Health Care & Benefits Power Breakfast Transcript

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Indianapolis Business Journal convened a panel of experts at its Health Care & Benefits Power Breakfast on Sept. 25 to talk about Obamacare, consolidation and the “Cadillac” tax.

The panelists included Alex Azar: president, Lilly USA; Julie M. Carmichael: system vice president and chief strategy officer, St. Vincent Health; Dr. Aaron E. Carroll: director of Center for Health Policy & Professional Research, Indiana University School of Medicine; Stephen L. Ferguson: chairman, Cook Group Inc.; Robert Hillman: president, Anthem Blue Cross and Blue Shield; Dr. Dexter Shurney: chief medical officer and executive director of global health and wellness, Cummins Inc.

The moderator was IBJ health care reporter J.K. Wall.

The following is an unedited transcript of the discussion:

                           WALL:  I'm going to start with Julie

                   Carmichael about hospitals, they've been in the news

                   a lot recently.  There have been some cuts at

                   hospitals which has been out of the ordinary since

                   they've been such a steady business, steady employer,

                   at least from an outsider's viewpoint.  St. Vincent

                   had to lay off nearly 900 people earlier this year,

                   IU Health announced it's going to lay off 800, the

                   other local hospital system, Community Health, has

                   made some cuts in smaller batches over the last

                   couple of years, as recently as last week.  Can you

                   describe for us, Julie, the various factors, and I

                   know there are many, that are really kind of driving

                   hospitals to the point where they need to make those

                   cuts and what's that going to mean, how are hospitals

                   going to operate differently going forward?

                           CARMICHAEL:  Well, I appreciate the question,

                   and thank you for the invitation to be here this

                   morning.  I've had the pleasure to sit in the

                   audience and observe the panel but never the

                   opportunity to be one of the panelists, so it's nice

                   to be with everyone this morning.  The simplest

                   answer to the question is that health care providers

                   across the country and here in Indiana are going

                   through a transformational change.  We are under

                   increasing economic and competitive pressure and for

                   St. Vincent's specifically we really have experienced

                   declines in our budgeted volumes, we've also seen the

                   mix of services that we provide to our patients

                   changing pretty dramatically, and then we've also

                   begun to experience declining reimbursement, and so

                   those three factors really led us to make the

                   proactive decision, however difficult it was, that we

                   needed to reduce our workforce in order to remain

                   competitive and focused on our mission.  It was a

                   very difficult decision and one that we took great

                   time and attention to think through and although we

                   made it and tried to be as kind and compassionate

                   with our associates and contracted associates, I know

                   that the decision we made impacted so many valuable

                   employees and their families, but we felt we needed

                   to take that proactive approach to really prepare for

                   the transformation that we're undergoing to preserve

                   our financial viability and to continue to be able to

                   provide services in the communities where we have

                   hospitals.  Going forward I think that's a question I

                   get frequently is, you know, "Is this it, will there

                   be more?"  I think we are going to continue to remain

                   active in our attempts to improve our cost position,

                   to increase the quality of care that we're providing,

                   but, in effect, we need to continue to be focused on

                   delivering more value to our health care customers.

                   In addition to monitoring the volume, we'll keep a

                   close eye on where we're delivering services and

                   start to make adjustments as location sites of

                   service change, and then we're also looking at a

                   series of transformational business projects as well

                   as price-reduction initiatives so that we can

                   continue to position St. Vincent Health in a way that

                   we can lead the market in terms of quality, safety

                   and patient experience.  So while I would like to say

                   that we are well into that transformation, I really

                   think that we're at the beginning of the journey,

                   we're likely to see this continue for some time not

                   only in Indiana but across the country and you'll see

                   us make additional realignments as we continue to

                   find ways to sort of transform the way we're

                   delivering patient care.

                           WALL:  Okay, thank you.  And what happens in

                   hospitals is, of course, a function of lots of

                   things, we've got changes in the law, we've got

                   changes in what employers are doing, what insurers

                   are doing.  Does anyone else on the panel have some

                   thoughts on changes in those areas that you think are

                   ultimately playing into the hospitals having to make

                   some of the cutbacks that they have made recently?

                   Anyone can jump in here.

                           FERGUSON:  Well, from the device industry and

                   from the state's point of view, we're one of the

                   leading states in terms of medical device

                   manufacturing and development.  It's impacting us in

                   two or three ways.  As hospitals are impacted, then

                   it's changing the relationship.  It used to be more

                   of a physician relationship, more one of educating

                   the physician on new technologies and new devices.

                   It's moving much more to a business side where you're

                   dealing with the business side of the hospital rather

                   than the physician side, so that's making a change.

                   I think probably two other impacts of the Act itself

                   is, one, the device tax which is having a major

                   impact on the industry and, as people know, it's a

                   tax on gross sales and so that drops the bottom line

                   if you combine that with the difference in our tax

                   rate in this country being at 30, 35 percent and

                   there's a manufacturing deduction of 9 percent, so it

                   will probably end up affecting the manufacturing cost

                   rate of around 32 percent, but it's 12 and a half

                   percent in Ireland, 15 in Canada and around the

                   world, and so you get a lot of recruiting from those

                   because they realize that putting your value-addeds

                   or economics 101 in locations where the tax rate's

                   that differential and then you add the device tax on

                   top which amounts to about a 27 percent increase in

                   your federal tax rate starting in 2013 and you

                   combine that, you're going to see I think a major

                   shift in the industry in overseas manufacturing.  We

                   manufacture 80 some percent of our devices in the

                   United States, 57 percent of our sales are outside of

                   the United States and growing rapidly.  It will

                   probably be that 75 percent of our sales will be

                   outside the United States.  We prefer to manufacture

                   here but the pressures are getting such that I think

                   many device companies are going to make that

                   decision.  We've made a decision not to move anything

                   out of the country and we're going to maintain, but

                   the growth in new manufacturing will be outside the

                   country given the current circumstances.

                           WALL:  You're having to go to a central

                   committee at hospitals to make a sales pitch now on

                   new products rather than doctor to doctor?

                           FERGUSON:  Yeah, in the purchasing and what

                   they're looking for and what we're responding to is

                   ways to — Device sales are about 6 percent of the

                   health care costs and the hospital is probably 50 to

                   60 percent that are in wages and salaries and

                   employee costs, so we're a small part but we're the

                   easiest part to put pressure on.

                           WALL:  So you can't pass on the tax very


                           FERGUSON:  Yeah, so we're looking at ways to

                   partner with the various health and it's becoming

                   dealing with larger organizations to save them money

                   and show them how they can save money and be more

                   efficient in their relationship with us as a


                           WALL:  Does anyone else have thoughts on

                   foreseeing pressure on just providers in general,

                   what are some of the underlying factors driving that?

                   Dr. Carroll?

                           CARROLL:  Sure.  Well, I mean it's very hard

                   to turn on the TV and not see somebody talk about the

                   fact that we're spending too much on health care.

                   Just to throw out numbers, if it's 2.7 trillion or

                   2.8 trillion or 16, 17, 18 percent of GDP, the one

                   thing everybody seems to agree on is that it's too

                   much, we need to spend less, but I think we don't

                   often consider the fact that money is not being put

                   into a pile and burned, that gets fed back into what

                   everybody up here does, it's the health care system,

                   it pays wages, it pays for devices, it pays

                   hospitals, it pays nurses, it pays everything, and

                   regardless of the mechanism by which we reduce health

                   care spending, if we reduce health care spending,

                   there's less money going into the pile for everyone

                   to take revenue out of, and so all of these changes,

                   while they can be conveniently blamed at the moment

                   on the Affordable Care Act, likely would've occurred

                   with much of the economic downturn anyway.  Health

                   care spending growth had been growing upwards of 9

                   percent for a number of years and last year it only

                   grew at 4 percent.  Many people think that's because

                   the economy slowed down.  Part of that probably is

                   because changes and mechanisms that are coming down

                   the pike with respect to the law, but if everybody

                   keeps pushing for reduced growth of health care

                   spending there will be reduced money and that will

                   cause a lot of these changes we're seeing regardless,

                   and so we've pitched this battle and we've pitched

                   this discussion much in the way that it's been

                   focused on health care reform, it's been focused on

                   Obamacare, it's been focused on changes that are

                   occurring, but even if that were to go away tomorrow,

                   health care spending has been slowing down, and in

                   the past few years, while there's been reduced job

                   growth in pretty much every sector in the United

                   States, health care has actually been increasing and

                   it was increasing throughout the recession and it was

                   increasing throughout the economic downturn.  There's

                   going to be repercussions of that, we had to take the

                   hit eventually and it's coming due now and I think a

                   lot of the reductions in labor and a lot of the

                   complaints we're seeing from many sectors of the

                   health care industry right now are because there's an

                   economic downturn and we're trying to slow spending

                   and that will have ramifications regardless of the

                   politics and the law.

                           WALL:  Anyone else have thoughts here?  Well,

                   let's talk a bit about ObamaCare directly, or at

                   least one part of it.  The law, maybe intentionally

                   or not, has been adding some momentum towards

                   consumerism, you've got an increasing number of

                   employees who have high-deductible health plans and

                   then once the exchanges start up there's broad

                   expectations that the most popular plans there will

                   be ones with pretty high deductibles as well.  What

                   does this kind of continuing consumer trend mean I'd

                   be interested to hear in your various businesses?

                   I'll start with Alex Azar and he can talk about what

                   it means selling pharmaceuticals.

                           AZAR:  So increasing consumerism in health

                   plan selection is absolutely happening, it's

                   happening both in the employer market with high-

                   deductible plans as well as now through Part D which

                   operates as an individual insurance market and then

                   with the new exchanges it will also be individual

                   based, so we've got experience there.  If you set

                   these systems up right with increasing consumer

                   choice and with the consumer having more skin in the

                   game on the choices that they make, this can be a

                   very good thing, so an educated consumer with choice

                   really can be at the centerpiece of the system.  If

                   you look at Part D where we set up the senior citizen

                   drug benefit under Medicare, since it was launched

                   you've seen over 90 percent approval ratings on the

                   program.  It has had 40 percent lower expenses than

                   what the Congressional Budget Office predicted at the

                   time that it was passed, and it's been calculated

                   that on average every senior citizen in the system is

                   saving $1200 per person in hospital, nursing home,

                   and other medical expenses by virtue of having that,

                   so those systems of the consumer in the driver seat

                   really can work well.  I look at these things from

                   the perspective of what's going to sponsor and

                   support innovation here in the United States and the

                   best choice and best medical care for patients and as

                   long as there's a competitive insurance system, a

                   genuinely competitive insurance system where the

                   patient is in the driver's seat, at the end of the

                   day the system will produce rational outcomes because

                   if the patient isn't getting access to the innovative

                   devices or drug therapies or physicians that they

                   believe they need, they're mobile, they can choose to

                   go to a different health plan, so if Rob's team

                   doesn't set up their benefit design in a way that

                   appeals to consumers somebody else will come in and

                   do that and they will be mobile.  Where you get

                   nervous is where the government has a dominant role

                   in it or if one plan has a too dominant role in it

                   and there's not effective choice because you want

                   folks to be able to choose the Cadillac plan and the

                   Yugo plan and the Chevy plan and to take their

                   dollars and as long as that's happening, if we've got

                   a service offering in the pharmaceutical industry, if

                   we've got a service offering that delivers value to

                   the patient, we think they're going to choose that

                   service offering.

                           WALL:  Who else has thoughts on this?  Rob

                   Hillman, I suppose you do.

                           HILLMAN:  Yeah, I mean there's been a lot

                   recently in the news and a lot of conversation in the

                   marketplace as it relates to consumerism and not only

                   consumerism but the fact that technology now is

                   really catching up with the concept of consumerism.

                   I think everyone who is a believer in free-market

                   economics understands that if you have free markets

                   and if you have competition, to Alex's point, then

                   you'll produce a good outcome ultimately for

                   consumers because competition ultimately is good for

                   consumers and we know that competition ultimately is

                   what improves quality and will lower cost in the

                   long-run, so the technology has really caught up with

                   the concept of consumerism to some degree and there

                   are organizations out there like Castlight, which, I

                   mean, their entire business is around trying to build

                   transparency in such a way that it's easy to access,

                   it's very consumable to allow people to have an

                   opportunity to make a real choice and ultimately

                   hopefully create a market for health care.  However,

                   I would just mention that it's not the Holy Grail, I

                   think some folks try to put that label saying if we

                   can create this market for health care that, although

                   it will improve quality and lower prices, that that's

                   the end-all-be-all, that's the answer in this

                   competitive market, but it's really only about a half

                   of the total equation, I think.  Ultimately what

                   we're trying to do is deliver the appropriate care at

                   the appropriate time in the appropriate setting at

                   the appropriate price and transparency gets to about

                   half of that, maybe place and price, but

                   appropriateness of care and whether people are

                   receiving care at an appropriate time, transparency

                   doesn't do so much for that, so I think it's an

                   important piece of the puzzle but it's not the entire


                           WALL:  Dr. Shurney.

                           SHURNEY:  Sure.  Yeah, I think that

                   transparency is a good thing, and so Cummins has been

                   doing this for almost a decade, in fact, with

                   transparency as well as making sure that employees

                   understand how their dollars are being spent and

                   having these accounts set up on their behalf, they

                   are transferrable and portable and can go with them,

                   and we really look at this in two different ways, we

                   look at the quality aspect and we also look at

                   engaging our employees and there's really no better

                   way of doing this than through some of these

                   transparency tools.  Bob mentioned Castlight and we

                   implemented Castlight in April of this year and to

                   date we have about 65 percent of our population that

                   has engaged that tool and we like it a lot because

                   our employees like it, so they're using it, they're

                   excited about it, they go out and sort of look at

                   where they can go and how much it's costing them, as

                   well as the quality aspect, again, so we think that

                   it's a great tool to engage our employees.  I would

                   just comment in terms of I agree it's not the Holy

                   Grail but instead of saying that it's perhaps 50

                   percent of the equation I would say that maybe it's a

                   third of the equation, so I think that the

                   transparency is a third of it, I think that allowing

                   incentives is probably another third so that everyone

                   in the marketplace is really marching towards a

                   common goal, a common good, and then the other thing

                   I think is also something that we're very excited

                   about and that's on the demand side, so we've been

                   very proactive, if you look at the things that we've

                   done for quite a number of years, in engaging our

                   employees around prevention, around well-being, so

                   you hear us talk a lot about well-being and so when

                   you can really engage your employees and get them to

                   take on the role of self-management, that's a big

                   thing, too, so if you think about the number of hours

                   that are in a year, 8,760 hours, someone can check my

                   math, but I think that's about right, then you think

                   about the time you spend in front of your physician

                   or provider, it's very few hours, so now you have all

                   of these other hours that the patient is in charge of

                   their own health and so that's what engagement is all

                   about, and so we're trying to really empower, I know

                   that's an old cliche, old term, but it's coming back

                   into vogue especially at Cummins, we want to empower

                   our employees and engage them to do those things

                   that's really in their best interests and sort of

                   nudge them, not coerce them, not force them, but to

                   nudge them to try to get them to do the things that

                   we believe they're trying to do on their own, and

                   I'll yield the table here in a second, but an example

                   of that is if you look at the best-selling books in

                   the country, they have to do with diet, how to look

                   better, how to feel better, how to have more

                   vitality, you look at shows like Dr. Oz and people

                   really like that stuff, right, and people spend their

                   own money on nutraceuticals, right, vitamins and

                   supplements, and so people are really trying to

                   achieve these goals.  Where we see our goal as an

                   employer or our role as an employer is to help them

                   achieve the things they're already trying to achieve.

                   In the past there's been a disconnect where they're

                   trying to achieve this and we're trying to in some

                   ways help them but somehow we're missing the boat, so

                   we spend a lot of time and energy trying to figure

                   out how to really help them do what they're trying to

                   do, and if you think about that, that's very powerful

                   if we figure out how to do it.

                           WALL:  Who else has thoughts here?  Steve


                           FERGUSON:  A little different approach that

                   we took.  In '93 we realized that our employees did

                   not have access to primary care and so they were

                   accessing the system either in the emergency room or

                   at a higher level of care and so a second thing we

                   decided, well, we worry about insurance and rates and

                   how much we're spending and we stopped and said what

                   we're really interested in is delivering quality care

                   to our employees and so we set up a primary care

                   clinic so that all of our employees can go to that

                   primary care clinic.  One of the things we found is

                   when they brought in their drugs there were a lot of

                   contraindicated drugs just because they were seeing

                   different physicians and there wasn't full

                   disclosure, so we looked at sort of the health

                   management side of it through the primary care

                   clinic, which if you ask our employees that's their

                   Number 1 benefit they would say, you know, they can

                   go in from 7:30 in the morning until 8:30 at night,

                   they can access it, bring their kids in for

                   physicals, and so it's really been a major — and

                   then somebody will say "Well, does it cut costs?"  I

                   think probably what it did is it managed the

                   increased cost, so we have not seen the increase in

                   cost that you've seen across and have been mentioned

                   here at 8 and 9 percent, we haven't seen those type

                   of increases, so it's been really a positive but it's

                   been a little more of an approach rather than just

                   giving them the information, it's been "Okay, here is

                   a way to access the system" and then we can get them

                   to a specialist if they need to go to one.

                           WALL:  Okay.  Dr. Carroll.

                           CARROLL:  I'll briefly add two thoughts.  I

                   think that there's very little dispute — I shouldn't

                   say that.  I think that it makes a ton of sense that

                   consumerism is very good for innovation, that

                   competition will drive innovation and we need some

                   ability to do that in order to avoid the lack of

                   innovation that would occur with, say, one group

                   doing all of the work.  Having said that, I think

                   that we are sometimes a little optimistic about the

                   ability of consumerism to take care of costs, which

                   are two very different things.  About 15 percent of

                   people in the United States account for about 85

                   percent of health care spending, the vast majority,

                   you cannot incentivize away their trauma care or

                   their ICU care or a baby in the NICU, they will not

                   shop for that, and so the idea that we can use

                   increased cost sharing as a mechanism to radically

                   bring down the cost of care I think is sometimes

                   misplaced.  Most consumer-directed health care goes

                   to people who are young and healthy and 50 percent of

                   people spend about zero every year in the United

                   States on health care.  We can incentivize them all

                   we like, they're not the drivers of major health care

                   spending in the United States.  What actually are we

                   spending the money on is not often the things that

                   can be affected by consumer-directed health care, so

                   I think that the idea of more skin in the game and

                   the idea that this greater cost sharing has a place

                   in the United States health care system and it's

                   absolutely a tool that we can bring to bear for

                   certain things to achieve certain outcomes, but I

                   think we sometimes oversell it in its ability to get

                   a handle on actual spending as a society.

                           WALL:  Julie Carmichael.

                           CARMICHAEL:  I was just going to weigh in

                   briefly on kind of the transparency discussion and

                   the impact that it has on hospitals and our

                   relationships with patients and payors.  It's a

                   conversation that I think is going to continue and

                   should continue until we solve the problem from the

                   purchaser's perspective and as health care providers

                   I think we often want to stand behind the complexity

                   of the issue and say that we really can't be as

                   transparent as we want to be, but I personally

                   believe that it's an area that we as health care

                   providers in the state of Indiana need to take a

                   stronger leadership role and I'm optimistic that —

                   You know, in Indiana I think we have a tradition of

                   being able to solve our own problems and I think we

                   have a health care community that recognizes this is

                   an important issue and through a strong leadership

                   with the Indiana Hospital Association I do think

                   providers can come together and develop solutions

                   that can be made available for employers and

                   purchasers of care.  I think one of the challenges

                   for us is we're a little bit behind the curve on this

                   issue, we didn't get out in front of it as much as we

                   needed to and like many things in healthcare I worry

                   that we come up with a lot of different solutions,

                   you know, we may have employers going down different

                   paths to solve transparency and that makes it more

                   challenging for providers to be responsive and do the

                   things we need to do.  So I'm hopeful that through

                   our state hospital association and the leadership

                   that we have in this community that we can step up

                   and offer some solutions around transparency that

                   will really make a difference, and to the points of

                   the panel, I agree transparency is a piece of the

                   discussion, it's not an ultimate answer to the entire

                   problem, but I'm also optimistic that transparency is

                   going to change the nature of the discussion between

                   providers and insurance companies and hopefully drive

                   us to a place where we're more collaborative and we

                   design new payment models that are more responsive

                   and create better aligned incentives, as I think Rob

                   was alluding to.

                           WALL:  Going down the line, Alex Azar, you

                   got to start it, do you want to add anything more on

                   transparency or consumerism?

                           AZAR:  Well, let me tell you a story because

                   I think this issue — I've been a big proponent for

                   over a decade of increasing transparency and the

                   high-deductible health plans and at Lilly we have a

                   high-deductible health plan, consumer-directed plan

                   that's very effective, but the best example of

                   consumerism in a competitive system really is how

                   that Part D exchange has been set up, you have highly

                   competitive plans where everybody has a choice of

                   multiple plans, you have transparent drug

                   availability and pricing available through the Plan

                   Finder tool on and you've got highly

                   concentrated powerful intermediaries, plans able to

                   negotiate with the drug companies driving costs down.

                   Where you don't see that is necessarily yet in the

                   traditional medical benefit side of things and I

                   think there with the exchanges, the Obamacare

                   exchanges, that's going to be one of the real

                   challenges because the plans that we're seeing are

                   probably going to have higher deductibles and have

                   more restrictive provider networks in them as a way

                   of keeping costs down on the exchange plans.  So I go

                   to my doctor and they suggest a very simple

                   diagnostic test.  Well, I pretty soon am sent over to

                   the hospital side of things, which seems strange to

                   me and I'm at least a health care person and so I

                   know to be very suspicious now once a band has gotten

                   put around my wrist, "Why are they doing that?  I've

                   had this before and I've never had a band put around

                   my wrist."  So then I'm sitting in a lab area and I'm

                   getting increasingly suspicious and I go up to the

                   front desk and I say "How much is this going to

                   cost?"  "We can't tell you."  "No, no, you're going

                   to tell me."  "No, we won't tell you."  "No, you're

                   going to tell me," and finally after about a half an

                   hour of me getting close to yelling and screaming I

                   learned that they were going to charge me $5000 for

                   this simple diagnostic.  I went online.  There are

                   many really good sites online that you can find out

                   what something ought to cost.  This should cost $550

                   if it's done in a doctor's office as opposed to in an

                   outpatient hospital setting.  So I challenged them

                   back, my insurance company didn't have much of a

                   negotiated rate off of it, I said "I've got a

                   consumer-directed plan, this is coming out of my

                   pocket, this isn't some deal between you and an

                   insurance company, this is a deal between you and

                   me," and they said "Well, we'll give you a cash

                   discount, $3000," and I said "For that differential I

                   can buy a first-class ticket and fly back to

                   Washington, spend a weekend at the Four Seasons, go

                   to my doctor there, have the test done in his office,

                   have the results shipped back, fly back first-class

                   and I'm still ahead financially."  So it's just an

                   example of we've got a long way to go on getting

                   insurance companies, hospital systems, physician

                   networks to really make consumerism a much better

                   process that works for the individual consumer.  I'm

                   a highly educated, you know, I've got the money to

                   pay it if I want to pay it, consumer.  We've got a

                   long way to go I think in setting up the infra-

                   structure and the systems on the medical side of this

                   and perhaps the exchanges will actually incent plans

                   moving towards more of that.

                           WALL:  I want to come back to the exchanges.

                   I was interested as we talked about consumerism and

                   transparency and they are closely related but not

                   identical things, almost everyone said it's good but

                   it's not enough and Dr. Shurney started talking about

                   some other things that are needed.  I'd be curious to

                   hear from the panelists what else does the health

                   care system need, even if it had what it needs in

                   terms of consumerism and transparency, what else

                   would still be required to really get to the place we

                   want to go?  Dr. Carroll, do you have thoughts on


                           CARROLL:  So, you know, it's fascinating

                   because we always sort of do this, we imagine that

                   there's sort of some Shangri-La if we could just get

                   there, but the problem is that when you talk about

                   health care systems in general, there's sort of three

                   things you always have to consider, they would be

                   access, how can people get it, how much does it cost,

                   and what's its quality, and depending upon who you

                   talk to, I had a professor back in medical school who

                   was a health economist who talked about he called it

                   an iron triangle because what made it an iron

                   triangle is you can only fix one of those things by

                   making the other two worse.  Maybe at best you can

                   make two of them better but it's going to make the

                   third worse.  I can make the system more universal

                   tomorrow, that will cost a lot of money.  I can make

                   the system incredibly cheaper tomorrow, but that

                   means a reduction in quality or the access is going

                   to go down.  I can make the system the best in the

                   world unequivocally, but, again, that has to cost

                   money where everybody can't have it.  We imagine some

                   system we can just get to that's going to be

                   universal, the best in the world, and somehow cheaper

                   all at the same time, that's not going to happen.

                   Anyone who tells you so is either lying or a

                   politician or both.  We can do one of these things.

                   The Affordable Care Act's main goal at heart was to

                   improve access, that was its major thrust, that has

                   been sort of the major push in sort of part of the

                   country to make our system more universal to get the

                   number of uninsured closer to zero.  The problem with

                   that is it costs money, it's going to cost, the

                   original estimate was upwards of a trillion dollars

                   over a decade.  As you keep pushing that decade back

                   it's going to be even more money.  People worry that

                   that will have a reduction in quality.  Yes.  If I

                   want to make the system incredibly cheaper tomorrow,

                   if I want to make it much cheaper, then either we

                   can't get it as universal as quickly as we would like

                   or the quality won't be as good.  Yes.  So when we

                   talk about consumerism, as I said before, I think

                   consumerism is a way sometimes to improve quality,

                   but it's not going to solve all three things at the

                   same time.  I think wellness programs are an

                   excellent way to try to encourage people to be

                   healthier, I think it's an outcomes good, it's a

                   quality good.  I don't think that they are a panacea

                   for the cost of the United States health care system

                   because so much of what we spend money on isn't

                   caused by a modifiable risk factor.  We can talk

                   about all of these things, transparency, they're sort

                   of bullets to try to make a change to the health care

                   system that likely will have some impact on cost, on

                   quality and on access.  The problem is that we all

                   can't even agree on what we want to fix, you know, we

                   want all three at the same time.  That is almost

                   impossible.  There are solutions out there to make

                   our system more accessible, there are solutions to

                   make it higher in quality, there are solutions to

                   make it cheaper, there are almost no solutions that

                   will do all, and I think part of the problem we have

                   with the debate in this country is that we don't

                   decide what we want to do first, we just want it all

                   and then when things don't work we react, so you will

                   see lots of articles about the Affordable Care Act

                   coming out about how they're going to impact quality,

                   about how they're going to impact cost.  They will,

                   because it was about access.  We can have other types

                   of reform that will try to do different things but

                   nothing is going to be perfect and as long as I think

                   we cast about for one magic silver bullet that will

                   cover everything we're not going be able to sort of

                   move forward as we would like.

                           WALL:  Go ahead, Steve Ferguson.

                           FERGUSON:  To follow up on that point, from

                   our view at Cook we think that we need to have direct

                   access to primary care and everybody needs to have

                   that, you need to have coordinated care so that

                   you've got somebody coordinating the care because we

                   don't feel like people understand enough to

                   coordinate their care and make some of those

                   decisions, and I think we need electronic medical

                   records and we see that as where health care reform

                   should've gone were at those three levels.  To the

                   other points here, we're self-insured, so if you look

                   across this the driver of our costs are the outliers

                   that you can't do anything about, somebody has a

                   motorcycle accident, there's a premature birth, high-

                   cost things that really are the things that drive our

                   costs.  The primary care side and the ordinary care

                   of our 8000 employees here in Indiana, the basic care

                   and the primary, with the clinic we've got pretty

                   much control of that, but it's the outliers and no

                   matter what you do you aren't going to solve that guy

                   riding his motorcycle down the road and those type of


                           AZAR:  We've got a whole host of issues to

                   address, we've got patients that are in medical homes

                   like Steve just mentioned, we've got to aggregate

                   care better across the bundled services.  Right now

                   every incentive in the system from the Medicare fee-

                   for-service system on down creates a disaggregation

                   of how care is delivered rather than a continuity of

                   care, we need better health IT, we need more

                   consumerism and competition in the system, but the

                   thing that I've really been befuddled by in the last

                   several years is we do not ever discuss the role of

                   innovation, we talk about cost, we talk about milking

                   cost out of the system but we so often forget to

                   speak about the importance of continued innovation in

                   driving lower costs and driving better health care

                   outcomes.  We've increased the life expectancy from

                   1900 to 2000 from 47 years of age to 78 years of age,

                   and there was a study done at Columbia University

                   that showed that the increase in life expectancy in

                   the 1980s and '90s, 40 percent of that increase in

                   life expectancy in the '80s and '90s was attributable

                   to the introduction of new molecular entities, 40

                   percent of the increase in life expectancy over two

                   decades just from the introduction of new medicines

                   and yet we are not speaking about this role of

                   innovation at all in this country and nowhere.  We're

                   maniacally focused on milking costs out of the system

                   as opposed to thinking about the balance of spending

                   wisely as an investment to reduce effective costs in

                   the long term.

                           WALL:  And system-wide do you think that

                   innovation can help control the costs?

                           AZAR:  Absolutely.  I absolutely believe

                   system wide it can help control costs, but more

                   importantly it can also deliver better health

                   outcomes.  I've long had this fight about is 16

                   percent of GDP too much to be spending on health care

                   and, honestly, I don't think there is a number that

                   is right or wrong there as long as it's efficiently

                   spent, as long as it's delivering outcomes.  In

                   Britain it's about 8 percent.  We're at 16.  Do we

                   get twice the quality of medical care and outcomes

                   than the British do?  I don't think so.  So there's a

                   lot of inefficiency in that 16 percent, which is a

                   problem, but I don't think there's a magic number

                   sustainable, not sustainable.  I think we make

                   individual choices and as a society we make choices

                   about the value of health care in our lives and the

                   value of it versus additions to houses and other

                   priorities that are perfectly appropriate value

                   choices that individuals and societies end up making,

                   and so if innovation leads to dramatically better

                   outcomes but at a cost I might make that trade-off


                           WALL:  Who else has thoughts?

                           FERGUSON:  On that same point, if you think

                   back when my father died of a heart attack in the

                   '50s, there was no treatment, you know, you go home

                   and rest, and then Bill Cook comes along and you get

                   access to the circulatory system, you get bypassing

                   and you get stenting, et cetera, et cetera, along

                   with the new pharmaceuticals that came along that's

                   completely changed that.  Now, is it more expensive

                   than him going home and dying?  Yes, it is more

                   expensive, but what the outcomes are, you know, if I

                   had had the same treatment in 1993 I wouldn't be here

                   20 years later.  So I think part of the cost there is

                   we are making people healthier, they're living

                   longer, that's more expensive, but it may be

                   something we all choose and that does cost money.

                           WALL:  Dr. Shurney.

                           SHURNEY:  I would just say also that we

                   probably need as a society to focus more on health

                   versus health care and we spend a lot of time

                   focusing on health care and 3 percent of the dollar

                   spent in health care go towards the prevention and

                   wellness side and 97 percent go to taking care of

                   people after they've become ill, so I think we need

                   to spend and focus a little more time trying to keep

                   the healthy people healthy and if we would just be

                   able to do that, there's still going to be some

                   catastrophic cases, but if we could just focus on

                   keeping the healthy people healthy, then that would

                   be great.  If you look at the CDC numbers in terms of

                   what they expect the percent of the population who

                   become diabetics over the next 20 years it's

                   astounding, they're predicting that one in three

                   people will become diabetic, and so if we can keep

                   the healthy people healthy, we can prevent some of

                   those people from becoming diabetic, I think that's a

                   big win, and so I think we need to look at that.  The

                   other thing is that if you think about the cost of

                   most health plans, 60 to 70 percent of most of the

                   costs are really for some chronic diseases, such as

                   diabetes, cardiovascular disease, that are actually

                   preventable.  Framingham studies going back 10, 20

                   years ago following and tracking people can show that

                   these things are really preventable.  If you look at

                   the study that was done by the National Institute on

                   Aging and National Geographic, a study called "The

                   Blue Zones" and you look across the world in terms of

                   places where people live to be over a hundred years

                   old, routinely these are places that really don't

                   have a lot of high-tech medical innovation, they're

                   places like Costa Rica, they're places like Italy.

                   There is a place in the United States that also is

                   one of the blue zones.  So, again, it's really the

                   life-style and some of those things that those people

                   are doing in those regions and so I think as a

                   society we need to pay a little more attention to


                           WALL:  I'm going to ask one more question and

                   then we'll go to audience questions.  Rob Hillman,

                   I'd like to ask you about the exchanges that

                   officially get going in six days.  As an insurer

                   you're knee-deep in that process.  Can you talk to us

                   about how you expect this roll-out of the exchanges

                   for individuals and eventually small businesses

                   buying health insurance to work, whether you think

                   that will work well or poorly, and just what sort of

                   system do you think we'll have once the dust settles?

                           HILLMAN:  How did I know you were going to

                   ask that question, J.K.?  I guess what I would first

                   say is I would look at what's going to occur here in

                   the next six days or what's going to occur on January

                   1 of 2014 as Health Care Reform 1.0, I think many of

                   the panelists have already mentioned, there's still

                   quite a journey here for our country, I mean we have

                   some incredibly difficult decisions to make about

                   what will we want government to play in our health

                   care, how do we want taxpayers to participate in our

                   health care system, and ultimately how much do we

                   want to spend and for what we're spending are we

                   getting the most bang for our buck.  So when I look

                   at 2014, everything changes, particularly if you are

                   enrolled in an individual or a small group plan, and

                   that means every product changes, rates change,

                   networks change, everyone has a decision to make.  If

                   you're in that market you have a decision to either

                   participate in a health plan either on your own or

                   through an employer or you make a decision to pay a

                   penalty, but everyone's got a decision to make, so I

                   would say that I think on October 1st the only folks

                   that may be out there looking around, maybe you,

                   J.K., to see what's out there, I really think that

                   crickets are going to be chirping on October 1.  I

                   think that once social media gets ahold of this and

                   people are twittering about health plans and checking

                   out what other people are doing on their Facebook

                   pages it will begin to gain traction because that's

                   how people buy today and people are going to be

                   looking at what's my friend doing, what's my cousin

                   doing, what's my coworker doing, that type of thing,

                   but without question it's going to be quite a bit of

                   disruption just because everyone needs to make a

                   decision.  So we know, as has been publicized, if

                   you're with an Anthem plan and you're in the

                   individual market, it's going to be a much, much

                   narrower network.  I will tell you that on average

                   across our individual block of business I anticipate

                   that rates will go up on average 47 percent, but I

                   look at everyone in the room and if you're in the

                   individual market none of that applies to you because

                   no one in the room is average, right, so there's

                   incredible disparity between how you get to this 47

                   percent, on average 47, but you have situations with

                   individuals with rates well over a hundred percent

                   increases and you have increases and you have

                   actually rate decreases.  So depending on where you

                   are today in terms of your age, your total

                   demographic, your health status, your benefit plan

                   that you have today, all of that is a driver in terms

                   of what this is going to have in terms of impact on

                   you and the decisions that you're going to make

                   really going into January 1.  We're obviously going

                   to have more people covered.  Our projections are

                   that out of the 800 and some odd thousand uninsureds

                   in the state of Indiana about 250, 60,000 of those

                   will actually purchase a product on the exchange,

                   others will take the penalty because, remember,

                   still, the competition in this environment is not,

                   although the other issuers are going to participate

                   on the exchange, they are not Anthem's competition,

                   the competition is the penalty, right, that's who we

                   are competing against because can you get a premium

                   that is attractive enough to compete with the

                   penalty, that's why narrow networks and whatnot are

                   so important because you have to find a way to get to

                   that premium level to compete.  So there's going to

                   be a lot of disruption, I think there's going to be

                   an incredible amount of confusion.  I was in

                   Greenfield, Indiana, it wasn't a meeting quite like

                   this, on Monday of this week, I was telling the story

                   at the table, it wasn't a broker meeting, a bunch of

                   rubicons that basically put a press release out and

                   said "The president of Blue Cross is going to be at

                   the auditorium of the hospital, anybody come in who

                   wants to come in and talk to him," okay, so it was —

                           WALL:  You're a brave man.

                           HILLMAN:  We had seniors, we had farmers, we

                   had hospital administrators, we had physicians, we

                   had people who are in the individual market, we had

                   people who were unemployed, you name it, and the

                   amount of confusion and the lack of information that

                   people are still operating on is really quite scary

                   and that's going to be a very key contributor to this

                   disruption because people really don't know what to

                   do.  In fact, I mean look at it, President Clinton,

                   Hillary Clinton and the President are out there still

                   selling the program this week and trying to encourage

                   young people to enroll and trying to tell them what a

                   good deal this is, so that kind of just gives you an

                   indication of what I think we can expect.  There's a

                   lot of drivers here that are just going to create a

                   lot of disruption.  Now, long-term, I really view,

                   again, the Affordable Care Act is the first step,

                   it's not the end-all-be-all on October 1 or January

                   1, it's really the beginning, okay, it's where do we

                   go from here, sort of to Aaron's comments, so we

                   still have issues around affordability, we have

                   issues around access to health care, I mean we fully

                   anticipate that wait times are going to go up in

                   physicians' offices, so how can we create more access

                   to primary care.  What's going to happen with

                   employers and our small group employers in

                   particular, how many of them are going to dump

                   coverage?  How much will the new rules change?  Okay,

                   we all I think fully expect that the rules are going

                   to change and continue to change for years to come.

                   So I'm optimistic, I think that the goal was to

                   provide coverage to more people, more Hoosiers, and I

                   think ultimately the Affordable Care Act has really

                   got us started on a conversation that we probably

                   should've been having years ago.  When I talk to

                   Julie and I talk to other hospital executives there's

                   a tremendous sense of urgency that we all have around

                   the affordability and access issues, so it will be an

                   interesting journey, but it's not the end-all-be-all.

                           WALL:  Well, great, that's very helpful.

                   Does anyone else have thoughts on the exchanges or

                   even sort of how the Affordable Care Act will play

                   out kind of at large?  Somebody does, I know.

                           CARMICHAEL:  Well, I mean, we could talk

                   about the exchanges for a full day or maybe a week.

                           WALL:  You could have a whole conference

                   about it.

                           HILLMAN:  Or several hours.

                           CARMICHAEL:  But nobody would stay.  But

                   we've been looking at the exchanges and the impact

                   and trying to decide what it means for our business.

                   I agree substantially with what Rob has said.  Our

                   approach to the exchanges this year is to take a

                   pretty cautious step into that and just participate

                   in one plan.  I think one of the things I'm most

                   interested to find out from the exchange is whether

                   or not the concept of a narrower network is going to

                   appeal to consumers, I think that's something we

                   tried off and on in this market for years.  It's

                   never really been a very attractive product and I

                   think this will be an opportunity over the next 12

                   months or so to see whether or not individuals are

                   willing to have less choice in exchange for some

                   better pricing and once we get through this initial

                   year of the exchange then I think we will be able to

                   develop a broader, more full strategy to deal with

                   exchanges going forward.

                           WALL:  Anyone else?

                           AZAR:  I'd say there are four implementation

                   questions that I'm focused on and going to be just

                   watching having been through the Medicare Advantage

                   Part D roll-out.  One of them is going to be looking

                   at nondiscrimination provisions, just how does that

                   shake out among exchange plans because they're really

                   relying on the states to prevent essentially

                   beneficiary skimming of plans, drawing in just the

                   healthy folks and figuring out ways to not get the

                   unhealthy folks in as you look at your actuarial

                   benefit, so how does that shake out in practice?  Is

                   it adequate and has there been adequate provision

                   made there?  There were a lot of protections in Part

                   D, more state-based now, how does that shake out?

                   The data interchanges are beyond complex, the IRS has

                   to share all the tax information with the Social

                   Security Administration, which has to share with the

                   Department of Homeland Security, which has to share

                   with CMS, which has to share with the state Medicaid

                   plans and the Veterans Administration.  All of this

                   has to float around in the ether as people enroll to

                   check eligibility and subsidy levels and nobody has

                   to be able to invade the system and have a privacy

                   breach on any of our tax and Social Security

                   information.  I'm glad I'm not in charge of that.  So

                   that working well and complying with privacy is going

                   to be a key question.  Is there an adequate Plan

                   Finder tool where beneficiaries, prospective

                   beneficiaries, can just find a plan in a

                   knowledgeable way as individuals?  And then finally

                   is the network robust enough, are the pharmacies, are

                   the doctors, are the hospitals adequate and are the

                   benefit packages robust enough?  Those will be the

                   kind of things I'm looking at.

                           WALL:  Well, let's go to an audience question

                   here.  Steve Ferguson, you talked a bit about a

                   primary care clinic that you set up at Cook.  This is

                   a question from the perspective of small companies.

                   What can they do to either provide primary care or in

                   other ways help their employees gain access if they

                   only have, say, 75 or a hundred employees?  If you

                   want to answer that, that's fine, or if Dr. Shurney

                   wants to jump in here, that would be great.

                           HILLMAN:  J.K., we talked a little bit

                   earlier, I personally believe that given the number

                   of people that are going to be coming into the market

                   and seeking health care, many of which have never had

                   insurance before, are going to have an incredible

                   amount of pent-up demand for services, it's going to

                   be taxing on our primary care physicians, so I

                   personally believe, and this is a very good question,

                   that access to care is kind of the new benefit that a

                   lot of employers are looking at.  In fact, I mean

                   we've had conversations with employers and with

                   providers of health care about how can employers buy

                   blocks of hours of time from providers, okay, so that

                   they can ensure that they have access for their

                   employees to primary care, so obviously a clinic is a

                   good example, but you may also see a point in time I

                   believe where payors or issuers, like Anthem, would

                   go to a provider system and say "We would like to

                   purchase from you a block of hours for our insureds,"

                   okay, and then as I mentioned earlier, technology is

                   getting to the point now where you can actually

                   deliver a very efficient physician encounter or

                   primary care visit through online technology.  We're

                   rolling out online technology, it's going to be a

                   free service to our employers.  Ultimately, after we

                   get over a couple of hurdles with the Indiana State

                   Medical Review Board, we look for the ability to

                   actually issue a prescription as a result of those

                   visits, people will be able to pay for those visits

                   online during the visit, have it run through their

                   benefits, but the technology is also at a point where

                   we have customers who are not only looking at not

                   only the online visits but you can actually sit in a

                   kiosk in a private area and upload biometric

                   information to a physician through an online

                   encounter by blood pressure and things of that

                   nature, and that's back to the innovation that Alex

                   was talking about earlier.  I think the technology is

                   there and that's why we also see so many companies

                   like Microsoft and Google and GE and others who are

                   very, very interested at getting into the health care

                   space and taking the technology they've developed and

                   really applying it to very new and innovative ways to

                   enhance access.

                           WALL:  You were talking about — Oh, go

                   ahead, Steve Ferguson.

                           FERGUSON:  We're looking to provide good

                   health care to our employees and we think that starts

                   with primary care and getting access to primary care

                   on a routine basis and so that was the reason we went

                   there and then we could do referrals to where we

                   thought the appropriate location was.  I think

                   primary care, I agree that the demand for it — It

                   looks like to me the place that people are going to

                   access primary care is going to be at Walgreen's,

                   CVS, Walmart, where they've got easy access and

                   people know they have these walk-in clinics and I

                   think that's going to solve some of the demand

                   problem, but I think that's going to be one of the

                   first places people look.

                           WALL:  Dr. Shurney, go ahead.

                           SHURNEY:  I would agree with these comments,

                   so Cummins has had on-site clinics in the

                   occupational space for a number of years being a

                   manufacturer and as many of you know, we're also an

                   international company, we have employees actually in

                   190 countries across the world and so some of these

                   are ex-pats that are coming from the United States

                   and working overseas, so one of the things that we're

                   looking to do is expand our capability with our on-

                   site clinics to also include more primary care than

                   just occupational medicine but also this virtual

                   clinic idea that Rob mentioned as well so that our

                   ex-pats that might be in Indy or someplace else can

                   actually then have these virtual visits with a United

                   States physician that could be actually their primary

                   care physician and also it allows us to access

                   specialists all over the world, so we are looking at

                   that as well and I think that it will help us in

                   terms of meeting the challenges that all of us will

                   have in terms of access to care.

                           WALL:  We've got a couple questions from the

                   audience related to the expansion of Medicaid that

                   the Affordable Care Act called for which so far the

                   state of Indiana has not chosen to do.  I'd be

                   interested to hear from you, and maybe this is sort

                   of two questions at once, but just in your respective

                   positions, how is the state's decision to not expand

                   Medicaid affecting you or how do you expect it to

                   affect you?  Julie Carmichael, I'd be interested to

                   see how that affects you in your reimbursement and

                   the money flowing through your system, employers,

                   maybe if it's affecting you, Rob Hillman, if you have

                   thoughts, you were talking about access, does having

                   the Medicaid expansion or not having it affect some

                   of those issues you were talking about?  I'll start

                   with Julie, can you talk about how it affects St.


                           CARMICHAEL:  Just briefly.  I think we're

                   disappointed that the state hasn't expanded Medicaid

                   access, we think it's an important program and given

                   where we are in the process of transforming health

                   care in implementing the Affordable Care Act we are

                   still going to have lots of people who don't have

                   access to health care and while we've been supportive

                   of the Healthy Indiana Plan, its ability to cover as

                   many people, especially children, as need to be

                   covered it's just not possible, so Medicaid expansion

                   is something that we feel strongly about and feel

                   that Indiana should move in that direction.

                           WALL:  One question I got before this event

                   was did the lack of a Medicaid expansion contribute

                   to St. Vincent or other hospitals having to reduce

                   their workforces?

                           CARMICHAEL:  Not directly.  I think, again,

                   reducing workforce was based on multiple issues.

                   Certainly lack of Medicaid expansion to the extent

                   that contributes to some of the reduction in volume

                   that we've experienced as well as that mix of service

                   changing, then, yes, but in an indirect way.

                           WALL:  Okay.  Does anyone else have thoughts

                   on this?  Steve Ferguson.

                           FERGUSON:  Sort of to back up from a public

                   policy point of view, I was one of the deciding votes

                   that put Medicaid in when I was in the Legislature, I

                   think that was a mistake.  I think at that point in

                   time it was 50 million state, 50 million federal, and

                   everybody needs to get the federal money.  We looked

                   at ways to provide that same amount of care and just

                   done it under an Indiana plan.  I think we're at that

                   same threshold.  When I was on the Higher Education

                   Commission I told the higher education community your

                   greatest competition for dollars is going to be from

                   Medicaid.  When I see this, they pick up

                   reimbursement for a short period of time and

                   everybody looks at that money but the President's

                   budget he introduced already suggests a 10 percent

                   reduction in what they're giving them and I think

                   Indiana can look at alternatives that are much more

                   cost effective and can deliver quality of care much

                   better than the Medicaid program and expansion of the

                   Medicaid program.

                           WALL:  Dr. Carroll, you look itching to

                   comment on this.

                           CARROLL:  I think I'll just take a slightly

                   different tack on that.  I think Medicaid is an

                   incredibly cost-effective program.  The biggest gripe

                   is that Medicaid reimburses doctors too little

                   because it's cheap.  It's held down increasing cost

                   spending greater than pretty much any other insurance

                   plan out there, it does it by being cheap.  The

                   government's very good at being cheap.  The

                   government might not be good at innovation, the

                   government might not be good at many other things,

                   but at holding down spending it holds the line.  The

                   gripes against the Medicaid expansion come in a

                   number of flavors, one is that it will wind up being

                   an increasing burden on states over time, but there's

                   very little evidence of that.  Since Medicaid's

                   inception in the '60s and '70s, when everybody sort

                   of came onboard, the government has never once

                   defaulted on its contribution to Medicaid and really

                   hasn't cut it back at all and so at any time we can

                   have any kind of program cut by the federal

                   government but we know that it's locked in through at

                   least pretty much a decade and it's a pretty good

                   deal in terms of federal versus state spending, it's

                   a significant increase in coverage in Indiana for a

                   very small increase in the state budget.

                           FERGUSON:  But doesn't that just go for five

                   years —

                           CARROLL:  No, it goes —

                           FERGUSON:  — and then at the end of the

                   time —

                           CARROLL:  It ends at 90 percent.  Right.

                   Well, right now it's a hundred percent, which is a

                   phenomenal deal, then it comes down to 90, but still

                   90 percent versus what states are getting right now,

                   which is 50 to 75 percent, is still an incredible

                   deal, especially since we will still be providing

                   care for many of these citizens and just cost

                   shifting it onto either hospitals or other sectors of

                   the economy at this time.  The other argument is that

                   it has a woodwork effect, that if we institute the

                   Medicaid expansion then lots of people in Indiana who

                   already qualify for Medicaid will come out of the

                   woodwork and demand their coverage and they will not

                   be covered at 90 percent, they will be covered at the

                   traditional 50 to 75 percent coverage based on state

                   because they were already eligible and we just

                   weren't covering them.  That's going to happen if we

                   do the expansion or not.  There's going to be a lot

                   of press, there's going to be a lot of — you know,

                   the mandate's going to scare some people that are

                   going to come out looking for their Medicaid.

                   Regardless, the state cannot refuse them, and so

                   they're coming out because the Affordable Care Act

                   has happened, they're not coming out because of

                   Medicaid expansion.  There's lots of other good

                   reasons from an economic perspective.  It's good for

                   the hospitals, it's good for the economy.  There's

                   lots of good studies that show that actually Medicaid

                   returns a fairly large amount of return for its

                   investment in terms of spreading the economy in other

                   ways, it can help people actually get up and go to

                   get jobs because, again, it provides some measure of

                   a safety net.  It would allow us to reduce spending

                   on the Healthy Indiana Plan which comes out of

                   Indiana's pocket.  It would actually reduce us to do

                   some of the things we do in taxes and everything else

                   right now to cover uncompensated care.  Lots of good

                   studies show that it would actually be a net return

                   in the short term.  The other main gripe is that

                   somehow Medicaid suffers in terms of quality, that

                   it's somehow worse, you will hear some people say

                   it's worse than being uninsured or that it's worse

                   than having other types of insurance.  On its face

                   value it's hard to imagine how having any type of

                   insurance is worse than having no insurance.  These

                   are not people at the high end of the socioeconomic

                   spectrum, it's not like they have a ton of other

                   options in where they might go to get care.  There's

                   no doubt that the network of Medicaid can be smaller

                   than many private insurances, that is why it's

                   cheaper, it is all about trade-offs.  We're seeing in

                   the exchanges that a lot of plans are going to adopt

                   narrow networks because that is cheaper, that's how

                   insurance often works.  We can argue that we want to

                   have Medicare have a bigger network.  That will cost

                   more money.  And so the option that's present to us

                   right now is not people can have Medicaid or they can

                   have something awesome and better, it's that the

                   Medicaid expansion will occur and most of these

                   people will have nothing in terms of health insurance

                   coverage, and given sort of the economic incentives

                   and the fact that the government put up a ton of

                   money to make this enticing, it makes I think sense

                   for the state to acknowledge that it probably is in

                   its best interests to go ahead with the expansion for

                   now and if we're worried about the fact that the

                   government could renege and default in the future,

                   take a tack like Arizona and put it right into the

                   law that accepts the Medicaid expansion that if

                   anything changes in the future it will be stripped

                   away and have to be re-added, we can cover our bases

                   and protect ourselves if that's really what people

                   fear, but I guess I would add, I like the way that

                   you put it, I'm disappointed that we didn't go ahead

                   with the Medicaid expansion and I hope we do so in

                   the near future.

                           WALL:  Any other thoughts on Medicaid


                           FERGUSON:  Well, you got both sides on that


                           WALL:  Another question, this is for Julie

                   Carmichael.  How do hospitals justify the massive

                   acquisition, building and consolidation rates while

                   decreasing staff and keeping compensation level?  So

                   I'll just leave it at that.

                           CARMICHAEL:  Yeah, I think that we have seen

                   a lot of merger and acquisition activity in this

                   marketplace and the reason for that is that smaller

                   independent organizations are struggling to deal with

                   all the changes that are foist upon them.  Access to

                   capital is increasingly difficult even for large

                   systems and so I just think it's a response to the

                   competitive pressure and the economic drivers in the

                   system.  I think that it has probably slowed down a

                   little bit in this marketplace and may continue that

                   way through the coming year, but as smaller

                   independent health care organizations struggle to

                   meet all the requirements of health reform and the

                   financial pressures they're faced with we will see

                   more consolidation of health care.  What you hope

                   happens through that consolidation is efficiency and

                   business transformation that allows us to provide

                   some of those backroom functions and administrative

                   services, management perhaps at a more centralized

                   level so that we can drive cost and inefficiency out

                   of the system, but it's just a reaction to the

                   environment, the competitive and economic environment

                   that we're facing.

                           WALL:  All right, well, we're going to wrap

                   it up there.

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