tv Tonight From Washington CSPAN August 18, 2010 8:00pm-11:00pm EDT
[captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010] president obama traveled to ohio today. that is next on c-span. later, outgoing ambassador to iraq christopher hill says the country is on the right track despite challenges. after that, the funeral for senator ted stevens to died last week and a plane crash. >> after nixon lost the 1962 governor's race, they offered the former vice president the job as commissioner of baseball. nixon was flattered, but declined, telling the owners "don't tell pat. she'd kill me for turning you down." whether it is baseball in the presidency or the cia and the
caribbean war, find all this on line at the c-span at video library -- watch what you want, when you want. >> president obama answered questions on a number of topics earlier during a backyard gathering in columbus, ohio. residents of the community asked about social security, the housing market, and health care. this place at the home of ohio natives who own a small architectural firm. this is about an hour. [applause] >> gret tat to see you.
>> well, i am -- i'm just thrilled to be here. and i want to thank joe and rhonda and the entire family for being such great hosts. and i want to thank all of you for taking the time to be here. i see the mayor of columbus is here, a great friend. somebody who's going to be running and i hope winning for the u.s. senate, lee fisher is here. and mary jo kilroy is here. we've got one of the best senators i believe in the united states senate in sherrod brown -- is here. and one of the finest governors in the country, ted strickland, is here. so give those folks a big round of applause. should we tell them to take off their jackets, too? take off your jackets, guys. lighten up a little bit. sheesh! this is just a great
opportunity for me to have a conversation with you. and i don't want this to be too formal. what i want to do is have a chance to listen to you and also answer your questions. what we've tried to do whenever we are in a setting like this is to talk about the things that folks are going through day to day -- because, look, i'll be honest with you, sometimes when you're in washington you get caught up with the particular legislative battles or the media spin on certain issues, and sometimes you lose touch in terms of what folks are talking about around the kitchen table. one of the ways that i stay in touch is through events like this, as well as reading letters from constituents and voters all across the country
every night. and obviously what's on a lot of people's minds right now is the economy. we went through the worst recession that we've had since the great depression. and when i was sworn in about 18 months ago, we had already lost several million jobs and we were about to lose several million more. we lost 800,000 jobs the month i was sworn in. and so we had to act fast and take some emergency steps to prevent the economy from going back into what could have been a great depression. we stabilized the economy; we stabilized the financial system. we didn't have a complete meltdown. and whereas we were losing jobs in the private sector when i was first sworn in, we're now
gaining jobs, and we've gained jobs seven consecutive months in the private sector. the economy was shrinking about 6 %; the economy is now growing. so we've made progress. but let's face it, the progress hasn't been fast enough. and joe, rhonda and i were just talking about the challenges that they've had to go through when rhonda got laid off -- and, by the way, also lost her health insurance in the process, at a time when her son was going through some significant medical needs. so, in addition to trying to stop the crisis, what we also wanted to do was make sure that we were helping people get back on their feet. so something that i'm very pleased with is that rhonda was able to use the provisions that we passed to help her get cobra so that she had health insurance, could keep her health insurance, at a time when the family was very much in need. and millions of people across the country have been able to keep their health insurance. we've also been trying to help our state and local governments so that they're not having to lay off as many teachers and firefighters and police officers, and i know that -- i
think the mayor and the governor would acknowledge that the help that we provided them has really helped to plug some big budget holes. and, in addition, what we've been trying to do is to build infrastructure that puts people back to work but also improves the quality of life in communities like columbus. so joe is an architect and he's now working on a new police station that was funded in part with recovery act funds. so all these things have made a difference. but we still have got a long way to go. and so a couple of things that we're focused on right now is, number one, making sure that small businesses are getting help, because small businesses like joe's architectural firm are really the key to our economy. they create two out of every three jobs. and so we want to make sure that they're getting financing.
we want to make sure that we are cutting their taxes in certain key areas. one of the things that we've done, for example, is propose that we eliminate capital gains taxes on small businesses so that when they're starting up and they don't have a lot of cash flow, that's exactly the time when they should get a break and they should get some help. we're focusing, as well, on trying to figure out can we build more infrastructure here in ohio and all across the country that puts people back to work, not just building roads and bridges, but also building things like high-speed rail, or building broadband lines that could connect communities and give people access to the internet at a time when that's going to be critical in terms of long-term economic development. we're also going to have to look at how do we, over the long term, get control of our deficit. something obviously that a lot of people have on their minds. the key is to make sure that we
do so in a way that doesn't impede recovery, but rather gives people confidence over the medium and the long term. and i'm going to be happy to talk about what we're doing in terms of spending. but overall, the main message that i want to deliver before i start taking questions -- and i said this to joe and rhonda -- is slowly, but surely, we are moving in the right direction. we're on the right track. the economy is getting stronger, but it really suffered a big trauma. and we're not going to get all 8 million jobs that were lost back overnight. it's going to take some time. and businesses are still trying to get more confident out there before they start hiring. and people -- consumers -- are not going to start spending until they feel a little more confident that the economy is getting stronger. and so what we're trying to do is create sort of a virtuous cycle where people start
feeling better and better about the economy. and a lot of it is sort of like recovering from an illness; you get a little bit stronger each day and you take a few more steps each day. and that's where our economy is at right now. what we can't afford to do is to start going backwards and doing some of the same things that got us into trouble in the first place. this is why it's been so important for us, for example, to pass something like wall street reform to make sure that we're not creating the same kinds of financial bubbles and the massive leverage and the reckless risks that helped to create this problem in the first place. and i am very proud that we've got somebody like a sherrod brown or a mary jo, who worked really tirelessly with us in congress to make sure that we don't have a situation where we've got to bail out banks that have taken reckless risks; that we are monitoring what's happening in the financial system a lot more carefully,
making sure people aren't cheated when it comes to their mortgages, or that there are a bunch of hidden fees in their credit cards that helped to create some of the problems that we've seen in the financial systems. we can't go back to doing things the way we were doing them before. we've got to go forward. that's what we're trying to do. and hopefully as we continue over the next several months and the next several years, we're going to see a columbus and an ohio and a united states of america that is going to be stronger than it was before this crisis struck. i am absolutely confident of that. but we've got more work to do. all right. so, with that, what i want to do is i just want to open it up and you guys can ask me questions about anything -- and just ignore all these cameras who are here. pretend they're not there. the only thing i would ask is introduce yourselves so that i get a chance to know you.
or if you haven't met one of your neighbors, this is a good chance for you to do so. why don't we start with this gentleman right here. and we've got some mics -- the only reason -- the main reason we're using mics is so that these folks behind us can hear you. this gentleman right here. >> hi, president obama. i hope i don't pass out while i'm asking this question, so -- my question is actually about health care. my brother is disabled. and he's definitely what i would consider one of the working poor. he will not mature any more as far as mindset of a 12-year-old. right now he works washing dishes at a local restaurant and, unfortunately, because the employer does not offer health care insurance, one whole check, which is two weeks' worth of work, has to actually go towards him just paying for cobra, which is obviously well
out of his budget. but he has to, simply because of various illnesses that he suffers from. my question is, unfortunately, i'm not able to sit down and read a 2,000-page bill or law that -- with all the reform that happened with health care. with the present reforms that went into place, how will that help him? and if it doesn't, then how will -- i know that you're not done with health care -- how will your -- the latest changes that you want to happen with health care, how will that help him? and thank you for doing such a wonderful job. >> well, thank you. healthhow specifically reform should help your brother. number one, it gives an incentive to his employer to provide health insurance -- because one of the key components of health care reform was providing employers a 35 % tax break on the premiums
they pay for their employees, all right? so basically it's cutting his potential costs -- the employer's potential costs for providing your brother with health insurance, it's cutting it by a third. that's step number one. and there are going to be companies out there that say, you know what, we want to provide health insurance, but we just couldn't afford to do it, but now that it's costing us up to a third less, saving us thousands of dollars, maybe we should go ahead and provide coverage for that. ok, so that is step number one. step number two is if the employer still doesn't provide coverage, over the next couple of years your brother is going to be able to join a pool -- what we're calling an exchange -- where he can basically buy the same kind of insurance that these members of congress are buying. and the advantage that he's going to have is that now he's part of a pool of millions of people who are buying it all at
the same time, which means they've got leverage. the same way big companies are able to lower their costs per employee because the insurance company really wants their business, well, now your brother could be part of the same pool that these guys are and that's going to give leverage, which will lower his rates. and the final part of it is, if even with these lower rates, this better deal, he still can't afford it, then we're going to provide some subsidies to help him. so all those things combined should help make sure that your brother is getting health insurance. now, one of the things that i think people may not be aware of is that although this exchange isn't going to be set up until 2014 -- because it takes a while, we've got to set it up right -- there's some immediate things that are helping right now. if your child has a preexisting condition, insurance companies, starting this year, will not be able to deny those children
coverage. and that's a big deal for a lot of folks whose children may have diabetes or some other illness and right now can't get insurance. insurance companies are going to have to provide them insurance. that's number one. number two, how many people here have kids who are college- age, about to go to college? all right. well, one of the things you're going to be able to do is when those kids get out of college, if they don't get insurance right away, they're going to be able to stay on your insurance until they're 26 years old. that's a big deal because a lot of times that first job or those first couple of jobs out of college are the ones that don't provide health insurance. so there are a number of changes that are being made right now that will make those of you who have health insurance more secure with the insurance they have. we're eliminating lifetime
limits. there's a bunch of fine print on the insurance forms that sometimes have ended up creating real problems for people. your insurance company decides to drop you right when you get sick, just when you need it most. those kinds of practices are over now. and the final aspect of health reform that's important is, is that by changing the incentives for how doctors get paid under medicare and under medicaid, we're actually encouraging doctors to become more efficient so that over time health care costs actually start leveling out a little bit instead of skyrocketing each and every year. because everybody here who's got health insurance, what's been happening? your premiums have been going up; co-payments, deductibles, all that stuff has been going up. so we've got to actually try to control the costs of it, and part of it is just a matter of making sure that we get a better bang for our health care dollar. so, for example, when you go to a doctor, we're still filling
out forms in triplicate on paper. it's the only business there is where you still have a whole bunch of paperwork. and what we're trying to do is to encourage information technologies so that when you go into a doctor, they can already pull down your medical records electronically. if you take a test, then it's sent to all the specialists who are involved so you don't end up having to take four or five tests, and pay for four or five tests, when all you needed was just one. those are the kinds of things that will take a little bit longer to actually take into effect, but hopefully over time they're actually going to lower cost. all right. i'm going to go boy, girl here to make sure it's fair. right here. absolutely. >> mr. president, i'm concerned about the furor lately that's been -- it's similar to what's happened in the past but it's reemerging, mostly from the republican party, but some democrats -- that social security needs to be privatized
because it's losing money, and we're all going to -- and it's going to go broke, and that sort of thing. how would you comment on that? >> i have been adamant in saying that social security should not be privatized and it will not be privatized as long as i'm president. and here's the reason. i was opposed to it before the financial crisis. and what i said was the purpose of social security is to have that floor, that solid -- rock- solid security, so that no matter what else happens you've always got some income to support you in your retirement. and i've got no problem with people investing in their 401(k)s, and we want to encourage people to invest in private savings accounts. but social security has to be
separate from that. now, imagine if social security, if a portion of that had been in the stock market back in 2006 and 2007. i mean, you saw what happened with your 401(k)s -- you lost 20, 30, 40 % of it. now, we've recovered -- in part because of the policies that we put into place to stabilize the situation, the stock market has recovered 60-70 % of its value from its peak. but if you were really in need last year or the year before, and suddenly you see your assets drop by 40 %, and that's all you're relying on, it would have been a disaster. so here's the thing. social security is not in crisis. what is happening is, is that the population is getting older, which means we've got more retirees per worker than we used to. we're going to have to make some modest adjustments in order to
strengthen it. there are some fairly modest changes that could be made without resorting to any newfangled schemes that would continue social security for another 75 years, where everybody would get the benefits that they deserve. and what we've done is we've created a fiscal commission of democrats and republicans to come up with what would be the best combination to help stabilize social security for not just this generation, but the next generation. i'm absolutely convinced it can be done. and as i said, i want to encourage people to save more on their own, but i don't want them taking money out of social security so that people are putting that into the stock market. there are other ways of doing this. for example, it turns out that if you set up a system with your employer where the
employer automatically deducts some of your paycheck and puts it into your 401(k) account, unless you say you don't want it done, it turns out people save more just naturally. i mean, it's just kind of a psychological thing. if they take it out of your paycheck, and they automatically take it out, unless you affirmatively say, don't take it out, you'll save more than if they ask you, do you want to save, and then you say, nah, i'm going to keep the money. and then you save less. so that's just a small change. it's voluntary, but that in and of itself could end up boosting savings rates significantly. so there are a bunch of ways that we can do -- make sure that retirement is more secure. but we've got to make sure that social security is there not just for this generation but for the next one. ok? all right, gentleman's turn. and by the way, i know that some folks may be hot, and if they are, you guys can always
move into the shade. >> mr. president, sir, i was born and raised in a good blue- collar town in toledo, ohio. i grew up in a union family and i work now for a significant number of pension assets in the labor union market with an investment firm. i think the question i have that most bothers me is what's important to my people out there that i talk to, and those two things are, the first, what's going to happen with their pensions, especially those, as you know, in the red and the yellow. the ppa has not exactly been that favorable to them. and the pbgc is not a very good option. my father had to take early retirement. he's not receiving the maximum amount after decades of hard work and service that he had anticipated. the second part is i'm not naïve enough to think that just the pensions alone can help save workers. we've got 9.5% unemployment in this country, at least at last release, and i'm sure as you know, that's even more -- it's larger than that for the manufacturing industry and us in the rust belt -- toledo, detroit, cleveland. obviously we need to put those guys back to work; they need to have man-hours out there.
how can we create a sustainable, competitive product at an advantage to make us another leader in the manufacturing and labor force industry going forward, not just to get them back to work for a year or two, sir, but to get to work for the long term so they can grow the market on their own with their own product and their own work? >> well, look, this is a great question and it goes to the heart of what our economic strategy has to be. and senator brown and congresswoman kilroy and others, i know this is their number one concern each and every day. and certainly this is your governor's number one concern each and every day, is how do we make sure that we're creating a competitive america in which we aren't just buying things from other countries, we're selling things to other countries, and we're making things here in the united states of america. let me give you a couple of examples of areas that i think have enormous promise. number one is the whole clean energy industry -- and toledo actually is becoming a leader in this, creating good jobs, in
areas like solar -- building solar panels, wind turbines, advanced battery manufacturing. there is a whole series of huge potential manufacturing industries in which we end up being world leaders and, as a bonus, end up creating a more energy-efficient economy that is also good for the environment. now, we made, at the beginning of my term, the largest investment in clean energy in our history. and so there are plants that are opening up all across the country, creating products made in america that are now being shipped overseas. i'll give you one example, and that's the advanced battery manufacturing industry. these are the batteries that go into electric cars, or the batteries that are ending up helping to make sure that if you get solar power or wind
power, that it can be transmitted in an efficient way. we have 2% of the entire market -- 2%. by 2015, in five years, we're going to have 40 % of that market because of the investments that we made. so one of the advanced battery manufacturing plants that we helped get going with some key loans and support and tax breaks, they're now putting those batteries into the chevy volt. and you combine it then with an entire new u.s. auto industry that is cleaner and smarter and has better designs and is making better products -- those are potentially thhousands, tens ens ofthousands, the
thousands, hundreds of thousands, of manufacturing jobs. and the midwest is really poised to get a lot of those jobs. in a town like toledo where you've still got a lot of skilled workers, they are poised to be able to take off on that. but we've got to continue to support it. the other area that i've already mentioned is infrastructure. we've got about $2 trillion worth of infrastructure improvements that need to be made all across the country -- roads, bridges, sewer lines, water mains. it's crumbling. the previous generation made all these investments that not only put people to work right away but also laid the foundation then for economic growth in the future. and we used to always have the best infrastructure worldwide. now, if it comes to rail, we certainly don't have the best rail system in the world. our roads in a lot of places aren't the best. our airports aren't the best.
somebody is laughing -- they just got -- obviously, went through an airport. so we've got a lot of work to do on infrastructure. and this is an area where i hope we can get some bipartisan agreement. it's hard to get bipartisan agreement these days. but i think the notion that we can put people to work rebuilding america, investing in making stuff here in the united states that -- by the way, every time you build a road, that's not just putting people to work on the actual construction; all those supplies that go into road building, all those supplies that go into a bridge, all those supplies that go into rail, that's creating a ripple effect all throughout the economy. so i think that's a second area of great potential. last point you made was -- had to do with pensions. look, the truth be told, the way we were handling pensions both in private companies and
among public employees, a lot of it wasn't that different from some of the stuff that was going on in wall street, because what happened was -- is that these pensions weren't adequately funded. some of these companies would underfund it, and then say, well, we're going to get an 8 % return or 10 % return on our pension funds, to make it look like they were adequately funded when they weren't. that contributed to pension funds chasing a lot of risky investments that promised these high returns that, in fact, were built on a house of cards. so you're going to see a number of pensions in a number of companies that are under-funded. now, we've got a mechanism at the federal level that provides a certain percentage backup or
guarantee for these pension funds if they fail. but we're going to have to, i think, work with these private sector companies so that -- right now, they've become very profitable. companies are making money right now. we were talking earlier about the economy and how it's moving slow. well, corporate profits are doing just fine. they're holding onto a whole bunch of cash -- they're kind of sitting on it, waiting to see if they can make more money and more opportunity, but they haven't started hiring yet. one of the things they need to be doing with some of this cash is shoring up their pension funds that are currently under- funded. it's a girl's turn. yes, right there. >> mr. president, tied in with the jobs situation i think is the education system. and it seems to be in a crisis now, and people are not being educated to take these jobs that are going to be created. and i wondered what sort of plans you might have for that.
>> that's a great question. are you in education? >> no. >> no? >> i'm a nurse. >> well, that's important, too. >> yes. >> thanks for the care you give to people all day long. i'm a big fan of nurses. the thing that will probably most determine our success in the 21st century is going to be our education system. i'll just give you a quick statistic. a generation ago, we ranked number one in the number of college graduates. we've now slipped to number 12 in the number of college graduates. that's just in one generation. that is putting us at a huge competitive disadvantage. because, look, companies these days, they can locate anywhere. you've got an internet line, you can set your company up in india, you can set up your company in the czech republic -- it doesn't really matter
where you are. and so what that means is a lot of companies are going to look for where can they find the best workforce. and we have to make sure that that is in columbus, ohio. we've got to make sure that that's in toledo. we've got to make sure that that's in the united states of america. now, we still have the best universities and the best colleges on earth. but there are a couple of problems that have come up. first of all, our education starts at k-12. and we're not doing a good enough job at the k-12 level making sure that all our kids are proficient in math, in science, in reading and writing. and what we've done is we've set up something called the race to the top, where, although a lot of federal money still flows to schools just based on a formula and based on need, we've taken a certain amount of money and we've said, you know what, you've got to compete for this money. and you've got to show us that
you've got a plan to improve the education system, to fix low-performing schools, to improve how you train teachers -- because teachers are the single most important ingredient in the education system -- to collect data to show that you're improving how these kids are learning. and what's happened is, is that states all across the country have actually responded really well, and we've seen the majority of states change their laws to start doing this bottom-up, grassroots reform of the k-12 system. that's critical. that's number one. the second thing that we've got to solve is that college became unaffordable for a lot of people. and joe and rhonda, we were just talking -- we're about the same age and we got married i think the same year. our kids are about the same age. so we've kind of gone through the same stuff. and michelle and i -- i don't know about you guys -- we didn't talk about this -- but michelle and i, we had a lot of debt when we finished school.
it was really expensive. and neither of us came from wealthy families, so we just had to take out a bunch of student loans. it took us about 10 years to pay off our student loans. it was actually higher than our mortgage for most of the time. and i don't want that burden to be placed on kids right now. because a lot of them, as a consequence, maybe they decide not to go to college, or, if they do, they end up getting off to a really tough start because their pay just is not going to support the amount of debt that they've got. so here's what we did. working with sherrod, working with mary jo, democrats in congress -- this didn't get a lot of attention, but we actually completely transformed how the government student loan program works. originally what was happening was all those loans were going through banks and financial intermediaries. and even though the loans were guaranteed by the government so the banks weren't taking any risks, they were skimming off
billions of dollars in profits. and we said, well, that doesn't make any sense. if we're guaranteeing it, why don't we just give the loans directly to the students, and we'll take all that extra billions of dollars that were going to the banks as profits, and we'll give more loans. and as a consequence, what we've been able to do is to provide millions more students additional loans and make college more affordable over time. that's the second thing. third thing we've got to do is we've got to focus on community colleges, which are a wonderful asset. not everybody is going to go to a four-year college. and even if you go to a four- year college, you may need to go back and retrain two years -- for a year or two, even while you're working, to keep
up, keep pace with new technologies and new developments in your industry. so what we've really tried to do is to partner with community colleges, figure out how we can strengthen them, put more resources into them, and link them up to businesses who are actually hiring so that they're training people for the jobs that exist, as opposed to the jobs that don't. one of the problems we've had for a lot of young people is they go to college, training for a job, thinking that their job -- or thinking there's a job out there, and actually the economy has moved on. and what we need to do is tailor people's education so that they are linked up with businesses who say, we need this many engineers, or we need this kind of technical training, and we'll help design what that training is -- so that when that person goes to college and they're taking out some of those loans to go to college, they know at the end of the road there's actually going to be a job available to them. last thing -- math, science, we've really got to emphasize those. that's an area where we've really fallen far behind, and our technological competitiveness is going to depend on how well we do in math and science.
ok. yes, sir. >> mr. president, i am a proud firefighter for the great city of columbus here in ohio. thank you. >> joe, did you use to play for ohio state, man? >> i must correct you. i was actually part of the national championship team for eastern kentucky university. >> oh, ok, all right. >> for the national champion, no less. >> well, there you go, ok. but you look like you could -- we could put you on the line right now. >> oh, that's what they all say. >> anyway. >> but, mr. president, i wanted to talk to you about a couple of things as it pertains to the safety and security of our firefighters. i want to share with you some good news as it pertains to the stimulus and the safer act for which you championed and signed off on. locally and from the state standpoint, we had some firefighter jobs that were in
jeopardy, up in the hundreds. the stimulus package -- i know the state was strapped with its commitment and what it had to with those monies. some of those areas we weren't able to be supported in. but because of your administration signing off on the safer act, which is staffing adequate fire and emergency response, you provided over $300 million last year and upped that to over $400 million this year -- that had allowed for the jobs in ohio to come back -- the firefighters rather who had jobs to come back and get their jobs back. in addition to that, the fire act has provided safer equipment for us. we -- don't want to sound cliché, but i'm just your average joe. but what we do as firefighters, we want to make a significant difference to our citizens here in our community, as well as our lives. that safer act and that fire act has provided us significant equipment -- money, funding
rather for significant equipment -- face pieces, self- contained breathing apparatus, things of those nature. so we come to say how proud we are to be able to afford that opportunity to secure our firefighters. the international president has sent a appreciative thank you and we would hope that you would find -- i know your busy schedule -- somewhere around this country -- cincinnati, akron, elyria, niles -- have brought back firefighters because of the safer act. and if anywhere along your schedule you have the opportunity, as a symbolic gesture of support, to stop in to those stations, thank those firefighters, we would greatly appreciate that. >> well, thank you. and as i said, you guys put your lives on the line each and every day. we wanted to make sure that public safety was not being threatened as a consequence of the recession. we've done that. we've helped to support not just firefighters but also police officers, teachers, other vital services.
we're going to continue to support you. and again, we're very grateful for everything you do. and if this is your lovely wife here, we're grateful to her too because she's got to -- she's got to put up with you -- running off into fires and putting yourself in danger. and i'm sure that makes her a little bit stressed once in a while, but i'm sure she's very proud of you. >> thank you. >> ok. anybody else? yes, go ahead. here, we've got a microphone. >> hi, mr. president. i was actually recently laid off of a position working at our local community college, helping dislocated workers get back and get retrained. but the position was funded on workforce investment dollars and the funding ended. as i look for a new position in social services, one of my concerns is i'm having trouble finding a position that pays enough so that i can pay my bills and also send my daughter to quality childcare.
so i was wondering if there's anything that's been done to reduce childcare costs. >> well, we have a childcare credit in place. we'd like to make it stronger. this is one of those back-and- forths we've been having with the republicans, because we actually think it is a good idea and they don't. but i think that giving families support who have to work each and every day is absolutely critical. thatthere's some companies are starting to get smart about providing childcare on site for their employees, which makes a huge difference. it's a huge relief. but those are usually bigger companies. and some of the smaller companies or small businesses don't have that capacity. bottom line is we just got to make sure that we're providing
you more support, primarily through a tax credit mechanism. this is something that we have incorporated in the past in our budget; we haven't got everything that we'd like done on it. it will be something that we continue to try to work on a bipartisan basis to get the cost of childcare down. there's another component of this, though, and that's also boosting the quality of childcare. kids learn more from the age of zero to three than they do probably for the rest of their lives -- and this goes to the earlier question about education. we want to get them off to a good start knowing their colors and their numbers and their letters and just knowing how to sit still. and a high quality childcare environment can help on that front. but that means that childcare workers, for example, have to be paid a decent wage and get decent training. and we've been working -- we set up actually a task force that is trying to lift up the
best practices, who is really doing a great job in creating high quality health care -- or childcare at an affordable rate, and then trying to teach other states and other cities and other communities how to replicate some of that great progress that's been made. there are some terrific programs out there, but they're still too far and few between. all right, i've got time for two more questions. yes, sir, right here. >> i work for a company who is benefiting from some stimulus money here in columbus. and it's keeping me and my crews afloat for a while. but what we really need is a stronger housing market here in columbus. we need to be building new roads and making houses affordable for people. they need to get out there buying. they need to be able to get the loans.
and what's up with that? >> well, remember i told you that it's going to take some time for this economy to come back. one of the reasons it's going to take time for this economy to come back is the housing market is still a big drag on the economy as a whole. and the reason the housing market is still a big drag on the economy as a whole is we built a lot of homes over the previous five, seven, 10 years. every year, about 1.4 million families are formed that are ready to buy a new house, or need some place to live. and what happened over the previous four, five, seven years during this housing bubble was we were building 2 million homes a year when only 1.4
[million] were being absorbed. and then the bubble burst, and now we're only building 400,000. and all that inventory that happened during the housing bubble, it's still out there. so some states are worse than others. you go to places like nevada or arizona or florida, california, their inventory of unsold homes was so high that it is just going to take a whole bunch of years to absorb all that housing stock. now, what we can do is to help people who are currently in their homes stay in their homes. we can strengthen the economy overall so that that new family that just formed, they feel confident enough to say, you know what, it's time, honey, for us to go out and take the plunge and start looking.
and right now they're kind of holding back, the way a lot of people are still holding back, because there's uncertainty in the market. and we've initiated, through the treasury department, a number of programs like that to help support the housing market generally. but i want to be honest with you. it is going to take some time for us to absorb this inventory that was just too high. quickthere's no really way to do it, because we're talking about a $5 trillion market. bigd we can't plug that hole in terms of all the housing that needs to be absorbed.
and there's no really quick way to do it, because we're talking about a $5 trillion market. and we can't plug that big hole in terms of all the housing that needs to be absorbed. we're not going to be able subsidize all that over- capacity right now. what we can do is just stabilize it and then improve the economy overall. what we're going to do is get back to the point where we're building 1. -- 1044 million homes a year, instead of 400,000 -- and that's a huge -- 1.4 million homes a year, instead of 400,000 and that's a huge difference. >> i'm the practice manager at an ophthalmology practice at the eye center of columbus, downtown. it is a great facility that the city of columbus helped us get in place. there are over 30
ophthalmologists providing specialty care in separate practices, a state-of-the-art ambulatory surgery center. we see tens of thousands of patients a year. and i think we do a very efficient job of providing quality care, over 300 people employed. so i'm kind of on both sides of health care. and when i started working for this practice 25 years ago, we are now getting reimbursed one- third of what we got paid for -- i'm just going to pick cataract surgery -- yet our operating costs continue to go up. my boss is kind enough to provide health care costs entirely for all of his employees. how does he continue to do that when medicare continues to reduce what they're paying, and there's the threat of more cuts coming and the private insurance companies follow suit? >> medicare, i think, is one of the cornerstones of our social safety net. the basic idea is, you've been working all your life, you retire; just like you've got social security that you can count on, you've also got health care that you can count on and you're not going to go bankrupt just because you get sick. but in the same way that social security has to be tweaked
because the population is getting older, we've got to refresh and renew medicare to make sure that it's going to be there for the next generation, as well. and the key problems are not just that more people as they retire are going to be part of medicare. the big problem is just health care inflation generally. the costs of health care keep on skyrocketing. now, the way we've been dealing with it, which i think is the wrong way to deal with, is basically under-reimbursing our providers. the right way to deal with it is to work with the providers to figure out how can we make the system less wasteful, more efficient overall. and that way we're paying -- your boss, if he's spending a dollar on care, he's getting reimbursed a dollar. but we're also making sure that the care he's providing is exactly what the person needs, and high quality for a better price. and that's part of what health care reform was all about.
i'll just give you a couple examples. one of the things that we were doing in medicare was we were giving tens of billions of dollars of subsidies to insurance companies under the medicare advantage plan, even though that plan wasn't shown to make seniors any healthier than regular old medicare. so we said, all right, we're not going to end medicare advantage, but we are going to have some competitive bidding and we're going to force the insurance companies to show us, well, what exactly -- what value are you adding? how are you helping to make these seniors healthier? and if you're not helping, then you shouldn't be getting paid. we should be giving that money to the doctor and the nurse and the other people who are actually providing care, not the insurance companies. well, there was a lot of hue and cry about this, but it was absolutely the right thing to do -- because now we just found out -- the actuaries for medicare said the changes we've already made have extended the life of the medicare trust fund for another 12 years -- which is, by the way, the longest it's
ever been extended as a consequence of a reform effort. so we've made medicare stronger just with some of the changes that we've already made. but you're absolutely right that we're going to have to keep on making these changes to continue to make it stronger. and that will affect not just medicare; it will affect the entire health care system. because there's no doctor out there who doesn't see medicare as the $800 gorilla. -- 800 pound gorilla. if medicare is saying you've got to improve your quality and efficiency, then they will because they've got a lot of medicare patients. but they also have a lot of regular patients. so hospitals, doctors, everybody starts getting more efficient as medicare gets more efficient. the key is making sure that we're not just cutting benefits. and, frankly, this is an argument that i have with my friends in the republican party sometimes. one big change that some of them have advocated is to voucherize the medicare system.
you basically -- instead of once you have medicare, you knowing that you can take that and go get care anywhere you want, we would just give you -- all right, here is whatever it is, $6,000 or $7,000 or whatever. and suddenly, you've got seniors who find themselves way short of what they need in terms of providing care. we've got to change how the health care system actually operates. and that means more prevention -- more preventive care. it means better -- that we reimburse people for checkups. it means we reimburse doctors when they're consulting with people on things like smoking cessation and weight control and exercise. there are a whole bunch of things that can make us healthier, reduce our costs overall. but unfortunately, the system doesn't incentivize them right now. we need to change that.
anybody have any last burning question? that was technically the last question. but this has to be like one that you're just, man, i really need an answer for. >> i've got a very general question. >> ok, go ahead. >> it's a very general question, here. i work on wall street. i was wondering what kind of changes we can expect to see in the reform in the next couple years. >> well, here's the essential components of wall street reform that we set up. number one is that we got a-- we had a system in which there was huge amounts of leverage that banks could take. and what leverage means is, if they got a dollar in deposits, they were making a $40 bet using that one dollar -- which when times are good means you're making a lot of money, right? you're putting one dollar down
of your own money, and you got $40, and when the market is going up, you're making out like a bandit. but when the market goes down, when it starts de-leveraging, you're in trouble. and that's basically what happened with lehman's and a lot of these other companies. so one thing that we've said is that we've got to have -- for big firms that are what we call "systemic," that if they go down, the whole system could go down with them -- we've got to have a better check and say, you know what, you've got to control a little bit how you work in terms of leverage. you've got to have enough capital, actual money, to cover the bets that you're placing so that you're not putting the whole system at risk. that's number one. number two, there's a whole derivatives market out there, which, frankly, even the bankers don't completely understand. but you've got trillions of dollars -- and if you work on wall street you're familiar obviously with the derivatives market. i mean, you've got trillions of dollars that are basically outside of the regulated banking
system, and people didn't know who's making bets on what. and what we said was that derivatives market, it needs -- it can continue, but it's got to be in an open, transparent marketplace so that everybody knows who is betting on what. and we're very clear about who the various parties are in these complex derivatives transactions. that means the regulators can follow it a little more closely. that's number two. the third thing that we did is we made sure that we don't have taxpayer bailouts again. so we've set up a system whereby if a big firm gets in trouble, we're able to essentially quarantine it, separate it out from the rest of the pack, liquidate it without it spilling over into the system as a whole. that's the third thing.
and the fourth thing is having a consumer financial protection agency that is really going to do a good job making sure that consumers know what they're getting when it comes to financial products. i mean, when you buy a toaster, there has been some assurance provided that that toaster will not explode in your face -- right? there are a whole bunch of laws in there, people have to do tests on the toasters to make sure that nothing happens. but if you buy a mortgage that explodes in your face because you didn't know what was going on, everybody acts like, well, that's your problem. well, no, it's actually all of our problem, because part of the reason we had this financial crisis was because people did not always understand the financial instruments that they were purchasing. a lot of these subprime loans that were being given out, a
lot of these no-interest -- you can buy your house, you don't put any money down, you don't pay any interest, you got this beautiful house -- and naturally people were thinking, well, this sounds great. but what they weren't looking at was, ok, there's a balloon payment five years down. this is only going to work if your housing -- the value of your house keeps on appreciating. and if it stops appreciating, suddenly it's not going to work anymore. people hadn't thought through all those ramifications. and that had an effect on the whole system. so what we've said is we're going to have a strong consumer finance protection agency whose only job is to look after you when it comes to financial products. and joe and rhonda and i were just talking about how it was only seven, eight years ago when michelle and i were trying to figure out our student loans, how were we going to invest for the kids' college education. we had -- at the end of the month, i'd be getting my credit card bills, and i'm a pretty
smart guy, but you open up some of those credit card bills -- you don't know what's going on. you don't read all that fine print. you just look at the statement. well, as an example of the kinds of things that this new agency are going to be enforcing, we've already passed a law -- thanks again to mary jo and sherrod -- we've already passed a law that says a credit card company can't raise the interest rates on existing balances. so it can't attract you with a 0% interest, you run up a $3,000 balance, and then suddenly they send you your next statement and it says, oh, your interest went up to 29%. you can't do that. i mean, they'll still be able to say, we're going to raise your interest rate to 29%, but that can only be the balances going forward. it can't be on the money that you borrowed where you thought it was a 0%. well, that's an example of straightforward, honest dealing
that we're going to be expecting. we think the financial markets will still make money, the banks can still make money, but they got to make money the old- fashioned way, which is loan money to small businesses who are providing services to the community. loan money to joe for his architectural firm, and he's going to make sure you pay him back. loan people for mortgages, but make sure that you've done the due diligence so that you're not tricking them into something they can't afford. make sure that it's something that you can afford -- right? they're just a bunch of basic, common-sense reforms that we're putting in place that will allow the market to function. because the free market is the best system ever devised for creating wealth, but there have got to be some rules in the road so that you're making money not by gaming the system, but by providing a better product or a better service. all right? well, listen, i want to thank all of you for spending the time. i know it got a little warm, and
you guys just hung in there like troopers. i want to make sure that i thank, once again, ted strickland, sherrod brown, mayor michael coleman, your lieutenant governor, and i believe the next united states senator, lee fisher, and mary jo kilroy for being here. and obviously, i want to thank joe and rhonda weithman and the whole weithman family for sharing their backyard. and we're going to have to make sure that we're helping their lawn here. it got trampled on a little bit. i hope you guys are not stepping in the corn. michelle, by the way, would be very proud to see that you've got the vegetable garden working. all right? give them a big round of applause, everybody. thank you very much. thank you.
oh, and by the way, i just want you to know that the weithmans made me the "o" in o-h-i-o. it's on tape. it's on tape somewhere. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010] >> congressional budget office director would give an update tomorrow morning on the budget and the latest economic numbers. he will also take questions from reporters. live coverage begins at 11:00 on c-span2.
a number of large companies expect their health-care costs to rise in 2011. that is next on c-span. the outgoing ambassador for iraq chris hill says the country is on the right track. after that, at the funeral of former alaska senator ted stevens to died last week in a plane crash. >> there are 48 hours of nonfiction books and authors every weekend on book tv. saturday, john samples debate the size of the role and -- of government in the 21st century. on sunday, investigative journalist son yet shock this it's the history of malaria. for a complete listing of this
weekend's programs, but is it -- visit booktv.org. >> the survey was carried out by the national business group on health. this is an hour. >> if you have any technical questions about the survey, call on caring for that. we are glad to be here. this is an exciting time in our history. as large employers and know that we are in the middle of a transformation, a transformation of how health care is financed
and delivered in this country. we are very busy trying to figure out what will happen, what could happen, especially to large employers and their employees, retirees. but want to help navigate these complicated transitions. we are excited about some of the changes, for the most part. we think that every resident of the united states should have access to affordable quality health insurance and we are ready and have been working with everyone else, including policymakers' comment to make certain that that happens as soon as possible. care and affordable health insurance are available to every resident of the united states i am here today to report on a survey that we conduct every year. weaselly do it in the summer. it is a survey -- we usually do it in the summer.
it is put out in the late part of the year so that you get results for what has happened. we started about seven years ago doing this survey to try to anticipate what is coming up we asked folks, what are you planning to do for the following year? if this happens-year, with health care reform, the following year is a transformation a year. it is a transformed period did our country. we as a number of questions about the impact of the legislation and some of the regulation. u.s. employers have long struggled with health care costs. problems have been serious for 20 years in the united states. we do know also that if employers are able to use cost management practices and make choices about programs that
will, for example, help employees and their dependents be healthier, you can bend the cost curve. not as much as we would like, that is for sure. instead of 10%, you'll be looking at 6% or 7% that is real money on the bottom line. we also know that the affordable care act has driven employers to rethink their health care strategies and to make decisions about what they're going to do now and in the future. we have a fairly long time line. we have a lot of changes that will have an impact immediately by 2011, starting in january. we also have been coming online at different stages. employers have really stepped back and said, what do we need to do to be aligned with where the nation is headed? this really is the first year that that is occurring. s the first year that is
occurring. this survey is quite timely. in terms of the overview of this study, which asked members to provide information for what they will be offering to their employees for the calendar year, 2011, which for most of them starts on january 1. most employers are sending out open enrollment packages, and announcing to their employees, dependents, and retirees in some instances, what their choices will be for next year. fall is usually the open enrollment period. we had 72 large employers to respond. we only asked our large employer members, representing about 3.7 million employees who completed the survey. we asked the question of what you are basically telling your cfo you need to put in the budget for what medical claim costs are going to be.
fourth 2010, we have with the estimate was, and what they believe it will be in 2011. the 2011 budget projections include any changes that might have made it not as expensive as it would have been if they had made no changes. this is what they believe they will have to spend. as you might see, from the document that you have, in 2010, we estimate that the mean for the employee survey was a 7% increase. these are all self-insured employers. they pay administrative costs for health plans. this is all about claims. this data tells you what people are doing. they're going to the doctor. they're getting more indigene.
they are being submitted to the hospital. this is not insurance profit, or any of the floss we have been hearing about in reform. this is the underlying use of medical services. for 2011, our employers are budgeting 8.9% as a mean. it is about to% higher on the mean. the median, for 2010, was 8%. the median for 2011 is 8.3%. you probably all understand this, but the important thing is that the needy in tells you what is the midpoint for 50% above, and 50% below the number. that washes out the all liars. a meeting can be higher or lower because of certain things, but a median is to a point in de
blogger continue on. with a mean of nearly 9%, we estimate that about 1% has to do with the mandated changes that employers have to include for 2011 under the affordable care act, and about another 1% of cost increases. this is a softer number because it is harder to demonstrate in the short term. we have seen evidence of hospital prices going up rather substantially. the other 1% is really building in some of the other changes that are likely to be occurring now, and within the last year. for example, if hospitals, or others, feel their costs will go up because of the health care reform, where because of what is happening in the economy -- or because of what is happening in the economy, they are raising
their charges. employers, who are the only ones who actually pay charges, or close to them, where as the government pays what it chooses to pay. they have what it calls administrative pricing. private employers might have some negotiating room, but they really do have to pay the cost shift from the public sector. it is a whole nother subject. if anyone wants to talk about it later, i will be happy to do that. one of the questions we ask is what plan design changes are you considering in spite of, and what might be the effect of wanting to be, or not caring about being a grandfather plan? you may recall the president promised from the very beginning that if you like your health plan, you will be permitted to keep it.
one of the things they did was put out rules that basically said you can not make too many changes to your plan, and if you do, you will lose that grandfathered status. if you lose that status, you need to meet a number of requirements. the theory was that if a large, self-insured employer would want to maintain grandfather status, and what make sure that it was like the plan of march, 2010, as possible. most of our employers are continuing to make the planned changes that they were going to make. by the way, i would just make an aside on this point. there is a bit of a misunderstanding between those who run the health plans as self-insured employers, and policy makers. it goes something like this --
most employers really offer the same plan year after year, but they are always tweaking them. for example, in light of a geographic area, they might offer a product from united healthcare. you, as an employee, think that is your plan, but every year, when i get my open enrollment package there are some changes. they're usually small, but they are definitely changes. most employers think of the plan as something that has a lot more flexibility within it, although the broad strokes of it remain the same. one of the ways they have written the regulation would, in fact, make it hard to make even some of the typical changes that are made every year. as you can see, 53% say they will be making planned changes, and 19% will make changes, but are scaling back the changes,
sometimes because they're just as a tent, 19% are making no adjustments as a result of the law. i was asked the question if that was high or low. i would say that it is not likely that as much as 19% would have made no changes. maybe 10% or 15% who have made no changes, especially those with highly unionized populations, because they have contracts that usually last for three years. if you're at the beginning of a contract, you might not make a lot of changes during that time period. in terms of changes due to the health care legislation, as you recall, even the grandfather plans are required to meet certain requirements. the first one is, and you can see this on page 6, is that if you have an overall, lifetime
limit -- a limit of $5 million over a lifetime. you work for a company. when your medical claims reached $5 million, in theory, you would get no more. that is what an overall limit would be on a lifetime. 70% of our employers are making a lifetime limit changes, that is, they are eliminating it. it is probably very high. if they have a lifetime limit, many do not, but if they have won, it is really very high, for the most part. the only time you see a low ones, is in another subject. changes to annual like time limits as another one. 37% of those responding said they would make changes because of the requirement. 26% white removed annual dollar limits on overall -- would
remove annual dollar limits. the plan might have something like $300,000 in a year, and maybe a lifetime limit of $5 million, and in a given year, you might have $300,000. this is another one that would be eliminated. finally, 13% removing pre- existing conditions for children under 19. by the way, most employers do not have a pre-existing exclusion condition for children under 19, and ashley did not even have them for adults, which comes later -- and they actually do not even have them for adults, which comes later. it could be you have a six-month waiting period. it might be that for the first six months, things would not be covered. that is probably what this number is picking up. generally, coverage for children is pretty comprehensive.
there is also another part of the affordable care act that includes an opportunity for employees to voluntarily enroll in a sort of insurance program called the community living assistance services and support act. that was a provision that was near and dear to the heart of senator kennedy, and was put in the bill because he wanted it in the bill. it basically would require that someone voluntarily pay, and there are different numbers on what it could be, and it could be $123, all month, for five years, at the end of that five years, you met certain criteria to having disabilities to daily living, you could get a cash payment of as much as $50.
that would cover not your medical expenses, but some of your living, household expenses. if you needed someone to come in to help you bathe, or something like that. only 3% are going to be doing that. the statute makes it clear that employers can operate voluntarily, but you might imagine it is expensive to administer a program like that. there is some sense that it is not really an insurance product. we could go back into some detail. as you all know, the statute changes the deductibility, and tax-freeness of retiree drug subsidies. i apologize. some of this gets really technical. a local back to different parts of the law. basically, there was a take away
of a tax benefit that employers got. they got a subsidy for the retiree drug benefits, and they also did not get taxed on that. that is changing. the question was what are you going to do about it, and i think the interesting no. there is that 69% have it under review. 26% and making no changes. there is also a temporary reinsurance program for early retirees. a lot of employers still provide coverage for those that are retiring before medicare, which is, by the way, the most expensive place for coverage for anybody. the act allowed for some subsidies for the reinsurance plan for retirees to help employees pay the bill for early
retirees. 62% said they intend to apply for that. the application, i believe, can out june 1. as i recall, it is already out, and we do know that many employers have applied for that assistance. one of the top three most effective steps to control health-care costs that are you taking now, and you were to put the top three. the slide on page 10 shows you what were the most effective, the second most effective, and the third most effective tactic. you will see that 21% ranked the most effective tactic offering a consumer-directed health plan, and 6% said the was the second most effective, and 10%, the third most effective. next, well as initiatives.
19% thought that was the second most effective. 17% thought it was the third most effective. those two together, are considered very beneficial in helping to control health-care costs. you can also see the fourth one down, disease and condition management, also has a substantial number, of being in the top three. increased employer cost sharing -- interestingly, one of the biggest concerns that policymakers had had had been on the cost-sharing side. employers think cost sharing is important, but they did not actually see it as the most important thing, by far. i think there is a little bit of a misunderstanding between the way employers view what is happening, and what policy makers are thinking about. on that point, if you go back several years, you find
employers saying they feel they have reached the maximum value of cost-sharing as a tool for getting employees, retirees, and dependence attention. at some point, they're going to get the care, and that is not what people want. on the next pitch, you can see what they are doing in 2011 in terms of cost-sharing. increasing employee contribution to the cost -- what the employee has to pay toward his or her own coverage. 63% are doing that. it could be as little as 1%. it could be going from their employers, who pay 85%, and the employee pays 15%. it could still be way below the national average, which is 80% /20%. they are increase in out-of-
pocket maximums. if you hit that maxim, whenever it is, $4,000, $5,000, or $6,000 for a family, once you hit it, 100% is paid for everything else in the year. it is kind of a protection, a safety net. you can see that it is being increased, by small amounts, but it is being increased. the in-network deductible is being increased in 44% of cases, and the out-network deductible is increased by 46%. there were increased by 40% -- 47% in 2010. employers tend to make a two or three-year plan. they try to not make too big of changes in any given year, especially because of this year
with the financial meltdown and the great recession, there are a lot concerns that most people's pay package is not only flat, and may have gone down, but there is also a recognition that most households if you go back three years or so have two working people in the family, and some number of those might not have a job at the moment. you might not have not only not had an increase in your own pay, where hours reduced, but you also might have someone in the household who may have lost their jobs. we know that from the data. there is a lot of concern about that. with the health-care costs going up around 7%, even if employers only pass on 20% of the 7%, those are really hard dollars, at a time when everyone's dollars have gone down. i think they are sensitive to that.
21% were changing co-pays, and interestingly, there is more positive attention been put on primary care. only 6% were changing the copiague for -- the call-pay for primary care. there is an intent, i think everybody's part, to reduce or eliminate cold-pays for primary care, and not just for preventive benefits. this is seen as a very important tactic for controlling health- care costs, and, we think, increasing and improving engagement and consumerism. in 2011, 44% are offering that as an option. 20% have gone to full replacement, where you have no other choice.
the details may vary. they may or may not be a high- deductible health plan. the high-deductible health plans, that technically high- deductible, frankly, are not much higher than the average house plant. it was maybe one year and a half ago that a study found that the median deductible now was over $1,000, and a high deductible was only about $1,200. there are higher, and higher deductibles for everybody. you can see that most of the movement, probably, between 2010 and 2011, was from those who moved from offering as an option, to a full replacement. some employees had the choice lester, and this year they did not have the option. we looked at wellness programs, which has been one of the most important initiatives that most large employers have been
providing in the last five years, increasingly. there are well as programs targeting obesity, and in terms of employees, 76% said yes, and 23% said no. for spouses and domestic partners, 42% have said yes, and that has been a growing number. will probably see more, assuming the regulation does not keep us from doing some of those things. we begin to see a small, but significant number offering well as programs to children. as i am sure you all know, we have a national crisis in that regard. if you turned to the next page, you will see the kind of things that are being done for participation in wellness activities in 2011. 41% are providing a premium
discount for participation. in this case, it is through health assessment. that is a really big number. 5% are offering a premium surcharge. we like carrots, better than sticks, at least so far. 70% are offering other incentives related to the help -- 17%, our offer and other incentives. you can see the numbers for tobacco cessation -- 22% offered a premium discount, and 11% essentially a surcharge for nonparticipation. you can also see that for healthy lifestyles, usually there are other kind of incentives, and there are a lot of reasons for that, including how hard or easy it is to administer something like that. this is really good news, in our opinion.
you can also see that the average amount of the incentive in a year to employees is $386. believe me, that is real money. especially in the last two years, we have seen that small changes, just as we have seen the consumers in america change their behavior across the board, we have seen that some of the benefits -- people are much more positive. their pay more attention to what things cost. if you're giving a discount or a surcharge that did not get their attention three years ago, it is getting their attention now. in terms of pharmacy benefit management techniques to be used in 2011, 73% are using prior authorization. that means that you have to get approval, basically, for a particular drug. therapy, 53% are using that.
step therapy is where you are required, unless there is a particular chemical reason for going straight to the much more expensive drug, or newer drug, or more narrow set of clinical conditions, that you use the first one first, and if that does not do what it should do, you go to the next one. you are required to do that, again, unless you have a specific clinical exception. 63% a three-tiered design, which means generic is the first brand, the second is its formulary brand, and in non- formulary brand is the third. a mandatory mail order for maintenance medication, like if you take something for a long time. it almost linda -- literally
comes automatically from the p r used mail order, or pay the full cost for difference between what your mail order cost would be, and what you get at retail. it tends to get people's attention. mandatory substitution -- 37%. just to sum up, you can see that employers are moving ahead with the changes of the affordable care act. they are not holding up changes that they want to make to maintain or retain a grandfather status. they actually do not think it is that important. employers are attempting to control health-care costs. they understand that are stuck paying for all of these costs, no matter what, no matter what else is going on in terms of the health legislation, they will be paying the tab for a very long time. the exchanges will not be in
place until 2014, at least under current law, and large employers would not have a choice of using them until 2017. that is a long way away. that is seven open enrollment, and one and three quarters presidential election. they are increasing some cost sharing, but most employers are not increasing it very much. they are, most importantly, focusing on health improvement activities, and they would like to be able to continue that, because that is one of the things they think is really important. they do like more and more consumer-directed health plans. they are, if they have not done it recently, during the extended eligibility audits, especially now that there having to pay for dependence up to the age of 26. there are almost no more -- no
more constraints on that. it could be a child that is married, lives elsewhere, and even works for someone else. the parent -- the employer of the parent is stock taking care of that. they want to make sure that every individual they are covering is an eligible dependent. there are also generally increasing cost-sharing for non-emergency use of emergency rooms. there are some -- there are still a ridiculously high use of emergency rooms. they're also using data warehouse is to target programs on the conditions that are targeting people in terms of making them sick. they're using data and analysis to identify what parts of the country to concentrate particular programs. my favorite is -- used to be
called the stroke belt. does anyone know what that means? the southeastern part had always been called the stroke belt because of the other things, the dietary conditions usually leave -- glad to strokes. places in the mid west are places where strokes and heart attacks are serious problems. there try to concentrate programs, including choosing healthier lifestyles, in places where there are particular problems. more employers are contracts centers of excellence. there is a program where lowe's employees needing heart surgery, and you voluntarily want to go to the cleveland clinic, then
they paid 100% of all of the cost, including the travel cost. i think we will see more of that. there is a growing interest in a second opinion for conditions when someone has either a a diagnosis or recommendation. employers are actually paying for organizations to provide a second opinion, then, they are trying to find all sorts of ways they can control costs to actually improve quality and safety of care. they are still there, trying to do everything they can to improve the health of their employees, and control costs. they know they have to do both, and will for a long time. i thank you very much for your attention and your time, and i welcome any questions on any of these topics. yes, gerry? >> for estimated cost
increases, what percentage of that is health-care reform, and they jump of that is due to legislation. in theory, with more people getting coverage, we are seeing the providers are getting less uncompensated care, and lesser of the need to raise rates. how do you explain why providers are boosting rates even more? >> that is a great question i will repeat it, although i guess everybody heard it, right? we wonder about that a little bit ourselves. i could tell you what they would say. there certainly correct. it is just a question of how iraq -- how correct from different points of view. even though the affordable care act will help us cover another 32 million people, we probably have some more around 47 million people, or 48 million people,
who have no health care coverage, and it might be worse than that, because those numbers are a couple of years ago. we will still be taking care of them. the second thing, and this is really tricky, the more the patients come in the door, who are paid by public pay years, with administrative pricing, which in most instances will be below what they considered their actual cost, there is still the differential, and they will stay as long as there is that differential, they have to make it up from someplace. we, on the employer side would say maybe we should actually be bringing down the cost of care delivery, so that we do not have that disparity. but, we have been saying that for a long time, and it has not made a difference. that is one of the things, or some of the things they might say. what we would like to see is a
combination of everybody working together and saying you cannot continue to rely on the private sector to pick up the slack. we have to change. as the exchange's get set up, and as we have more and more people in medicaid, and in terms of payment, medicaid payment to the actual underlying cost of hospital or a doctor, is the worst payment, from their point of view. there is the biggest gap. medicare, there is a gap, but it is not as big as medicaid. the more people we have in medicaid, which is one of the main ways we are quick to cover a lot of new people, denmark -- one of the bat is how hospitals believe they're not getting one of the% of their cost. >> did anybody here that? the difference between
compensated care, and under- compensated care -- that is exactly it. there are people that would argue that there is none that is undercompensated. >> do you have any ideas of how many employers would lose their grandfathered status because they are making changes under the health reform law? >> well, i guess the question is whether they want -- there is a statement you have to say, that you believe you have maintained your grandfather status. there is a step you need to take. we do not know how many, which is now that most of them are saying that if -- how many. we just know that most of them are saying that if they do not visit this year, -- lose it this year -- the number of
constraints, and, by the way, it could be below the national average, you cut already pay more as employers -- you could already pay more as an employer than anyone else in the country. the figure they look at is whether you increase it. if you were going from charging them 12%, to 18%, which was to be below the national average, you would be out of compliance. we do not know the number, but we estimate it will be somewhere over 50%, and certainly, by the second year, when you have more planning time. by the way, the plan, and this gets pretty technical really quickly, each plan someone offers is separately determined to be grandfathered or not. for example, you might offer two plans. you may have a traditional ppo that you do not mess with very
much, and then you offer a more attractive plan with a savings account, etc. etc., and you did not bother to grandfather that one because you can be very creative with that. you might do more things than you want to do, but you did not want to have to say this is a grandfather plant, and we basically have not made any changes. i am overstating their, but every plant is different. most employers to offer more than one plan, by the way. >> the survey was conducted in may and june. since then, it seems there has been a lot more information on how restrictive the grandfather rules will become and how difficult it will be to maintain that. are you hearing anything from members where that number might be lower? >> they had a pretty good sense of where this was headed. you're right.
there is more detail. it also takes a while to read some of these things. now, i think where they are, is the belief is the next year will be the bigger problem for most. now, they have more certainty, and in this case, it is not particularly good certainty, it is not a certainty that pleases them, but it is more certainty. just to give you an example of what's we and -- of what we and our employers would like to see -- if you were an exceptionally generous employer in march of 2010, you are the worst off. the changes are fixed on the assumption that you are at the national average. if you were more generous, the changes are things like five percentage points. you can not change co-insurance at all. if you're co-insurance is 50%,
which would be really loud, it easily 20%, -- is 15%, which is really low, it is usually 20%. the more you did for your off yous, the worse are. everyone is sitting there saying now, we know where we need to be, they're also saying there is not enough to be grandfathered to be worth worrying about. a lot of things that are in their make sense in the small, individual insurance market, but they are not all that difficult for most large employers. so, it is not very, in all, something that you say oh, gosh , i am afraid on when to lose my grandfather status.
-- i am afraid i am going to lose my grandfather status. large employers are regulated by the labor department for their health plans. they have very, very rigorous rules they live with. i used to administer these at the xerox corporation. i can tell you, but it burned on your head. it is very demanding. it is a lot of consumer protection. there is even a statement. the statement for the grandfather plan that you have to sign, and put in your document's open enrollment, says you should know that if this plan is grandfathered, you do not get the consumer protections you would get in the affordable care act. it would not say that you have the other consumer protections you would get. that is -- there is that kind of disparity in how these things are being viewed in the policy
world, and the people that administer these plans, down in the trenches. >> i am with bloomberg news. i wanted to ask about the survey on cost-sharing. you mentioned in the list of things that employees said that they thought were effective, and that increasing cost sharing, over time, employers are finding that to be less useful. at the same time, the same servite -- survey shows that 60% of the company's plan to reach 63% of the company's you talk to plan 2 -- 63% of the company's you talked to plan to increase the premium. how you reconcile that? >> first, it is two reasons.
they will be increasing their costs because the costs are going up. the percentage is determined by to the already built-i in premium. they may charge 50%, or 17%. they might -- 15%, or 17%. they might go to 18%. they usually do small increments. responsibleple are -- human-resources people are responsible. they want to keep employees happy. the increased cost sharing is not very much, and the increase in the premium is not very much, but those changes are frequently used to encourage people to make choices that employers would like them to make.
so, for example, there is usually a big differential between what an employee pays on a monthly, or bi-weekly basis, for a consumer-directed health plan. i do not have the numbers in front of me, but our survey a couple of years ago found that 36% of our employers charged 30% more -- less than the plan. if they want people to make choices, basically they increase the premium on and hmo and decrease it on ppo's. they're always doing things to encourage people to make different choices. sometimes, the straight forward numbers mask some of those
complexities. that is one of the concerns we have about the grandfather rain. most employers make a lot changes. what we would like to see is an equivalent that would solve the problem. if you have a super-rich plan, and you just want to make small changes to it, but they happen to be some of the changes that would trigger you out of grandfather, as long as your actual equivalent is very high, then, that would be ok. that is what most employers think about -- what is the whole package? what are the tradeoffs within the package? that, again, is one of the problems with regulation, and requirements from people that do not administer plans. they will be looking at one thing. for example, there are a lot employers that cover dependents that are not in the last -- the new list of current dependence.
-- of covering the dependence. the new rules read that you did not have to be a dependent under the irs rule to be a dependent. some rules cover dependents that have no relationship, but they cover them because they are financially responsible to them. right now, that depends and would not be allowed, under the new rule, and, in fact, if they keep covering those on usual dependents they will have to give up what makes them different from anyone in the neighborhood, and that is that you are financially responsible. there are those kinds of complexities. yes?
>> in terms of more plans going in the direction of consumer- directed plans, what does it mean for the provider? what can they expect if more large employers are going in this direction? >> well, the provider should expect that they would have more people coming in with higher deductibles, and they will need to collect those deductibles, essentially. there will be higher-digit higher cost-sharing. what we all -- higher cost- sharing. what we hope is that people will ask questions. if someone is told we think we should do an mri, or a cat scan, and the patient asks a basic question like what difference will it make in my
treatment, and the doctor, or whoever is ordering it, says we would just like to have it for additional information. the patient might say i do not want it. the patient, then, has made the decision. it is not going to effect treatment, and not make any difference, because the doctor has made up what he or she is going to do, maybe the patient would say it is no longer free to me. we hope there would be more questions. [unintelligible] >> and asking questions, and reading the ebo. we know from the plans that exist that people do that.
they ask questions. we do have a lot of information on that. did i answer your question, fully? >> i will follow up. >> sure. >> part of what you were saying was that within that 63% of employers that said they will shift, past -- at least some of the premium costs, that represents a lot of different kind of changes, not just a blunt shift over. >> right. >> the premium could be 1%, but you know there are two -- the cost-sharing, and the pricing of the point of care. the other data would suggest that it is more likely to be on the premium side, because premiums have gotten so high.
we are coming out of 10 years ago, people paying very little because, among other things, the costs were 100% less. one of the things that is painful for everybody is that if you look at a chart that shows what has happened to the dollar cost, which is what we all know -- no one knows -- no one says my plan was up 6%, they say it went up $100, or something like that -- it is not only what it is costing in absolute dollars, it is the flat, or even negative wage scale. the affordability gap is much worse, not just a little bit. two years ago, before the meltdown, and the recession, we were talking about how horrible the affordability gap was.
america could not afford this. the economy is crippling. it keeps us from being competitive. then, suddenly, everything else collapses. if you could chart it, we were kind of going like this, and suddenly, it is like this because the bottom dropped out of the economy. healthcare is not touched by any of that. it is still growing at the same rate or more than it was picked it is like they are impervious to what is happening -- that it was. it is like they are impervious to what is happening in the economy. you have any other questions, comments, thoughts? >> down the road, it might be cheaper for an employer to terminate coverage, pay the penalties that are set under the law, give employees extra money to buy coverage to the state
exchanges -- do you see that scenario developing? >> i think the employers are thinking broadly in two ways. first, they know that no matter what happens down the road, they have to come up for competitive reasons, provide a comprehensive benefits plan today. they are trying to navigate the transitions as effectively and efficiently as they can. i think what could happen in the future is wide open. wide open. a lot will depend on the extent to which we can get a handle, and actually begin to control costs, as the president, and now-gone peter orr said always talked about. also, as people move in and out
of the labor market and our exchanges operating, the exchanges, themselves, become a place that people feel more and more comfortable, and the exchanges are actually doing a good job of managing health-care costs, it all of that is happening, it might look more attractive. it will also, probably, very by industry, or location, and culture. there are places like in silicon valley where there are benefits that are not provided in other places in the country. back -- there are a bill prepared did not want people to be distracted. they want them to be nick -- they are lucrative. they do not want people to be
distracted. they want them to be making money. in places like that, companies might decide to do more, because it might become a more valuable benefit -- a trade-off for cash wages. more on-site wellness senators, programs, that kind of thing. they vary by state, company, and how these exchanges worked out, and what happens between now and then. for something like a voucher program, where some people could go into the exchanges, but not all would, would be right now, looking at a worst-case scenario. if all went in, or non went in, it would be different. i think employers are recognizing what our obligations are today, and the biggest ones are improving health, and reducing costs. they're very pragmatic.
the thing about business, especially employers, they're pragmatists. they live in the real world. they're competing like crazy. for the most part, we are not winning. we know we need to do something about that. we are struggling with almost no job growth. we have had a lot of loss in jobs. there are a lot of questions about how we're going to restart the economy, and actual start creating jobs. some of these requirements play into those concerns. i have heard members talk about how every new mandate is added onto a base, that right now, in america this year, a family of four's medical costs is over $18,000. this is just the claims cost. when you think about hiring, or
creating another job, you have to think about what it costs to me to have that job, and it is the wages, pension retirement, vacation days, paid time off for holidays, and, on average, per active employee, over $9,000 in medical claim costs. we have to change all of those things, to do something about it, but there is not an easy answer in this transition. as ice began, i said this is a -- as i began, i said this is a transformative time. most of us cannot guess what is what happened in a year, but what we know is that we have a path forward that we follow because we live in this real world, and we have to figure it out here-by-year. that is what this survey reflects in the work that we do.
how we get to 2014, and by 2014, how does it look like? by 2017, what does it look like? by the way, we're putting a higher cost increases, and leaned out there in 2018 is the cadillac tax. there are employers, already, who are about to hit it. that is a lot of years forward. if they do not change that quite a lot, there will be many, many employees and employers paying the tax. some of what is costing is the mandate. there is a little bit of a catch-22. we are hoping that every time somebody talks about a cadillac tax, they are reminded that we need to be able to control costs if we're going to avoid the cadillac tax. they wanted to control costs,
but we need to be allowed to do that, and that is what we need to be doing between now, and in particular, 2018. all right. that is a. thank [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010] >> up next, outgoing ambassador to iraq chris hill talks about political challenges facing the back. after that, the funeral of ormoc alaska senator ted stevens who died in a plane crash. and then president obama in ohio
on the economy. on tomorrow morning's "washington journal," grover norquist will talk about the cost of the federal government. and then a look at u.s. attitudes toward drug abuse. after that, a former chief accountant will talk about the new appendage or regulations built and what it could mean for investors. later in the morning, a hearing on the bp oil spill examines the safety of seepage in the gulf of mexico. >> the c-span networks provide coverage of politics, public affairs, nonfiction books, and american history. it is all available to you in television, radio, online, and on social networking side.
they are content any time at the c-span video library. we take you on the road with our digital content vehicle. it is washington your way. the c-span networks, now available in more than 100 million homes, created by cable and provided as a public service. >> christopher hill returned from iraq a few days ago after a 16-month stint as the u.s. ambassador there. he talks about the future of iraq as the u.s. can that mission draws to close at the end of this month. the u.s. institute of peace hosted the event. it is about 90 minutes. >> good morning and thank you for coming out on a wet august morning. i am bill taylor. the united states institute of
peace. very pleased to welcome back ambassador christopher hill. as everyone knows in this room, he just completed a tour in baghdad. ambassador hills had a long career starting with the peace corps and cameron a long time ago. he has been an ambassador in many places including libya and macedonia and iraq. he has been the leader in north korea, assistant secretary of state, so this is the end of one chapter but he now goes on to the next chapter in his career where he will be the dean of the korbel school of international studies starting very soon. we're very pleased to have him here. he takes off shortly cut -- to go to little compton, rhode island. all well-kept secret in rhode
island, the home of the best ice cream parlor in the country, i am convinced. also, watching from a distance from colorado. we're very pleased -- yes. we're very pleased have ambassador hill and hoping he will be able to look forward, with where we're going between this relationship between the united states and iraq. we will have a good opportunity for questions. if there are people in pakistan and their root watching us online. we may get some -- in baghdad and their root -- beirut loten is online. please silencer phones and please welcome ambassador hill. [applause] >> thank you, bill, and thank
you for being to the old u.s. building. showing its age, i guess. i guess you are looking forward to the new building which is about the size of the houston astrodome, one of the eighth new wonders of the world. i am leaving the state department, not only because our view of the atomic has been obstructed by the new building. [laughter] if always liked the view and i did not know that that was liberal. -- literal. it is a great pleasure to be back here. i just had 16 months into iraq. i went into extra time there. i was planning to make it 12
months, but i did try to see if they could be helpful on the issue of government formation, which is a bit of a labor of love. it is day to day of very painful process. but it will get done, it will get done. let me just say that for those who have served there, there is no more exciting time to work in baghdad at war on one of our provincial reconstruction teams. we have a strong team there. ambassador jim jeffries is probably a riding as we speak. i think it is a place where the foreign service has embraced the monumental challenge of the civilian-military transition, and also the transition of iraq
or broadly and the transition of the u.s. relationship in iraq and i am very proud of all foreign service officers who have gone there. as you know, people do not go with their families. instead of living with one's wife and children, you live with a roommate. you fill out form to make sure the room made does not smoke or does not party late or does not wake up too early or too late. it is quite an experience. and you also experience the thrill of getting the so-called duck and cover all our at certain periods -- in fact, we just came off of several weeks in which we have a rocket fired just about every day on the green zone. so you get this stuff in cover, the new people leap out of bed and hide in the bed, and the old people just keep on going. and if you were there for a couple more days, you continue
to do that. it is an experience to live the there, to be sure. if you look at where we have been there and where we're going, that it is definitely going in the right direction. i arrived there in april. i remember arriving at 830 at night and prevented -- 8:30 p.m. and presented my credentials and at 11:00 i presented the actual credentials to the president. at midnight, i sat down to a banquet of kurdish food which included a circuit -- a serving of turkey. and at 1:30 a.m. in the morning, i returned back to my home. at 7:00, i had leon panetta at the breakfast. at 8:30 a.m., secretary clinton arrived. and by the end of the day when she arrived, i said that
tomorrow is sunday. and they said, no, that is the first day of the work week here. getting there grabs you by the throat and does not let you go. it is an extremely energetic, very busy place where you throw yourself in the things. as i said, i am very proud of the americans to come there and continue to go there to make it all work. in iraq, it is one sort of series of problems after the next. when i got there, we were dealing with the fact that we had u.s. troops still at the hundred 40,000 level and we were beginning to reprocess and relocate those cities -- them out of the cities into the countryside. we were turning over responsibilities to the iraqi army. i know there was a lot of concern at that time, could the
iraqi army manage the process? and soon after the completion of this process, there were a number of high-profile bombings -- that is an awful way to put it. but the point being that took down the foreign ministry and the finance ministry and a single day, and a couple of months later, there were additional bombings of public buildings, and then again a couple of months after that. and yet the iraqi military stepped up. if you go back and google the moments in august and october, read the mainstream media on them to see what they said, you would see a lot of argument that somehow iraq is not going to survive those bombings, it is not going to be there after a while. it would imperil everything that we were doing, and yet if you look at iraq today, it is still very much moving forward. i think there is a resiliency --
in any society, it is difficult to predict, but in iraq society, people need to understand it is very much there. as i left last week, i checked and a number of u.s. troops because when i arrived it was over 140,000. when i am leaving, i realized it was around 55,000. and it was on a glide path to make the 50,000 level by the end of august. the u.s. troops have already turned over -- already switched their mission to moving from combat operations to an advise and assist brigades, assisting the iraqi military -- that has been the mission for several months. it had been implemented in the south and going to the rest of the country. it is not like anything big will happen on the 31st. on the 31st of august, it will
look like that 30 of august. but almost in most places like the 31st of july and the 31st of june. i would say that the securities such operation which is very difficult, one that is not going to be at a completely satisfactory level -- but it will continue to improve. the iraqi forces are capable of handling the security problems. they will have problems. there will be mistakes. we will make mistakes in how we handle it. they will learn from their mistakes as we learn from ours. i think you will see continued improvement in the security situation. i think similarly we are in the midst of a very difficult process of government formation. this is a process that if you have the stomach to follow every day, letter its impact of this
small -- you had better get some pepto-bismol. you thought people would be in one position on tuesday and they are in another place on thursday. it is hard to follow and sometimes hard to stomach. but one has to step back from that knowledge in and look at the overall situation of where iraq is and where iraq will go. with respect to the government formation, as difficult as the process and he did as the processes, i recommend not trying to follow it from the press because you will find it even more heated through that medium -- you will see that at some point, like every country, iraq will have a government. the real question for us is not
whether they are going to have a government -- they will. the question is -- hallett is the united states going to interact with this country? can we say that we're going have to long term special relationship that we have been talking about for many years? a couple popsicle i was privileged to go to the korean embassy and meet with people who were the first educational exchange people with what later became the fulbright program in the 1960's. i ask one of them, what was the biggest task for you to come to america in the 1950's? one of them said to me, it was to convince americans that korea is not a war. korea is a country. about a month ago, i had the occasion to meet with the iraqi fulbrighters, and i tell them
that one of your big tasks would be the same, albeit a struggling country with many problems, but a country that is very much in the middle east and will at some point us in its role and responsibilities commensurate with that side -- its size and very dynamic population. it is today a country under majority rule -- shi'a who are the majority there among the sunnis and the kurds, they have the prime ministership, and it is hard to predict who will have the prime ministership in the future. but most iraqis expect to see that the prime minister of iraq, the next prime minister will be a shi'a. many americans look at this and say, does this mean that somehow sectarianism has
prevailed in iraq and that your identity as this go forward is somehow a setback -- as a shi'a is somehow a setback from the suttles decided that one was to create? i would argue that the civil society in iraq is growing. the tendency is to have more secular than sectarian tendencies. but the political identity will be an identity based in the time being on sunday, shi'a, and curtis affiliation -- sending -- sunni, shiite, and kurdish affiliation. when people look at the united states and save police states and read states and regional identities, i think you can argue that politics is going to
be based on some kind of identity, and as long as she got, sunni, and kurds know how to work together and they can reach across the identity divide and cooperate, that this is not something that we need to fear. and when you look at the politics in iraq, you see shi'a having differences with other shi'a, you certainly see senator having differences with other senator -- sunni having differences with other sunni, and the overall structure is not to be. baez. i think that we can work with the overall structure in iraq. when the government is finally formed, when iraqiya prevails, whether the state of law, or
some amalgamation of other groups, but when it emerges, if you will see that the kurds will have an important role in the baghdad government. you will see that the city's -- sunnis have an important role and the shi'a have an inborn a row. no one is suggesting that somehow if you can run at iraq -- that you can run iraq except through the three components. i think that that will get done. from the point of view of the united states, is this country going to embrace the democratic principles we need them to embrace? even though this political process set in very difficult, if you look at what happens in iraq in terms of the free press and freedom of speech, there is a lot that people have absorbed the concept of these individual rights. carter's human rights abuses in iraq?
of course, like any country, but the question is not whether there are abuses but what is the trend line? is it getting better or worse? most observers would argue that despite the horrific violence which unnerved many people, overall the trend lines in iraq for human rights are improving. what is iraq trying to do with its neighbors? is iraq trying to be a stable and good neighbor in the region? there again, you could look at this equation and take some sense of optimism from the fact that iraq has worked very hard to tamp down regional problems. there places where iraq needs to do more, but it does not mean that iraq is setting itself up in any kind of historical adversarial role with its neighbors. in fact, it is looking for ways that it can work better with those neighbors.
i think all of the ingredients would argue for the fact that the united states can have a longer-term and a special relationship with this country. it is a relationship that is going to depend on our people's willingness to see iraq more -- not as a war. it depends on our willingness to work and to stay the course in iraq. obviously we are facing many budgetary issues today. it is not easy at all, but when you look at the overall national security costs of our staying in iraq, every time a stryker brigade leaves iraq versus standing up another rule of law module, something like that, the overall national security cost for the united states are falling dramatically. even though the civilian component is coming up and the military component is going
down. this is not some never-ending obligation. rather, we can see that overall the allies for this country -- our outlays for this country are falling and it will take a few years, to be sure, but we can look forward to the days to win iraq will be self sustaining, will be able to pay its bills, and whether it is eight years or 10 years, it will be in a position to pay all this bills and be a substantial economic player. when i got there in september -- april, there was a lot of talk about the hydrocarbon law. we made that judgment at the embassy, we said to ourselves, what is the purpose of the hydrocarbon law? it is necessary for foreign investment.
i think what we determined and i think the iraqi government is determining this, if we want foreign investment, why don't we get foreign investment? we went ahead with some oil contracts, production contracts and oil service contracts with major oil companies, and by that time this process was done by november 2009, iraq has now contracted with 11 major companies representing all of the major oil companies in the world. well companies from china, russia, the u.s., britain, france -- all of the countries of the un security council, but many others as well. if all of these cringe -- all of these contracts are realized, or ron will be producing oil in the
neighborhood of what saudi arabia produces. in other words, it is going to be a major player in the oil market, a year with its own oil. this was never about the u.s. taking its oil. the u.s. share of these contracts are fairly small. we had a big one, but only two of the major oil companies are actually u.s. iraq will be a major player. it will be economically successful, it is a matter of time. you can see the economy growing day by day. you can see a nascent development of basrah, you can see the developments in kurdistan. once i went up to see a shopping mall there which had a food store on the ground floor, and on the third floor there was a bowling alley, believe that are not. things are happening in iraq. they are -- there are continuing
pockets of very difficult security issues, mosul is one. if you talk to the security of there, you'll hear that it was never handled properly. there were always issues up there. but the iraqis know what those issues are and they are managing security and i think that you will see that in these remaining areas for security has been a problem, you will see it continuing to turn in the right direction. the u.s. is looking forward to this relationship with iraq. it will be based on these economic relationships, and it was quite gratifying to be hosting in iraq some 22 u.s. agriculture firms that were there. there will be another major trade mission this fall. these are firms that are in the infrastructure and telecommunications.
not necessarily an oil, so you'll see some diversification in iraq. i think we have stood up the largest academic exchange program in the middle east. the government has been very committed to it, and when you look at the amount of bonds that the iraqi government has put out -- the amount of funds that the iraqi government has put out for outgoing students, it is the highest in that region with a bilateral program with us. i think that we look to develop across a range of cultural activities. we work with their sporting teams, and we have looked to make sure that we have a balanced and full relationship with iraq. i think the iraqis want to make sure that we care about iraq, and not just as an element of
the war against terrorism, but as a relationship with the country and its people. and i think we're on the way to doing that. a government. i am not going to predict when. i can predict that it will be difficult and painful, but we will get a government there, and i think the u.s. and look forward to a very important relationship with this country up 30 million people. i think it is a country that will be, because of its mix of , and occurred -- kurd, if you look at where it lies, next to ron on the one side and gnomon on the other side. turkey and saudi arabia,
therefore if you see the importance for u.s. policies. i think there will be a lot for our diplomats to do their, and i want to stress as the u.s. military draws down, the u.s. interests in iraq remain. we have very much interest in their success and thanks to their own efforts in terms of these zero contracts, it is not just the u.s. but other countries that have a great interest in iraq posset says. one of the things that we will have to do when there's a new government is try to go out to the regions and make sure that iraq has as good relationship with the region as it can. it has to overcome terrorism and be able to come over dictatorship and a sense of being estranged from his neighbors and from the region. i return from iraq from reels -- which they sit -- with a real
sense of optimism about its future. if you do get enmeshed in the day-to-day events, but when you step away from that, if you can set the progress. we have gone from 140,000 down to 50,000 troops in just the 16 months that i was there. we have gone to a situation where their local governments is very much engaged in the process of in getting -- of getting investors in. we have many relationships with their universities, banks to the security situation. i've been able to travel outside of baghdad into all the provinces of iraq. i am sure my successor will be able to do the same. i think when we look at where this place is began -- where this place has been and where it is today, i think you can see it as the future. how about some questions? >> thank you very much for that
overview. a review of what has happened during a period there and your expectations about the future. let me open it to a question. we're very pleased that the iraqi ambassador to the united states is here with us. welcome back, sir. if you like to ask any questions, you have the first opportunity, but i will look for your hand. and the first question is in the back here, sir. there is a microphone coming to you. >> good morning. my question to you -- where does national reconciliation play in the priorities iraq? you mentioned the hydrocarbon law has just contractual think,
while it is really very deep. >> i think the effort at getting this on to the framework was actually one that was impeding the actual purpose of the framework of law. he points out that the point was national reconciliation, but the other purpose was attracting foreign investment and getting it moving. it did not seem like the right approach. now the foreign investments are there, and the need for this framework law is clear. they need to do something about the institutional at the structure toward dealing with oil. it is also -- moving on the contracts also has the effect of getting the problems of contracts, those of also moved
in there has been agreement on those issues as well. i think the result of just getting the process moving has resulted in some success in terms of, first of all, investment and national reconciliation. i think after reconciliation needs to be looked at more broadly than just the hydrocarbon law. they are a variety of issues, including territorial issues, on the edge of the krg, the so- called disputed internal boundaries. this is something the u.s. and has been working in the u.s. military has started to facilitate per confidence- building measures, including joint patrolling and checkpoints. these have been very good initiatives, but frankly much more needs to be done. not only in terms of confidence-
building measures, but including trying to address the governance issues in these disputed territories. i think that is something the u.s. can do. in fact, the u.s. can be helpful in doing, and the un needs to be engaged in this, and they are. i would see the u.s. continuing to engage. we will have a person doing the northern issues who will be engaged very much. he is sitting in the room, george, great to see. we've got to get you to iraq. what you doing here? [laughter] i think we will continue to be engaged on that. when you look at some of the anbar, they are
unni.hi'a-sendi if you look at some of the problems down in karbala, they were shi'a-shi'a. against makingn the national reconciliation is a sunni-shi'a issue, for a shi'a- curd issue. the need to strengthen their independent judiciary and strengthened the ability of a service-providing institutions, because at the end of the day, what the iraqi state from their government is not -- need from their government is not sectarian cheerleading, but the provision of more services. i would like to think that some of the pressure to get on with government formation is coming from the public that is
demanding that they get on but the process of providing more services to the people. electricity production is still woefully low. they continue to have water issues. investments in these areas need to be made, and the trouble with these issues is you invest one year, and it will not be for a couple of years until you see the return of your investment. >> bank. we have a very wet terrain the came here with, as marines did, with no umbrella. >> thank you, ambassador taylor. it is a long time since we work together. -- i spent four years altogether in iraq.
my question is a little bit complex and may touch upon some things that most of the people do not know about, so forgive me. just give me 20 seconds of back room. it strikes me that the problems we're seeing in the formation of the central government stem from the fact that constitutionally the constitution of iraq is designed to serve on monolithic totalitarian regime we have ministerial control and budgetary a party. -- budgetary authority they administer the budget right down. there'd been some effort to overcome that with regionalization. the tension at the center stems from the fact that even though the provinces and the regional governments are fairly stable, politically stable, the center is struggling over those
ministries -- who is going to control the money, including the hydrocarbon sales? so with that fundamental tension between political stabilization at the sub- provincial level and the struggle for power at the center we see playing out, at the uc them overcome in that? the eupepsia resolution of that any time in the near future -- do you see any resolution of that any time in the near future? we saw a breakdown between allawi and others. this seems to me to be a big part of the reconciliation, and the stuff that goes on what bombs going on, that can be overcome eventually. but that tension at the center does not look like to me it is going to resolve itself very easily without modification of the constitution. can you comment? >> i think they can achieve a
new government without modifying the constitution. one of the issues that has come up is the question of whether the constitution, which inventions of council of ministers, whether there is too much authority that has gravitated to the prime ministership instead of the council. their situations where some security structures that should be on the the ministry of interior moved to the prime minister. now what you are nuri al-maliki , you would say that you do not want security structures under me. but we were facing a life and death insurgency and we had to move fast and deal with a tough situation. but i want them back in the ministries where they belong. and what i also want, if you are nuri al-maliki, i want to say that not only is power
redistributed, but responsibility redistributive. what he does not want is a situation where you create a power-sharing government and then people from another party say, well, that is up to the shi'a, they are in charge of this. froms to say, if you're iraqiya, you're going to have ministry x, and you need to take ownership and responsibility for these issues. part of that is the responsibility sharing and i think maliki has a plan for that. i would disagree with your notion of the constitution being a totalitarian concept. but that many countries in the world. there is a central issue that everyone deals with, the power of the center versus pyrites of the regions. in the country -- rights of the
region. even in our own, you have this problem. key issue is to find a balance. certainly in iraq's case, but there were concerns that the draft would be toward too many powers in the region's and this would weaken the center and create a situation where the cohesion of the country might suffer. they tried to deal with that in the constitution and make sure that there was a strong center. when you look at the kind of issues that need to be addressed in iraq, the investment laws and the various problems of services and things like that, a case can be made for needing a strong center that can do this. but when you look at the issues -- you alluded to, and anytime you visit a place where people
will say, we do not have -- our provincial councils are not properly funded. the money is in baghdad and you have to go to the ministry, and once you're there, you will not get the services. it is a problem and something needs to be corrected. but the provincial powers laws can address some of these things. i do not suggest that there needs to be a new constitution. but like any country under a new constitutional order, they had to strike the balance, and it is not easy to do in any country, and it is especially difficult to do in iraq were there were centrifugal forces at work seeking to pull the place apart. when we look at some of the things that need to be done in the context of government formation, we felt that a lot of the things that could be done
did not involve constitutional changes. i think there are a lot of things that could be done by statute. one of the problems with this long period of government formation, technically the council -- the council of representatives is in session but it is really not. no one is proposing new laws, no one is moving ahead. that is another reason to get moving on this process. >> i'm going to recognize right here, but maybe you could follow on this issue? the issue of distributing powers within the center. there have been proposals recently about a new political committee for national security or what they call the national council for strategic parts that would establish a fourth center of power. each group would have one of the minister's. and this would be at fourth. what is the current thinking on
that? >> that is different from the issue a region versus center. but when you look at -- you have the main political groupings, you have a concern about how power has evolved under nuri al- maliki, a lot of power coming to the prime minister in your major concern that the prime minister position is a looming large. and then you look at some of the other elements of the system, including the political committee for national security, where you have the prime minister convening a meeting that looks like the presidency. and leaders of the parliamentary blocs, there is a moribund that has not been called on a regular
basis. you start looking at the question -- could that element be strengthened? and strengthened in a way that you preserve the prime minister as commander-in-chief, but strengthen the ability of the broader government to be providing policy guidance. i think a number of people have looked at this with the understanding that you do not want to go into a new constitutional arrangement. i think that feeling is that you could create a suit up -- souped -up political committee, and put it in statute, where it was done through an agreement with people but not through a statute. if you look at what that they
have got the right national security structure for what they are dealing with, i would argue that they could make some improvement there, but i will argue that tested the united states in 1947 put together the national security act without changing one word of the constitution, you can do something like that in iraq. but there is a mountain of mistrust to deal with. there is a zero some notion -- sum notion, that if you do x, you must somehow be weakening y. when-when is considered -- win- win, they do not quite get. -- get it. [inaudible] he said that it they get to the
playoffs, he will be back in. he may be on crutches. >> associated press. you talk about security problems. it is the situation -- do you have concerns that that might be one way that iraq might turn? >> am i concerned about how they might turn? >> is there the danger of a coup in iraq? >> i don't think the issue of a coup is an issue that comes up or is on the table. i do not think that there is any scenario -- any realistic scenario that would involve that sort of problem. the kind of problem that they have it is continued terrorist attacks. i do not believe that terrorists are using car bombs in killing women and children
because they're dissatisfied with the flow of government formation. i do believe that iraqis have an expectation that they will have a government. frankly, it is the kind of place where they expect a strongish government. the longer that this goes on, the more people ask the question whether it is affecting the security situation out on the streets. i must say, the police are working very hard. the army is working very hard. our forces are working very hard with the iraqi forces. i cannot personally. two examples where government formation is impeding the law- and-order efforts. but certainly one was to seek government formation sooner rather than later, and security is one such region -- reason. >> we have a question from an iraqi in baghdad to ask this
question on government formation. what happens if no government is formed soon? will the united states intervene? >> thad allen have asked -- what does she mean intervene? u.s. embassy, i can tell you, has been working daily on this issue. there have been days when the political counselor there, gary who left just a week ago, he would have upwards of 10 meetings a day with every single iraqi political party or political coalition. i myself would frequently have meetings with all the leaders. almost on a daily basis. some people would call it intervention, i would call it being helpful. it is not in our interest to be
pushing ourselves on people who do not want to assemble. -- want us to be involved. i think we need to be respectful of their sovereignty. if you look at air ron's efforts in iraq, they have not done very well because they have not observed the first rule which is to be respectful of the country's sovereignty. i think we are respectful and as such i think we are listen to. but we need to be very careful here. there are a lot of minefields in that country, literally and figuratively, and we do not want to put ourselves into the position where we appear to be somehow taking sides in a way that will not be understood by the iraqi public. to the questionnaire, i will tell her that there will be a government. i cannot think of too many
places, maybe somalia is an example, but not too many places where there have not been a government so there will be a government. and it will include all three components, the question is, it can do what -- who can do what? >> i am with the american kurdish affirmation that work. -- information network. the bible is not included there and sometimes it should be. some things say that tripod should be set next to an iron kettles. -- should not be set next to iron kettle. [unintelligible] do you think the arab
population is going to be respectful of the 20% of kurds without a balance of power? >> i lost you on the clay pot. [laughter] kurds and arabs have been neighbors for centuries. i think the kurds have achieved of broad autonomy in the republic of iraq. and moreover, the kurds had been part of the solution rather than the problem. i think the fact that president barzani is one of the most respected politicians in iraq, and the fact that all the political leaders in baghdad, whether allawi or maliki, all of them have been able to discuss th