the reason why i think it is different this time with all this health policy stuff is a pretty simple fact. the average american family cannot afford the average health insurance premium. >> you think of that for eight nanosecond, that's a wee bit of a problem. the average french family can afford the average family because it costs twice as much. median household income is $18,142 in the employer market.
du does not compute. what we have done is see this couple mu lat tiff increase in unaffordability of premiums. the green line is workers contribution compared to the blue line, health insurance premiums generally. the green line being above the blue line means there is cost shift to the employees. the boston two lines are overall workers earnings and inflation and, of course, they are way, way, way less than the increase in premiums. again, the average family, therefore, hasn't had a wage increase, any increment in compensation came in the form of health benefits. this is the point we are at now where the kaiser family foundation, up around 18, 142. that does not include out of pocket softs. if you use the millman numbers, you are up around $25,000.
what is corporate america's idea? to shift the cost to consumers. 50% of the workers have a deductible of $1,000 or more, 20% of $3,000 or more. why is that significant? median households don't have $3,000? st they don't have that in financial assets. that's why what we have seen is that they forego care. this is not our data but data from the commonwealth fund. this is people who have jobs, who have health insurance, who are doing it right. they just happen in the case of the dark blue line to make less than 200% of the federal poverty level. if you are in that category, about half of folk in that category have foregone care of one type or another. had a problem but didn't go to a clinic or fill out a prescription, skipped a test or treatment and didn't see a specialist. it would be lovely and
convenient for smieconomists if they were only foregoing unnecessary care. that is not what happens. when i was on the boar, we gave the rand organization $3 million to prove the obvious, which is when people have to pay out of pocket, they don't get stuff. some of that matters to their health. let me just say, when it comes to consumers, i hate satisfaction surveys. just hate them. why? because they don't move. we waste acres of real estate doing these satisfaction surveys an they don't move over time. why is that? americans are nice people. you want to see dissatisfaction, go survey the french. they're pissed off about everything. the reason we do it, occasionally you see a movement. we did see a significant drop in the last couple of years in the percent of americans that say the insurance plans meets my family's needs very or extremely well. that was particularly acute for
exchange folk. i would point out that people on medicaid are as happy as people on commerce plans with this. they are much more positive than people on exchanges. in fact, when we look -- what we like is not satisfaction surveys. we put together this emotional scale that we ask consumers about and the question is, how would you describe your feelings about the health care you received today, including how much you pay for it and the benefits you receive? please select all that apply. this is going to come as a complete shock to the men in the room. you can have more than one emotion simultaneously. women understand that. men have a great deal of difficulty with that concept. they have trouble coming up with one emotion at a time, let alone more than one emotion. you see what you would expect as a social scientist. you see a normal distribution around the stuff in the middle accepting mutual re-sign.
you don't see many saying they are empowered. a surprising number say they are powerless, depressed and angry. i put the california numbers to brag about as a californian. the reason the numbers skew more positively in california is we have kaiser. we have hmos, which are generally not high deductible and we have a much higher penetration than most other parts of the country and we have medicaid that's huge. a third of californians are on medicaid. all of those reduce the out of pocket cost burden which i think tracks to satisfaction and we know when we break this out in our survey by class of insurance, it is ironic that the people who skew more positively have public insurance, not p private insurance. fewer people with commercial insurance are hopeful and as many are powerless.
the numbers for public insurance, rather, tend to be slightly better on the positive side and less negative on the negative side, which may be a function of expectations. one of the things we know from consumers. we have a very big sample in this survey. one thing we know about consumers that is sort of interesting. the role out of pocket costs play. 28% of americans have received a balanced bill for care they thought that was cover. if you are in that category, you have much less to say you are powerless, depressed and angry. >> a woman went to see her physician. he said, oh, yes, i can take care of that problem. she made sure. she had a ppo, went to choice, made absolutely sure the doctor was in network.
she had this problem. he said, i can take care of that. go to my surgery center on the second floor where he suddenly was out of network and sent her a bill for $18,000. didn't resolve the problem clinically. she had to go to a hospital. this time, she is really making sure that the surgeon is in network and the hospital is in network only to find that the anesthesiologist and the second assistant surgeon were out of network. they sent her collective bills for $24,000, all perfectly legal. this has caused some states like new york to pass the no surprises law which tells you have to inform the patient in advance they are going to be screwed by the second assistant surgeon. i am sorry. transparency is not a solution here. that's wrong in my view. these hospitals are conspiring to defraud patients. so the other thing we found in our survey with regard to this out of pocket cost stuff, we found a group of patients, about
10% of the american public who use the health system and have trouble paying for it. another word for them would be patients. almost anyone admitted to a hospital or has a serious procedure done and makes less than $150,000 a year is going to be in this category. they are not all on medicaid. in fact, fewer than average are on medicaid. they are disproportional atly unu uninsured to be true. most of them have coverage. if you are in that category, you skew very heavily to the negative end of the spectrum of powerless, depressed and angry. what do consumers want? in a word,they want cheaper. we put them through a tradeoff exercise. basically, you can have this or that. you can't have both. which do you prefer? you do that over a big enough
sample and you reveal relative preferences. what they tell us is give me low premiums, low deductibles, loco-pays an i will trade off choice for cost. one of these things we found is the one thing that seems to have bipartisan support amongst those that vote republican, democrat or much republican is reducing cost. that will be a focus if hillary clinton i elected president. i am not going to go into as much depth as the other stories. i want to hit on a few of the trends we think are important for the market to watch and have some implication for all of you and your roles. the first has to do with consolidation. we are seeing this at the health plan level, although i think one or two of these mergers might
not be consummated because of resistance to the department of justice. i was talking to a liberal group of doctors a couple of months ago. i said, the good news for you liberals is, we are going to have a single payer system. the bad news is, it is united health care. i'm not really that worried. the d.o.j. lawyers called me. i said, i don't have a problem with it. as long as there are three of them, it's fine. what i'm much more concerned about is what i see in every market i go to. i go it a lot of board retreats with a lot of hospital systems across the country. what we are seeing here is the creation of 200 large, regional, integrated delivery systems that are coming to dominate the landscape. when i say dominate, it doesn't mean everybody is going to work for them. certainly, we are seeing doctors running to hospitals to huddle for warmth. we are seeing hospitals consolidating regionally. we are seeing the role of for-profit and private equity money driving some of this.
the bond market thinks it is a good idea. there is a positive up side from this integration, which is, if you think about a managerial success where you drive out inappropriate clinical variation and you improve quality and reduce cost, that would be a win for the world, a win for the health system. unfortunately, the data don't support that much the tendency is to use pricing power to raise prices rather than yield true efficiencies. by the way, this isn't going over well with the people who pay the bill. i don't just mean medicare and medicaid. the people that are the life blood, financial life blood of the american health care delivery system are private employers. i'm an adviser to the pacific business group on health, which is a coalition of large employers. pacific is a misgnomer. it includes wall mort and
disney. their view of the world is not donald trump's increase view. their view is 4%, 2016, 4% increase. the good news about employers is that -- the good news is, they are not leaving. they are not abandoning the field. it has been surprising positive effect of the affordable care act that the number of people with commercial health insurance has remained relatively flat as the cbo predicted. what we track is the red line, the percent of american employers that say my company is actively exploring ways to get out of providing health insurance to our employees. you can see that red line. you don't have to read the numbers. it just went up and came down. the reason is that they took a look at private exchanges. they took a look at exiting the field. they made a determination that there was really fundamentally their responsibility to ensure their health employee's needs
were met. that's the 87% number at the top. they are not leaving. that's the good news. the bad knew fonews for the del system is they are not leaving. they are going to be in the face of the delivery system going forward. that's what we have seen and hear anecdotally this year. employers putting pressure on their health plans to get zero premium increases or zero price increases from these provider systems. there is a megatrend that is still troubling. i don't think obama should be blamed for this. this is the progressive unaffordability of health care which reflects this. over time, we're seeing fewer and fewer workers covered by employee health benefits. the reason that is true is because of the progressive unaffordability of health care. i live in silicon valley. a lot of people work at google. not a lot of people work for
google. the people cleaning the floors are contractors. they generally have less health benefits than the really sophisticated high-tech folk. the other trend that relates to this is employers experience of price. now, this is a sophisticated audience. you all know about the dartmouth atlas, the left-hand side-view on this chart where medicare spending per capita has been rigorously analyzed by the folks at dartmouth and the dark air why is of the country are expansive. the light areas are cheap. what you don't always see is the chart on the right-hand side, which is the smart alecs of harvard who did the same analysis but with self-employed insurance data. this explains the mystery for those that travel around the country. you get states like wisconsin where hospitals are getting 300% of medicare in the private sector. there is huge variation across
the country in the rates paid. even in my state, california, northern california has low utilization and very high prices. southern california, the other way around. that's why even in kaiser, there is a $100 price per member between northern and southern california rates. this is the hardest data in america to get. so i just made it up. >> it is a little hard. the labels got squished. let me talk you through it. on the left-hand side. if you do coronary bypass surgery on an uninsured patient in northern california, you will get 7 cents back on the dollar. medicaid in my state pays 69% of the cost and medicare pace 89% of costs. so you don't have to be a rocket scientist or a futureist to figure out, you are going to charge the private sector more if you are a provider. on average, around
150% of cost. the dream is to get the number on the right-hand side, which i call the demented saudi prince price. what would a saudi prince pay at johns hopkins. that's what cfos call the charge master. again, it is tough to see the labels here. what we did with exchanges is inserted another player in the mix. so every hospital board, this is the story you hear. this is in an expansion state. we have windfall profits on the in-patient side because their bad debt went way down, 6% to 4% for hospitals like that. it's true in many, many states across the country. the problem is, you have now permanently impaired are mix, because you have way more medicaid patients. that's why over time, we are going to see the slow deterioration of the finances in
those hospitals, many of whom were doing spectacularly well in 2015. i didn't really just make the data up. the american hospital association track this is stuff. we are seeing a widening gap between what medicare and medicaid pace relative to cost and what private payers pay. there is a little bit of wining going on here. when these cfos say to me, medicare doesn't pay the true cost of care. medicare doesn't pay for the income aspirations for you and your people doing things ex athexactly the same way, which doesn't sound so good. i know this is going to be painful. all of you in this room are feeling this sting. the pbgh board meeting, this is the number one issue for employers. i was with the ceo for care first. maryland is an odd state because
it is an all pair rate setting state. for the first time, specialty phrma now exceeds inpatient hospitals spent. phrma per member per month exceeds inpatient hospital for all carriers i have talked to. it is going up dramatically. the entire pharmaceutical industry, including the old legacy players are pivoting to large molecular biology indices with very high prices. it has gotten kind of ridiculous. hepc being the primary example. $84,000 in the u.s. and $900 in egypt. as we say in glasgow, half joking, full serious. it is choeaper for a self-insurd employer to send that patient for a three-month luxury vacation to egypt, put them up
at the ritz-carlton, give them a meal allowance and take their friend or partner, fly them business class and tack on the niles spa cruise where you will be pampered to death for ten days and you would still save $30,000. that's nuts. that's why when we do surveys, 72% of americans including a majority of republicans believe that price controls or caps on pharmaceuticals should be enacted. i think we will see action on this one way or the other. it is maybe the plot forming the trump administration too. the other thing we are seeing across the country is this migration to try and make volume to value real. the best estimate i can give you of how real this is, is from our survey of hospitals where we ask them, you know, you have to pick one of these options. on the left-hand side is the least invasive, which is, we
have no plans to take risk beyond modest share savings and pay for performance, about a third. on the far right-hand side are hospitals who say we are committed to removing the majority of revenue toss fully at risk within five years. that's around 6-8%. the next to last is building an aco model that is capable of taking risk such as medicare advantage or employer direct contracting. i think that's about right. we ask another way. about 20% of health systems say they are going to have an insurance license within five years. i think this is a separation going on between the people who want no part of this, people in the middle who are sort of playing at it by doing a clinical integration strategy and people that are serious about migrating more towards risk over time. the other thing that's reinforcing this is payments reforms from cms and private payers, including both bundles and the shift towards population
health. i want to make a distinction between bundles and population health for a second. a bundle, more is still better. it is not so alien to these providers. they are used to being in the growth business. it does encourage improvement across by putting an envelope further out around the continuum of care. not everything is easily bundled. i worry a lot that the sum of the bundles is going to be more than the current payment. the reason i say that is my good friend, pat fry, who ran sutter for many years, has a tendency for profanity, which i appreciate, said to me about bu bundles, screw me on the bundle, i'll screw you on the rest. you can grind me down on orthopedics but i will charge you more for stuff you can't bundle and come out the same. i think that's right. i think that's the way providers play the came. i'm a big fan of cap tation, risk, accountable care,
population health. it makes you think about the frequency of which you do things and the appropriateness. it will cause you to go up the food chain to focus on the determine nats of health. you will find a lot of the solutions. i am preaching to the converted. this is where you have been, looks more like social work than medical care. that epiphany is happening all over america with providers that are getting into the risk business. there is this mutual disrespect problem. everybody in american health care thinking everybody else's job is easy and anyone can do what an insurance company does. that's just not true. so what happens when you get in the risk business. well, what happens is you hire another smart alec consultant. they will run the numbers and you will find what is a law of physics that in any insurance poll, 5% of patients account for 50% of costs.
1% account for 20%. the bottom 50% utilizers use next to nothing. what's in that 5%? well, what's typically in that 5% are hondas, as one key category. i'm a honda. i was denied coverage before obamacare saved my bacon in 2012 in the individual market in california. i was denied coverage not once, not twice but thrice. it was thrice denied, positively biblical. the reason blue shield denied me is they said you are a honda, hypertensive, obese, noncompliant, diabetic, alcoholic, right? none of which is true but kind of directionally correct. the other thing you will find is behavioral health. 20% of americans of behavioral health, super utilizers, it is more than 85%.
anyone who is in end of life care in the medicare population will be in that 5%. anyone with active cancer will be in it, the frail elderly and the elderly population. social work, not medicare may be the solution. for any clinicians, if you prescribe one biological, you will ought mt. cli be in the top 5% high cost cases in the commercial market. let me just close by telling a couple of stories and make a couple of observations about what this means for medicare. the stories basically are what i'm hearing, how these provider systems are responding to this new future. the story of the trap is this young hospitalist who -- a latino kid who went to ucsf and did well. he came back, wanted to serve his community in phoenix in a very low income neighborhood with a horrible readmission rate. he told the ceo, i can cut this
rate in half. he took his truck and he drove on his own time at night to see the family, took the discharge summary, gathered the family around, spoke to them in spanish about what grandma had done in the hospital, the meds she was on now and what should happen going foor. forward. he did. he cut the rate in half. you don't need a board certified ucsf trained hospitalist doing it. you can have a kid with a check board who spoke spanish or better yet, a proma torey or a friend of the family. that is happening over in the country where health systems are getting on to this. the second example came from art gonzalez in denver health at the time. he told me the story of the number one frequent flyer patient they had. mrs. johnson, a brittle diabetic, constantly being readmitted in the e.r., in the hospital, not in control. despite the fact she was in a
patient-centered medical home and the entire cast of grey's anatomy came around her every friday. it wasn't until some smart young nurse asked wasn't until some sg nurse asked the question, mrs. johnson, why are you not taking your meds? she said, well, they have to be refrigeratored. so? i don't have a frig. they bought her a frig. she never came back. in a good way she never came back, he was fine. final story told to me by bernard from kaiser, from 300 medicaid to a million users. it has a fantastic group visit program for diabetics, multi-disciplinary team, patients, it's great. they were having this problem with the newly covered medicaid
members not turning up for appointments. the doctor getting all judgey about it. what do you do with medicaid until some smart alec realized the reason was because the bus schedule didn't work. couldn't get there until 10:30. so they change the bus schedule. lo and behold it worked out. so those are the kinds of interventions across the country, segmenting, using advanced analytics, patient registries and medical, upstream, understanding that they have to focus on the population and be more imaginative with the problems going forward by partnering with others and that's what we're seeing. this group knows this. i think a lot of people have to be reminded of it. that this notion we overinvest in medical services and underinvest in social services. the work has really underscored
this. i go to france. the french are number one in all these international measures. an exposure to the medical system is bloody scruffy, i have to tell you. the reason they do well on every measure has nothing to do with medicare. it's because they walk, they drink red wine and walk and get naked in the summer. nothing will keep your bmi down better than getting naked in the summer. [ laughter ] >> one final point on population health. the single biggest determine ate of life expectancy is income. this is what we call a straight line. turns out a massive study by stanford and harvard researchers. turns out, if you're going to be poor. better to be poor in places that
aren't darwinian. there are lessons. i'll skip to the doctor stuff. here is the punch line for you all. medicaid is massive. it's bigger than france. 2.6 million americans by last count, as far as i'm aware, that is unbelievable how big this program is. i think it's a challenge for the country. partly the churn in and out eligibility. partly the question who is going to look after them, which providers. it's a huge lift. this your world. i don't mean to be preachy here but it's covering kids, mums, expansion population. it supports dual eligible default for most middle class americans. i think your challenge, our challenge as a nation is design financially stable delivery models for the future.
i made that point. i think the way you do that is so innovate that scale. the problem right now we do a lot of tinkering. we're great at pilots. ceo, patient centered medical home it's like scout badges when you're in the scouts. i'll get that. accountable care organizations. i've got three of them. diabetes disease register. absolutely. then you ask the follow-up question, what percentage of patients get that on a percentage basis, square root of 0. we need to innovate that scale. three going for managed medicaid, high deductible health care, medicare advantage aco risk. that's the game. it's going to require the delivery system to transform it's self. the real question this election will decide is are rich people
going to write a check for poor people. there really only three futures for health care, where we move to large integrated systems transform to meet the triple aim spurred by payment reform by public and private payers. that's what i'm hoping for. i'm worried about darwinian consumerism of subsidies taken out and we have to live in a world of high deductibles and economic rationing. i worry about the left of the political spectrum taking over and grinding down on budgets and prices, locking in all the inefficiencies that currently exist in the system. what that means for medicaid, i think innovation on the one hand, about thinking creatively of combining social spending and various social initiatives in a
more creative way. if it's darwinian we have to put the arm to take fair share, geographically discriminate against people. i worry a bit about the price controls, how we maintain quality and appropriateness. you figure it out. these great colleagues here are going to tell us how it's going to work. i absolute you for what you do. it's incredibly important. the people of america who depend on you salute you for what you do and i thank you for your time and attention this morning. thank you. [ applause ] >> all right. thank you, ian. it is rare to see someone enlift so much laughter in a conversation around medicate but we certainly appreciate that today. so you brought up a lot of points and images, some images especially around bmi comment i think we'll try to remove from
our brains when this is over. but there's a lot to chew on there. so let me move immediately to experts who are grounded in the reality of the now and let's start with justin. in your experience in florida, what's your reaction to that? are these scenarios that you see, or is he just way off for a variety of reasons? >> i agree with the scenario he's laid out. i think the payment streams in particular are probably the ones that are going to survive. i'm optimistic. just like him. i'm very optimistic about how things will go. i was in a doctor's office several years ago. the doctor's office, like many doctor's offices, never updated its magazine stack. i was reading an economist magazine from a couple years earlier that was talking about
this new sony ereader that came out. they were poopooing whether it would take off because it was big an clunky. in between reading, the ipad came out. every magazine, paper mill started to collapse as a result of an innovation. there's certain things out there we don't know what's going to come down the pike. one odd thing about health care, innovation tends to make health care morive expensive rather th cheaper in the short run. that poses challenge. we in florida have done our best to simplify our systems and focus on what we're trying to accomplish. coming up with shared definitions of success that go across the aisle and things we're trying to achieve. we're trying to do it in a way we set the incentives. so much of what we've done in
united states and health care is get the incentives wrong. it has always been pay for volume with a lot of the biggest providers being shielded from their cost increases. they are paid based on their cost. what they end up with if you set your system up like that, a delivery system where americans get more prescriptions than anyone else, more procedures than anyone else and the costs have gone through the roof. it only costs us about two or three years of life expectancy compared to our peer countries when it comes down to it. we've got to change the way we deliver health care in the country. we've really got to work at getting in sent i was right and paying for value. that is a very difficult thing to do because it involves -- there are a lot of people in this room that make a lot of money off medicaid and medicare programs. they make a lot of money off of these funding streams. when you say you're going to save money -- when we say we're
going to save money, what we're saying is we're going to reduce the amount of money we give you over time and we're going to have higher expectations for what we get for that money. we're going to try to build the incentives that way. these are not cash assistance progra programs. you're speaking not to a room of poor people but a room of very wealthy people. i can only imagine what the average income is in the room or median income is in the room but i'm sure it's much higher than the national average. we really need to think about that. if we put so much pressure in the state government on other investments that the state officials would like to make, and they would love to make more investment in education, they would like to make more investment in trade and transportation infrastructure, but we start to swallow that up in health care. you have to question the value of that investment over time. and we have done our best to try to become a