>> again, assuming change like the cbo option, they are the retirees immediately feel the impact of that premium increase. so what would they do? if i were one of them and i had an alternative option to pursue, alternative coverage option, i would do that, adding adverse selection's to what is already a high-cost option because adverse selection has been going on. so you could predict access only plans would be unraveling as

these changes come about. and then finally i mentioned a minute ago just in passing, and i can elaborate in the q&a that you could engineer a lower spending limit and still not safe employers money if you don't count toward the beneficiaries spending limit under medicare the amount that the employer or the union plan pays. so if you do that, and i am a retiree, i'm ask myself, well, gee, why should i continue paying a premium. before him have been out of pocket limit under the employer plan but now i can get it under medicare. why do i need to keep paying that premium? or if i'm the employer i said, you know, this is one more reason why maybe it doesn't make sense for me to offer retiree health plans. we have good other coverage under medicare, we now have a new spending limit. i could save a lot of money if i eliminate this plan, i could save a lot of money even if i give a portion of that savings

to the retirees to use for their medicare premiums, or for some other purpose. so i think adding the spending limit diminishes the value of the employer plan. i think employers probably would only be more inclined to keep it is the spending limit under medicare were so high that they felt that their retiree population was not protected by it. so there's potentially a lot of disruption in the way of a very well intended set of cautionary changes. i think some of that could be mitigated, obviously, if the changes were applied to future retirees and your grandmother or protect existing retirees. but there's a trade off. if want to avoid disruptions, you're not going to realize the same level of savings in the budget window. and if the changes are instead implied to all current retirees, then i think would be important for lawmakers to consider ways at least two transition benefit our transition arrangement where

you guarantee access without underwriting. so that if a retiree, for example, has to switch from access only employer plan to an individual medicare plan, that they have that option without being penalized for the health status. and, finally, i just want to come back to some things that joe said, because this concept of having skin in the game, which was one of the reasons given for changes in cost sharing which was not on tricia's slide, but the concept of skin in the game actually develop in the private sector in the 1990s and it developed with respect to active employees. we all know that design and concept has expanded. but i think it's very different when you're trying to apply that to retiree population, because of the volatility that they face for their health care spending, not only direct health care spending but also other health related support services that

are not covered by medicare or by supplemental coverage. and the amount even with medicare covered services, there are as much a couple at age 65 wouldn't have squirreled away around $200,000 in order to pay for their lifetime retiree health costs. i think we also need to remember that there's volatility for retirees on the income side, and it's a downward volatility. obviously, a lot of retirees may be spending down their assets but increasingly a lot of retirees are getting their benefits, not may be federal employees but in the private sector, getting their benefits from defined contribution plans where the account balance, the money that they have available to them varies with the market, with the asset allocation, and so those kinds of fluctuations in income compound the concern about volatility that joe was

talking about and the need to have more security. so i guess i would close i saying, if supplemental coverage, and particularly retiree health benefits are to be changed directly or indirectly, for the purpose of medicare cost sharing, the preferred approach in my opinion would be to try and find ways that would not add further volatility to what is already a kind of risky business for retirees and their health care. thank you. >> great, thank you, frank. thanks very much. thanks to all the panelists. and now we get to the segment of the program where you get a chance to join the conversation. as i mentioned there are green question cards you can use to query one or all of the panelists. and there are microphones at either side of the room. the one on my right is way on

the other side of the rim. so you will have to strike out early to get to it. and i'm pleased to recognize as our first questioner, comment or, someone i need to identify not only as the president of the national coalition on health care, but also a member of the board of directors of the alliance for health reform, and i'm talking about john who is also no stranger to the senate always. john? >> thank you, ed. i want to start by thanking the alliance and kaiser for an excellent, excellent discussion. this is a tough area. this is not a simple area. and i personally have a lot of sympathy for the effort to deal with he fragmentation of medicare. it does not make sense but no one would design that program today. however, i want to make two kinds of comments. one is on messages from focus

groups that i've reviewed over the past two years, trying to test out some of these ideas were seniors. and i think it's fair to say that the idea of a deductible that comes every january after you've just spent christmas with your grandkids is a nonstarter. there's simply no way to sell that to retirees. now, i do think that retirees understand that maybe there should be some cost sharing at the point of service, but the deductible is just an impossible sell is what i can report. now, i'm not saying it's bad policy. i'm just saying a flat across the board approach is a very difficult one to convince seniors that works. so i much more interested in the kind of variable benefit that she reported on from the bipartisan policy center,

particularly something that is keyed to the value of the benefit design. and i applaud the idea of exempting physician offices, but here again from the focus groups, most seniors don't decide to go to the hospital. that's not a voluntary decision for most people. and so they don't really get why they should be charged for something at somebody else's decision, not theirs. so i think this becomes quite difficult, and particularly when we obviously need to save money in this program. so i have an alternative approach to suggest, which is i think not just seniors but all of us need to be more engaged in decisions around the care we receive. and people need the tools to become engaged, and particularly seniors because they are the most active to

compare one procedure with another, one doctor with another, one hospital with another. and we all know that prices and quality there. sometimes quite substantially. so we need transparency in the system so that people can understand that there are consequences to these decisions, and they have choices that have a real impact. and secondly, much of the effort to change behavior by seniors i think should not be so much economic as guidance. people need guidance, and the best place i think would be the patient centered medical home, where there's a care team that knows the whole situation and can counsel people as to how to appropriately utilize this system. so i'm just arguing for a broader approach. we do need to simplify medicare.

we do need to think about what the proper role is of cost sharing, but that's not the only tool we have. and, in fact, i think seniors would be much more open if we provided some additional tools to help them be better patients. thank you. >> thank you, john. anyone want to chime in on any part of that? job? >> i think, you know, certainly our work with seniors and people with this those on medicare bears out that they do need more information, and they want more transparency in the health system, and that the complexity that they see in the health system isn't always, or frequently isn't the actual medicare benefit, or benefit structure, but rather the structure of health care delivery system. so i think the idea of a patient-centered medical home, the aco structure, some of these yet to be proved but on their way and certainly scaling up.

i think they are the kinds of things and the kinds of experiments that we need to be doing in the medicare program in order to give seniors and people with disabilities in medicare that place, that home base and that information agent. because i think a lot of consumers now are looking to their providers for this kind of information. they also, what i think will be interesting over the course of the next few years if doctors and providers typically have been seen as can kind of white hats, you know, it seems like the insurers versus the providers. you've got it coming together of insurers and providers, in a mix of payer and provider now. so maybe that's a getting a little prayer, i don't know, but you will need i think, consumers need to know that an immediacy that and that structure needs to be transparent and they may need other assistance in navigating

that. but certainly i think that can help with the utilization issues that we discussed, and also in making sure that folks are getting the highest value and highest quality care, but we've got a long way to go and there will always be i think a large proportion of seniors, particularly folks over 80, over 85, that are going to need a lot of assistance in navigating what ever system would come up with. they are not going to be their own information agent in many instances. >> okay. >> barber, the coalition for disability's health equity and the fiber myalgia and chronic pain association. i'm concerned because you are talking about disabilities and seniors in the same breath, but people with disabilities who retire on disability are not eligible for medicaid insurance. there are people who are dual eligible with a 500-dollar deductible a month before

medicaid picks up. sometimes-it. so in figuring, and doing these studies, is anyone taking that anthatin consideration because f these people are very low income but not low enough to be covered for everything? and don't have the options. they're paying dollar one and dollar to because there's a medicare. so our studies taking that into consideration? >> i'll defer to trisha and juliette in terms of the work that they've done, i think you raise an extraordinarily important point. and that is that we often confuse, or at least fail to recognize, that there are real differences in that population are serviced by the medicare program. full array of issues in terms of impairments, those because of age or disability. and the attention both to the mix of services as well as the financing of those services is

one that has not gotten the kind of discussion or attention data should have. the issues with respect to the very low income, people better tools, people that come in because -- even the complexity of the program and the method by which you qualify and the benefits of better of able to you depending upon the basis of her qualification, complicate a complicated question. and so your point is right. we haven't paid close enough attention to it. and as we look at restructuring and look at what the protections might be, that is clearly a population we need to spend more time on. i'll turn to juliette in terms of the kind of work that form the basis of some of the research as well. >> i think sheila answered your question perfectly to our studies don't actually address beneficiaries with disabilities separate from the traditional population overall. i think you raise an important question.

aside from these proposals to restructure medicare cost sharing and change the rules of supplemental coverage, specifically with regard to medigap, looking more specifically at how the medigap rules are different for people with disabilities than they are for people aged 65 and over on medicare is an issue that our studies don't address but it's certainly an issue that is worthy of policy makers attention. >> kind of like if you want to find out what could happen to seniors if you change medigap, you can look at the disability population since they don't have medigap. thank you. >> joe raises an additional point that i would raise. and that is i think there's increasing interest in looking at how the states are dealing with some of these issues. because of the unique nature of some the state programs whether it's new york and others. and so in looking at sort of these solutions and looking at those unique populations, i think would benefit from understand whether states have stepped in to try to address some of these issues. >> some states do have open

enrollment in their medigap plan for people with disabilities. so that's a piece and you're right, no federal open enrollment. i think the second thing is, we're hoping with the coming of the aca exchange is, and certainly medicare rights center's and we work with a lot of other groups nationally to try to make sure as medicaid programs are streamline both lment processes, that the programs like other programs that help low income folks are also part of that streamlining part, inserted into the exchange which is hopefully the brand spanking new computer system, new york and other states are revising and updating the system that have been around, welfare. and so hopefully it's a new front door for a lot of these programs. but you're absolutely right, there still needs to be, it's not consistent nationwide and is

not going to be anytime soon. so when we are looking at federal proposals to really streamline or improve medicare, we've got to make sure that it is there for people that are disabled and under 65 as well. >> this is one for frank. frank, you talked about the effects of benefit design on different employer plans but you also mentioned the surcharge. can you talk a little bit about what the surcharge, how employers might respond to a surcharge or what that might mean for retirees? and other differences between employer plans and medigap? because some of the proposals would have a surcharge on both. >> yeah, i think that's a great question, and one thing about it is surcharge is a concept that sounds really easy, doesn't it? well, just add that the and then we will have this effect. but then when you start to get

beneath that idea it gets really messy, in my opinion. for example, what triggers the surcharge? is any kind of supplemental plan? well, that wouldn't make a lot of sense because you could have high deductibles supplemental points that don't have big utilization affects. but would it be only first dollar plans? well, how do you define what a first dollar plan is? so just a regulatory mechanism to try and differentiate among different kinds of supplemental plans for purposes of a surcharge i think is scary, but beyond that i think if you try and have a uniform surcharge on all plans, then you really don't have a policy justification for that is the idea is medicare utilization. the other question is, on whom is the surcharge going to fall? there's one idea which you should put in excise tax on the plan, but there's already an

excise tax on high-cost plans that is built into the affordable care act that takes effect in 2018. and it will start, employers are reluctant how they will change their retiree health designs to live within the gap. so now we will have to excise taxes and i don't know how they will correlate. if it falls on the employer, you can imagine what the effect would be. the employer is not looking for an added cost increase so the reaction i think would be pretty significant. and then if it sort of something where you add on to the retirees medicare premium, their part d premium, kidney that's another level of complexity that makes my head spin because neither have some of the employer or somebody has got to give a valley of what their retiree health coverage is, i would guess. and we know that employers are not happy about having to report these values.

they are quite burdensome. and then you can have life changing events that would affect the determination of what that surcharge would be, ma or would it be a tax on the retiree and subject to the income tax rule? so i think as i said at the beginning, once you get beyond the idea of, gee, a surcharge is easy and we just impose a fee, it becomes so complicated that i think from the standpoint of retiree health plans i do see a lot of problems with it. there's kind of a backdoor way of avoiding a surcharge and i think maybe it's embedded in some of the proposals you've heard discussed here which is to say, okay, we will have a surcharge but we're going to stipulate what the design would be of the retiree health plan. and if you do that, and certainly congress could do that, but it would be a very significant departure from all the history that we've had where

these are voluntary benefits, negotiated by labor and management, and just offered by the employer. and these designs have evolved and they are very different for different sectors of the economy. and suddenly if you're going to have a federal definition of what those plans have to look like, you could do it, but in terms of the impact it would be a very big, big difference in what we assumed. >> got a related question, frank, and i don't know whether you're the person who wants to take this on, or some of our other panelists. the questioner writes, both first and second presenters actually, stated that first dollar medigap coverage drives up utilization. please describe what, if any, research the competing hypothesis that high user beneficiaries, i.e., sick

people, self select into first dollar coverage? and that's what causes the utilization rates for medigap policies to be higher. or are those the same thing? >> now, i think those are sort of two competing arguments. i think the questioner sort of answered his or her own question. you know, there is research that suggests medpac summarized this in a recent report, that there is higher medicare spending, higher utilization among people with medigap policies. but then on the other hand, there is this belief and i think there's research to suggest that people who are sick or are purchasing medigap policies because it does provide them with the sort of peace of mind and the protection from the medicare cost sharing requirement that would otherwise be relatively burdensome if you have relatively high medical needs. so i think there has this

question if you impose these restrictions on medigap supplemental coverage, are you penalizing people just because they are sick? are you penalizing them, are you making it harder for them to get assistance with medicare cost sharing that they would otherwise be unable to afford? but they're willing to pay for medigap premium in order to get the financial protection. and most people with medigap policies have more generous first dollar policies as opposed to some of the other medigap plans designed that we've seen lately that don't pick up as much of the costs of the medicare cost sharing liabilities. so i think this is what we face in what needs to be reconciled with, if policy makers were can move forward with this type of option. >> so this is a related question. do any of the proposals have

protections, co-sharing increases, written results in people not getting necessary care? in other words, other safeguards included in these proposals that would make sure that the co-sharing were to prevent unnecessary care, but doesn't indeed somebody from getting necessary care? >> you know, i think the proposals are confronted with the same issue that we are confronting in the current program, which is there have always been concerned as to whether or not even with existing cost structure people who delay or avoid care because of the costs that are going to be incurred. i mean, a lot of the support programs, were developed in fact to address the concern, particularly those with low incomes didn't have the capacity to essentially finance that first step. i think in the constructive bipartisan policy center

proposal we at least acknowledge that in the context of having this, it was excluded from the deductible so you don't have to essentially meet the deductible of 500 plus dollars when you walk in the door. you have essentially a fixed co-pay for your visit to the doctor. again, recognizing that the majority of medicare beneficiaries in fact utilize part b services is a grossly small percentage, utilize part a. but again there was a tension to that question also the attention -- between 100-one and 50% of the poverty line who currently don't benefit from a federal support in terms of cost sharing exposure. so again i think this is a problem with always confronted. it's a question of whether not any kind of requirement essentially delays or prevents the one from securing care. commonwealth and others have done work on this question. it comes down to the question of insurance, what difference does that make and acknowledgment and in absence of insurance, in fact

people delay. the same issue with respect to cost sharing. so i think it's a problem we confront now with existing program and will be a problem we confront going forward in terms of how we restructure what that benefit looks like. to john's point earlier, people now face is absurd part a cost on an episode basis which is this bizarre construct of a 60 day, you know coming essentially pay it if you're hospitalized, then you don't pick if you're are within that 60 days but then you pay begin and another 60 days. so i mean people are confronting cost-sharing problems today but many of them have protections, financial security and the purchase of coverage or it's available because of their union or because of their retirement plan, or because of medicaid. but again this is not a problem that is new to us. it's a problem we continue to struggle with which is what the problem is.

spent a lot of these proposals, some of them don't try to mediate between that at all. there just simply shifting costs right onto consumers and there's a nice savings number at the end of them. i think the commonwealth part of the proposal probably gets the closest and friends from the beneficiaries perspective with a lot of elements that sheila has talked about. and i think also as we know from this commonwealth work, many other countries with national health systems have first dollar coverage and use other mechanisms to calibrate or provide a disincentive for unnecessary care, mostly for provider payment, control and provider directives. it's a much more directed health system in that regard. >> joe, there are two cards i can coordinate at the same time because you mentioned part e and i think a lot of people in the

room have not heard of part e. so can you describe what is part e? how is it different from medicare vantage? >> part e and medicare essential, unfortunate are not expert on this. i really to refer you to the commonwealth slides and report on this. there's a bit of a change in the proposal. recently, but basically what it is taking parts a., b. and d., and combining them in a public government run program. so it's not communism you would say oh, that sounds like medicare vantage but that sounds like medicare hmo. yes, but those are run as in a white private insurance companies under contract with the federal government. this would be a federal program. the peace here of course would be that for the first time you would have a public part d plan. right now as you know part d, prescription drug coverage, is

applied only through private health insurance companies. so it would be bring those three things together to a lot of folks are in the medicare vantage broken up one of the reason there in the medicare advantage program with these private plans is because they like the simplest of the of having all those benefits kind of urge to give the a lot of the streamlining that we're talking about that would occur in a government program occurs in medicare advantage plans. they like that. but they don't like the leather network of doctors or they don't like some of the care management or medical management that occurs in medicare advantage. they don't like some the geographic limitations but they like that simplification, if you will, in the kind of one-stop shopping you don't need a medigap plan. so this would basically, part e or medicare such would combine parts a., part b, part d, and you would not need a medigap plan. there would be higher premiums.

so it wouldn't be the same premium structure for all of that because you'd be giving supplemental coverage. for i think one of the components, for example, they would continue to be co-insurance for part d, i think 10% coinsurance. so it's another, we didn't go through it in detail, in our slides. it's not talked about a lot on the hill, it's like a viable proposal because even though it has a significant savings associated with it for a variety of components, about 183 billion i think over 10 years, it's seen as well, we're going to put all this under the government including part d and a lot of folks like the party program over here on the private side. but it is a wit way of getting o the supplication, this streamlining, and saving money at the same time given the components of there. >> and i should come just a small commercial. a few weeks ago we did everything, some of you were

there i believe, that featured a presentation by a former ceo of karen davis about proposals like medicare essential that would revamp the benefit structure as well. so you find a lot of gulf conflict and critical information about and related to that plan. had that breathing on our website. >> i recommend that highly as well, and i also say that in medicare essential is there is a lot of delivery system reform as well. so the patient-centered medical home, aco, that model is relied upon as well to achieve some of the savings. i think once again it's looking at redesign of the benefit but also redesigned of health care delivery system because that is essential to kind of get at the underlying problem.

>> i have a question for the panel about the unintended consequences of the income related primus particularly. if you increase the level, going down in terms of where these premiums would actually affect people, and what would be affected if you see people not taking medicare? i may, people for instance, going out and a 10 gigabyte insurance in a wider scale through the exchanges possibly, perhaps in the sydney or the costs have come down, and what kind of things would this do to the medicare program and the other beneficiaries who are poor? >> could i ask you to identify yourself? >> i'm karen, i'm a policy fellow. >> karen, i don't think we know the answer to your question for a number of reasons. the presumption has always been and our experience has always been that medicare has been

such, medicare has been positively viewed as compared to private insurance for this population. as much more accessible, much more affordable. part a is required, i mean, it occurs. part b is voluntary, and he is as well. and so our experience has been when one looks towards turning 65 or one is disabled that medicare is an inevitability. and it's a positive one because of historical people were not able to purchase in the market anything nearly as fulsome for the price of essentially they pay for the medicare program because its trust fund financed under a and accommodation of general revenues and trust fund, supplemental trust fund be. so compared to what you bought in the private market it's always viewed as a valley. what will occur in the new world order in terms of what might be available in an exchange structure? one might imagine that given the

role of the private sector largely in the individual small group and large group market that is employment-based or an individual market as compared to sort of the financing of the elderly as a publisher which hasn't occurred since 65, again you have to look at are the benefits comparable, is security there? one of the benefit structures looking like with regards to the premiums? i don't think we know the answer. in terms of the changes on the income side, which is something that was introduced after 65, relatively recent, again it's relatively higher income to the point that was made earlier, a large majority of these beneficiaries are at 20,000 or less. the income targets better viewed are at 50,000 for an individual down from 85, and then 100 plus for a couple. so again it's not targeted at

very low income individuals who make up the bulk of the medicare program, or people are very low income who are trying to, the eight or 9 million people are in the duals because of their income, or their status. so again i don't think we know the answer. it's a reasonable question to ask but i think there are a whole host of reasons why medicare, not the least of which is the structure of the terrorist -- trust fund will continue to be a benefit and viewed more possible. and with the benefit structure looks like. but again it's a question that will come up. we're looking at a whole host a proposal on restructuring the way we think about medicare whether it's aco, medical homes, looking across the full continuum of care which we have not been a very good job of. we can focus on the a cute side but there is this post a cute side which are beginning to focus on. so i think it's an interesting question but certainly not one that i know the answer to speak i think that you're right, the crystal ball is kind of cloudy

on what the coming exchangeable to and whether wealthier individuals will keep the coverage post-65, which they could do. subsidies run out at age 65. you can't get subsidies for coverage after 65 but wealthier people would not, above 400%, would not qualify for the anywhere. the second piece is, my problem with income relating premiums is the slippery slope idea. so some do go down to 40,003 years from now when we haven't controlled costs to other deliver system reforms, 26, five, wealthier medicare beneficiary come you're going to pay more, then it doesn't strike me as we're sending the limit for wealthy or higher income at 60,000, or whatever, even 87, now, 85,000. on our tax structure were setting at at 250 or 400, no one

is saying hey, yeah, let's raise taxes on those rich $65,000 a year folks, you know? so why we're looking to people with medicare as wealthy and higher income at 60 plus in income, that strikes me as a bit ironic to say the least. but my main problem with it, it doesn't really solve, it gives you money, doesn't get you a lot of money but it gives you some money. at the end of the day it doesn't solve the underlying problem, which is the health care costs and you know there's a lot of other proposals that get there that think we should be doing before we just kind of up the bill for people with 60 or more thousand dollars a year. >> i just wanted to add that i think people don't realize that when the medicare premium is related to income that it's based on modified adjusted gross income and not your taxable income. and i can be a very big difference. for example, a retiree when they

turn age 70 and one half, the following year they have to start taking distributions from their retirement plans but a lot of retirees don't get that role quite right ended up taking two years were the dissertations from the plan. and so suddenly their income is juiced up a lot but it's not taking into account welcome what if i have a spouse who needs in home care that have to pay for 24/7? there is no correlation between those two because it's not looking at taxable income. same thing as if a retiree sells their house and suddenly they have a bump up in income and now they have to pay a higher medicare premium because they saved all their lives, pay down the mortgage and now they sell the house. you know, i think it can be a lot of inequities in applying debt. and it's not just getting higher income people. it's people who fall into income situations with a certain agree

of variability. >> we have a bunch of questions related to income. i just related to income relatedness. one of them is very quick, quickly responded to if i can ask some of our panelists to respond. for the analyses that have been cited, the 50%, and she'll just mention again 50% of medicare beneficiaries with incomes up 22500 or less, to the income figures include social security benefits and pension? >> yes. >> grego. i knew that would be quick. okay. >> i the question on the income related issue that some of the proposals have an income related out of pocket limit, and the idea there is, let's give greater protection for lower income people but not so much for higher income people as a way of conserving federal dollars and resources your this would be really new for medicare

and income relating a benefit not just for those with low incomes. i have questions about how this works for employers but i have questions, i don't know if sheila, even thought about how medicare would administer something like this. what's it mean for beneficiaries? does anybody on the panel want to speak to what it might mean to have an income related limit? because i know it sounds appealing for people trying to provide protection for those with modest incomes. so anybody want to jump in on that one? >> well i guess, so there is this question that income relating the out of pocket spending limit. there are also proposals that have suggested income relating other features such as a deductible, modifying the co-sharing amount depending on a beneficiaries income. i think there are several

questions from an administrative standpoint in terms of, well, backing up a little bit. we've referenced the income related premium. so there are already aspects of medicare that are income related. so people with incomes above $85,000 a year is integrated, people above $170,000 a year as a married couple, they have monthly income for part b and part d programs if they are enrolled. so there is a mechanism in place currently for medicare to know i beneficiaries income. and that's administered through as i say, they know how much medicare beneficiaries are making if they're paying premiums, but it's very different when it comes down to income relating lots of other features of the benefit in terms of graduate deductible drop from 500 to 400 or 300? to being a which income bucket

you fall in. and how do you report that to medicare is it's based on your taxable income? what if medicare think of more income than you actually do? is there a process for you to appeal so that you placed into the lower cost sharing category? there are i think a host of questions but and then the races i think a set of privacy concerns for some people who may be worried that if they're paying a lower copayments, they're benefiting from this income or later provision but then the doctor might know how much their income is. or at least what category, what income category they fall into anything that raises real privacy concerns for some people. so i think this proposal, again it looks good on paper and it seems like a great idea, and it certainly is a way of making it less painful, less onerous, less burdensome for some lower income people than the average medicare beneficiary. but i think it also raises

concerns that haven't yet been fully thought through in terms of the administrative complexities of making it work. >> well, from a retiree health plan perspective, there's no way that the employer is going to know what the retirees income is going to be. so basically the administration of this would all have to occur outside of the employer plan and some administered entity within have to communicate it. but in addition, typically the organizations that sponsor retiree health plans are large corporations which often offer defined benefit and defined contribution retirement plans as well. so they would be higher income on average than the average beneficiary, or it may be state government employees who have good benefits and good pensions they go along with it. so they might be more likely to

be impacted. and in a way the retiree plan, if you think about this, is in sort of a passive situation, which is social security will determine, presum present it woe social security, although they're very overburdened now with administrative duties with the growing baby boom generation. so social security would be administering this and would be sort of an unknown. and so functionally for everybody who's higher income in the out of pocket limit is higher, it's like that example in juliette study and trish is a study where the spending limit goes up to 7500. so in effect, and i'm just picking that number, so in effect it is increasing the cost of the planned for everybody who has got that additional income out of pocket boost. so i think that would be hard for employers to know. i think they want more certainty about the costs and what their costs are going to look like.

so i could see that adding another complication. and then finally there is the same thoughts i expressed the income variability with respect to the premium. i think would also be applicable here to the out of pocket limit. with sudden changes in income, suddenly putting the income, the out of pocket limit up when there may be other reasons that wouldn't necessarily justify that from attacks equity standpoint. >> i think everybody has said the pluses and minuses of this, i think it comes back to, once again, you're trying to assemble by the benefit and are making it more complicated at the same time. the motivation is certainly good when we're looking at more affordable poor folk, but then you step back and say, the real treasure of the medicare program in a sense is it's a uniformity across all classes get it brings americans like social security together in a big social

insurance program. and so agitated chip away at that i think you start to have some problems. i also go back to saying, you know, we always say medicare, a lot of people say medicare is unsustainable. no one seems to say the defense department is unsustainable. if we need more money in the medicare program and the health care system or we need to enhance benefits for lower income folks, we can use the tax system to do that. and i would say our history of getting these kinds of better benefits to poor medicare beneficiaries isn't that great. once again, wonderful programs, extra help, very low enrollment rates. that's why ed have the commercial at the beginning for learning about those and tell your friends and family about those. it's the right motivation but i think at the end of the day it overcome decades and it is

administratively very burdenso burdensome. >> i'm sorry, we need to get you to a microphone so you can ask a question. let me just take a 10-second break year. were coming toward the end of our time and want to make sure you have a chance to pull out the blue evaluation form and fill it up as we go through these last two questions. and i think from what joe has said that we know how you would answer this next question, what do you think of the mccaskill cockburn bill which would lower the income threshold for income related premiums from $85,000 to $50,000 speak as well, at the risk of repeating myself, once again that the good example of a slippery slope. we just keep going down the slope until we get to a number where we are raising it of mine and once again i would say we've got a tax code. we have a very robust debate

about changing the tax code every time we decide to change it. and where the money should be spent. i really think that's where we should be focusing on income and where, what folks should be paying for the whole of rate of services that our government provides to us as opposed to now focusing and very narrowly on medicare premiums for folks that are either at some level in income that is considered wealthy or not. these numbers move whether it's 50,000 or 60,000 or 87,000, it's really to raise money. and it seems like the tax system is the best place to do that, not medicare premiums spent i'll take that as a don't like. >> i obviously, not dissimilar from the approach that the bipartisan policy center took as lower, but i think i would go back to my earliest comment, which is bbc proposal is one that is part of a much broader

set of recommendations that include reforms to the program. broadly. and to essentially move towards making it a much more cost effective program and is not dependent upon this as the only method of essentially rethinking the way we organize and finance services. so it is an element. it is not i was the most important element by any stretch but i think there are far greater elements that are important to consider including a simple vacation of the benefits, and the structural changes in terms of moving, maintaining choice but moving towards more wouldn't need systems of care. so again i think the value here is in looking across a wide array of things rather than one specific thing. i don't imagine that any of our principles would support that as an independent element that is so good to change the premium. i think they would only consider

it as part of a much broader strategy that would also result in reduced program costs and would hope would benefit everyone in terms of reducing those costs. >> yes-men. now that we've made you walk to the back of the room. >> thank you. >> do want to identify yourself? >> [inaudible]. i have to had questions about individuals who buy first dollar medigap coverage. one is whether we know and we know whether income profile is whether they're part of the 22000 income group? by related one is if we know that people who buy first dollar coverage tend to use more services but we don't know if it's now the chicken and make kind of thing. it would seem to me that if you are using more services we could see if those are the nondiscretionary, presumably the nondiscretionary like more hospitalization where you don't think that that's particularly discretionary, or at least discretionary on the part of the

physician and hospital admitting, you know, department but not the type that you think of as discretionary services in general. >> let me answer the straightforward question first which has to do with income. so people who purchased medigap on not the poorest on medicare generally because they have medicaid. and they don't tend to be the highest income groups on medicaid because they didn't have employer coverage, if they were affiliated with an employer. so you're really talking about a middle income population without as many people on either tales. in terms of the service utilization, the studies that i have seen have not pieced apart what types of services people use more when they have full cost sharing or what services people forgo when they're confronted with cost-sharing. and i don't know, maybe anybody else on the panel might be able

to help whether anybody has really looked at it in a more refined since. i mean, ran did some work years ago. there's a lot of work done on the effects of brand versus generic cost-sharing and how that has driven people to encourage people to use lower cost drugs. so there's some research related to cost-sharing and utilization, but i do know of any research that answer your question directly. >> it seems if there's serious discussion about limiting or prohibiting first dollar coverage, that it's knowable to know what kind of services of those individuals are using. and if it's largely hospitalization, then you think of them as figure as opposed to just morally hazard. >> i think your own statistic is 46% of people with medigap have incomes under 30,000.

it's not that 22. i'm quoting from a kaiser briefed on that, so i do my kaiser homework. >> i'm sure you're right. >> go to town. i think once again and back, i think there should be more information available about what this affect is a first dollar coverage. once again time and again, and this is anecdotal based upon our health lung, we hope about 15,000 people with medicare year, and what we see is they may, once again, they are very confused about what's needed are unneeded and we don't provide health advice to them, or health information. coverage only. but what we find, and i think it bears this out, once they're in the health system their utilization is not necessary driven by themselves. it's driven by a provider. providers recommendation. that's why you go to the doctor, right? to find out what you need to do.

so, you know, what we're concerned about as i said earlier is that initial visit, you don't know if it's unnecessary, necessary. i think much of the literature around this is looking at imaging as a new driver of cost and that's certainly something that you don't toddle off directly to the imaging center. that's something that -- maybe somebody does, i don't know. maybe i should be don't do. you go to a doctor first and the doctor says, x-ray, mri's, cat, whatever it is from that. so that to my mind is before we jump on this comp like to get rid of first dollar coverage bandwagon, i think we need a lot more information and we also need to understand that it's quite clear, statistics show, it works. it prevents people going to the first visitor of walking through the door because they will have

to pay money up front. that's why preventive care is a zero co-pay. they encourage people to go get it. i think that is the concern. a lot of the value based designs, that's what value based is, 0-dollar for preventive care or less generic drugs, et cetera. we are not idle think at a place where, certainly mark and others have done a lot of work on value-based and the private insurance market has expanded a lot with it. and we need to continue to do that. but, you know, as we all know, getting a bunch of doctors to agree, this is high value and this is not so high value, it's tough and it's going to take time. so i think we do need to have some time. fortunately, we do have some time. i mean, even though medicare, we are all concerned about medicare's financial future. it's in some of the best shape it's been in in decades, and

that does give us a window of opportunity to allow some of these things to be experimented with before we go off and cut off the first dollar coverage just because, hey, we need to save some money in 2030. >> one question that has come up inferentially throughout this discussion, and it's because i wrote it down, i can repeat it. that is, any other proposals that we're talking about with or without safeguards for low-income people, are only getting incineration and will only get serious consideration -- getting consideration and will only get serious consideration to generate savings in the medicare program while we discuss deficit reduction and medicare being in an unsustainable situation?

>> i mean, maybe yes and maybe know. i mean, these proposals have been talked about in the context of a visit and debt reduction. it would be conceivable that they would be talked about in the context of the sgr, physician payment reform fix what is the question about how to finance the payment reforms for physicians under medicare. so i don't necessarily think that that reduction thing would drive these policies. >> i think i did articulate earlier that my concern is that we are talking about these in the context of debt reduction, and you certainly seem numbers in bowles-simpson and cbo and others whether or significant savings and there would be in those savings our primary driven by significant cost shifts to consumers. there are other more moderate and i think long looking, if you will, proposals like at the bipartisan policy center that would still shift costs.

there's always going to be winners and losers in any of these redesigned, there's always going to be an adjustment period as it were. at i would say as a consumer organization, i've been crying will a lot, very negative. i think there are proposals that are out there that would generate short-term savings to pay for sgr, like drug rebates, for low income medicare beneficiaries which would save a significant amount of money, about 140 billion every 10 years. but it's in the president's budget. whether they're politically feasible or not you know is another matter but i think they are there and they are worth the debate. while we have time to kind of, to look at these, these proposals in a more, i hesitate to say this passionate because we all get passionate about it, but not looking at them to drive savings. because i don't think we'l we wl ever calibrate it so that everybody is a winner. there's going to be some level

of adjustment where someone will pay more in some circumstance but i see these proposals, many of them as taking this opportunity of deficit reduction to do some good things. but at the end of the day they are saving money and a lot of it is because of shift in cost to consumers or to other insurance programs. >> i would agree with trish that it's not entirely clear to me that the only reason to drive this discussion is, in fact, a budget discussion, although it will could occur in the context. but i think any of us who have spent the bulk of our professional lives think about worrying about and studying the medicare program recognize that we are in a period of time where there is clearly the need or and a desire to we look at the program. serving all the work that is taking place in restructuring to finance in restructuring the delivery system, the relationship between providers

and the relationship between beneficiaries and providers and structure, acos, medical homes, all suggest to you that there's a growing awareness of the fact that the program was -- the program that was developed in 19 six-month is not a program that is suitable for today. no one which they create and it is certainly not related to or similar to any other kind of system in place. it has enormous benefits that also has exposure as well to beneficiary. so i would hope the conversations would occur with a mind towards improving it for those of us who are boomers who are not long from qualifying to maintain for a very long period of time. ..

>> i think it's august 2nd. so you can pick up the thread of the discussion in that context as well. let me just take a moment to thank you for your very thoughtful questions and your attendance here this afternoon. thank our colleagues, tricia and juliette and their colleagues at the kaiser family foundation for making this program so rich in its background and in its content. and ask you to join me in thanking our panel for a really good discussion. [applause]

[inaudible conversations] >> this morning president obama ice two new nominees for the national labor relations board will testify at a senate confirmation hearing. the hearing is part of the filibuster rules agreement in the senate. republicans have agreed to allow votes before the august recess on the new nominations. live coverage at 10 a.m. eastern on c-span3. coming up today, the house judiciary committee holds a hearing on issues related to

children brought into the u.s. illegally by their parents. the hearing on the so-called dreamers will be live starting at 2 p.m. eastern on c-span3. >> that role of the first lady, she becomes the chief confidant. she's really, in a way, the only one in the world he can trust, so he unloads to her, talks to her. they all, they've all done that. they're all strong women. and, of course, they accompanied usually a strong man to where he was. but i would say that's their main role, is confidant to the president. >> our original series, "first lady cans: influence and image" examined the public and private lives of these women. watch the encore presentation from martha washington to ida mckinly weeknights in august at 9 p.m. eastern starting august 5th on c-span.

>> the senate armed services committee heard from general martin dempsey and admiral james winnefeld. senator mccain has threat thenned to hold up the -- threatened to hold up the confirmation of general dempsey. outlining the costs and potential impact of u.s. action. this 90-minute portion of the hearing starts with questions from senator carl levin. >> thank you very much, admiral. let me now ask you the standard questions, ask you both the standard questions which we ask of our military nominees. have you addressed the, have you, excuse me, have you adhered to applicable laws and regulations governing conflicts of interest? >> yes, sir, i have. >> yes, sir.

>> do you agree when asked to give your personal views even be those views differ from the administration in power? >> yes. >> i do. >> have you assumed any duties or undertaken any actions which would appear to presume the outcome of the nomination process? >> no. >> no, sir. >> will you insure that your staff complies with questions for the record and hearings? >> yes, sir. >> where i will. >> will you provide in providing response to congressional requests? >> yes, sir. >> i will. >> will those witnesses be protected from reprisal for their testimony or briefings? >> yes, sir. >> you agree to testify upon request before this committee? >> yes, sir. >> you agree to provide documents including copies of electronic forms of communication in a timely manner when requested by a duly constituted committee or to consult with the committee for any delay in providing such documents? >> yes, sir. >> thank you. okay.

we're going to have a seven minute first round of questions. general, do you support finding additional ways to increase the military pressure on assad? >> senator, first let me say that i'm well aware of the human suffering and tragedy unfolding in many -- in syria, and the effect it's having not just in syria, but on the region. to your question about courses of action going forward, i support very strongly a whole-of-government approach that applies all the instruments of national power. as for the military instrument power, we have prepared options and articulated risks and opportunity costs to put additional pressure on the assad regime. >> be does the -- does the administration support be additional training and equipping of the opposition?

>> the administration is, has a governmental approach to the increased capability of the opposition. >> does that include training and equipping militarily? >> not through the department of defense. >> through other means whether it might be other countries? >> yes. >> on afghanistan, is the, are the security forces of afghanistan on track to be be fully in charge of securing afghanistan by december of 2014 when the nato combat mission ends? >> they are. general dunford assesses that he will achieve his campaign objects in developing the afghan security forces. now, he does also acknowledge there are some potential gaps that he will have better clarity

on after this fighting season. >> but he's basically on track. >> yes, sir. >> now, i'm not going to ask you what advice you've given to the president on the residual force which might remain, assuming there's an agreement with the afghans, after december of 2014. i'm not going to ask you what the advice is because that's advice you give confidentially to the president. he has a right to your confidential advice. my question, however, is the following: have you given the president your advice relative to the size of the residual force? >> i have, sir. we've provided several options. we've, as joint chiefs, we have made a recommendation on the size, and we've also expressed our view on when that announcement would best meet the campaign objectives. >> now, would you agree that legal protections for our troops which would be provided for if we can reach a bilateral security agreement with

afghanistan are essential to any long-term u.s. troop presence in afghanistan? >> i do believe that. >> so that any presence after december of 2014 is dependent upon working out a bilateral agreement with the afghans? >> that's right, sir. >> i hope president karzai is listening to that answer. >> i'll travel over there on friday night, sir, and have a planned office call with him. >> i hope that you would make that clear, and also i believe that our committee -- and i won't speak for others directly, if anyone doesn't feel this way, they'll speak for themselves -- but i think it's essential that he understand that there has to be a bilateral agreement that protects our troops for there to be a residual presence. and i happen to favor a residual

presence, by the way -- >> as do we. >> and i happen to favor giving confidence to the afghans that there's going to be a continuing relation. but i do not want to just be silent in the face of what i consider to be president karzai's unwise, a number of his comments which are very unwise in terms of whether or not he wants a residual presence or not. he sometimes acts like he doesn't want a residual presence even though it's very clear the afghan people do and so does he that he wants it on his terms, that it can't just be on his terms. it's got to be on a mutually-agreed basis, would you agree with that? >> i do, sir. i also would point out that our relationship and our interests in afghanistan run deeper than just president karzai. >> of course. and there's going to be an election next year, and i think you can also pass along to president karzai that his assurances that he's not going to be a candidate in that election be but that there will

be an election are something that the committee members, i think probably most of whom have met with him, take seriously and those statements of his matter to us. now, on the guantanamo issue, do you, do you favor -- let me, let me start over. we have in our defense authorization bill language which would give greater flexibility to the department of defense to transfer guantanamo detainees to the united states for detention and trial if it's determined to be in the u.s. national interest and if public safety concerns are acquiesced to streamline the authority of the secretary of defense to transfer guantanamo detainees to foreign countries. do you support those provisions? >> senator, what i support is, as the senior military leader of the armed forces of the united

states, is that we must have an option to detain prisoners. we can't expect young men and women on the battlefield to have a single option which would be simply to kill. we must have a capture and detain option. so i support anything that will assure me that those young men and women will have that option. >> and assuming that they have that assurance that there are places, a place or places -- >> that's correct, sir. >> -- then in given that condition, qualification, one which i share by the way, do you then support the language of the bill? >> i'd have to see the bill. but if you're asking me has guantanamo, the facility, tarnished the image of the united states globally, i think it has. and, therefore, i would welcome any other solution. >> on his sill defense -- missile defense we have, well, we've had an assessment from

lieutenant general formica, a meter providing the afinish a letter providing the assessment that investing in additional sensor and discrimination capability for our homeland missile defense would be a more cost effective and less expensive near-term homeland missile defense option than deploying an east coast missile defense site, particularly since there's no current military requirement to deploy an east coast site. do you agree with those assessments of the vice admiral and general formica, and do you agree that additional analysis is needed to determine whether it would be necessary to deploy an additional missile defense site in the united states in the future? >> yeah, i'd like to ask the vice chairman who work withs -- but i will say i absolutely agree we should do the analysis before we make a decision on how best to meet that capability requirement. >> well, i'm glad you gave me an opportunity to ask admiral -- >> i've been looking for an opportunity. >> well, so have i. thank you for billion giving me

that -- for giving me that opportunity. general? >> i would spend my next dollar on the sensor discrimination you just described. there is an oft-quoted saying in the military that quantity has a quality all its own. in this case if you can get better discrimination, you can have a better firing doctrine that would help you there. i also think it's wise that we're doing the eiss, the environmental impact statements, for a potential east coast site. and as we watch the threat develop -- and we're going to have to be very cognizant of that because it could develop quickly -- it may become necessary to actually put into place a second site. we'll play that as we have to. >> when you say we should do the eis, the environmental impact statement, you mean before making a commitment to a site? we should complete those assessments? >> yes, sir. i think we're planning on doing those eiss in the relatively near term, and i think today will be done naturally, probably before there's a need to actually make a decision to go with an east coast site. but i also want to state we need

to be cautious and very cognizant where the trajectory is of the threat. >> when you say they will be done naturally, they think they should be done? >> i agree with doing them as a hedge, as part of our hedge strategy that we've always considered having an east coast site -- >> i'm just trying to get a clear answer. >> do you believe they should be done before a decision is made a as to whether any site is selected? >> yes, sir, i think so. >> there was an article in today's washington post that reported south korea wants to begin delay the transfer of wartime operational control. i'm sorry, i was looking for my card. i'm not -- i forget that we're using the timers. and i am glad that peter levine reminded me to look in front of me for a blue card. i keep looking for that blue card. i've gone over my time. i apologize to my colleagues and call upon senator inhofe. >> thank you, mr. chairman. in my opening statement i quoted each one of you in there, and i

think they're such very strong quotes, particularly the the one if ever the force so degraded and unready we'll be asked to use it, it would be immoral. then the statement of general dempsey -- actually, i can't -- i don't see it right now, but the one, yes, admiral, to be for the first time in my career instances we are asked to respond to a crisis, and we will have to say we cannot and then, of course, we saw james clapper saying there's never been a time in our history, and he's been around for 40 years, when the threats are so great and diverse as they are today. do you agree with that? >> i do, senator. they are, there are probably fewer existential threats to the nation, but there are far more ways that middle-wage states, nonstate actors and violet extremist groups -- violent extremist groups can reach out and touch us.

>> well, i think -- do you agree with that, admiral? >> there are two definitions of a hollow force. one is the force is larger than the readiness money you have to keep it ready, and the simple one is something that looks really good on the outside but is rotten in the middle. >> yeah. well, i wasn't talking about the hollow force, i was talking about the threats out there. i look back wistfully at the days of the cold war, things were predictable. now you have entities out there like iran that even our intelligence says they're going to have a delivery system, that's what he's talking about, and that's the threats i think it's really, it is a scary thing. the question i'm going to ask you, you both believe that. have you shared this with the president? >> yes. we have briefed the -- >> so he knows this? >> yes, sir. >> and yet he continues with his approach. let me ask you a question about gitmo. you said you'd welcome any other solution. i've often looked at gitmo as

one of the few good deals we have in this country. we've had since 1904. $4,000 a year, i think it is, mr. chairman, and they don't collect it half the time. and yet when you say welcome any other solution, just what other solution -- is there a solution out there that would not entail bringing these people into our continental united states? either one of you? >> i've been, i've seen the analysis done at any number of solutions, but there hasn't been any consensus on which one to pursue. i simply want to align myself with those who say we have to have a detention solution. >> well, no, i agree. we have to have a detention. we've got some in there that is ready made. i understand that a lot of the people in the middle east don't like it, it's maybe given us a bad reputation if some areas, but i believe we need to think of america first. i can recall four years ago when

the president came out talking about these internships that they had, they had sites in the united states. one was in oklahoma. i went down there, and i talked to a young lady. she was in charge of our prison down there. she had had several tours in gitmo x she said what's the matter with them up there? don't they know that we have this? it's ready made. i have to say this because this is a great frustration the me. yes, we have language that is pretty good language in the bill, but nonetheless, if east one of you -- well, i'll ask one last question on that. can you think of anything that would not entail incarceration or movement into the united states? right now off the top of your head? >> i don't have an easy answer to that one, senator. one thing i would mention is just a little more flexibility, i think, would be useful to us, and i'll give you an example. we have a moral obligation to take good medical care of these detainees.

because we can't move them outside of gitmo, we have to build very, very state of the art medical facilities -- >> and i've seen it. >> it would be great to be able to move them, you know, briefly back and forth to the united states if they need medical treatment. that's the kind of flexibility -- >> well, okay, that's fine. >> >> i know that's different. >> there's not a person up there that hasn't been down there more than once, and one of the big problems they have with the detainees is overweight because they're eating better than they ever have in their lives, they have tests run they've never even heard of before, so i think we're meeting that. on april 9th when we stop the fine, i've talked to each one of you on this, but i think we need to get something on the record, i have an aviation background. i don't think you have to have that to know that you've got to keep your proficiency up. that was three months ago, april 9th. now, i applaud the decision to now get back in and start retraining. i mentioned in my opening statement that i was going to

conduct a study as to how much more cost there is to go through the retraining that we're going to have to go through right now than if we'd never made the decision back in april 9th. have you already done that or do you have any information in terms of how much more it's going to cost now than if we had not done it to start with? >> i think it's a good question, and i think we can easily get that for you for the record in terms of cost. what i can tell you is that if you take one of these squadrons that hasn't been flying at all, it's going to take one to three months for them to bring their proficiency back up just in basic airmanship skills, taking off and landing and that sort of thing. and probably another three months beyond that to get their combat skills back. i think of it more in terms of time, but there is a cost dimension -- >> yeah, but time, wouldn't you agree, equals risk at the time we need these. we don't have the -- we had some of them who came right out of school right around april 9th who they're going to have to go

back and-start from the beginning now -- and almost start from the beginning now. we don't have the capability of taking care of the needs as they come up, i believe that that translates into a risk, and i'm not willing to take it if i can do anything about it. >> senator, could i add -- >> sure. >> what we're seeing is that we're going to end up with two problems over time if sequestration remains in effect. the immediate problem for the next several years will be readiness. because we will not be be able to find the money we need to achieve the level of sequestration cuts without dramatically impacting our readiness. then as the force becomes smaller, you can restore readiness because you're dealing with a smaller force. but i think too small. so it goes too far taos. too fast. >> yeah, i understand that. the proficiency of a smaller number of units can be greater, but you're still dealing with a smaller number of units. and in this with the diverse

threats we have right now, to me that's not a very good idea. not that you can do anything about i. but right now that is a problem. last question because my time is up would be, admiral, i appreciate the fact that you used the word "immoral." and given the current path of readiness in our armed forces, in your professional judgment, when the commander in chief be at a point of making immoral decisions? >> i don't think i was the one who used the term "immoral," but i think that a we are keeping the white house closely informed as to the outcome of the strategic choices and management review. that includes both capability be, capacity and readiness of the force. they are aware of those results, and i'm sure that they're going to factor that into their decision making on the rest of the budget issues that are in play and, hopefully, we will be able to find a good resolution that will allow us to go forward with being able to plan for what the future is. >> well, i appreciate both of you. we have to let the people know

that we have a real serious problem here, and i think in this hearing is our opportunity to do that, and i apologize in attributing a quote to you that i guess it was general dempsey who made that quote. >> yeah, it was, sir. and let me assure you that if the nation is threatened, we'll go. but that's the point, we'll go, and we may not be with ready to go. so it would depend on the nature of the conflict in which we were asked to participate. >> yeah. >> if it's an existential threat to the nation, there's no immorality in that. but if there this were some othr contingency and we were asking young men and women to go not ready and we had a choice -- >> and i appreciate that very much, and i agree with you. thank you, mr. chairman. >> thank you, senator inhofe. senator blumenthal. >> thank you, mr. chairman. and i join in thanking both of you for your service over many, many years. general dempsey, you and i have

discussed briefly the purchase of helicopters for the afghan armed services, the purchase of russian mi-17s from the export agency controlled by russia that is now selling arms to syria, a country that is still harboring, providing refuge to edward snowden. and we discussed the reasons for that sale. and very graciously, you suggested you would look into the possibility of either ending that sale which will result in helicopters right now according to the inspector general for afghanistan sitting on the runways of afghanistan because a they lack pilots to fly them,

and they lack people trained to maintain or repair them. i wonder where there is something we can do either to stop those sales, purchases subsidized by american taxpayers, provided by american taxpayers to an ally, supposed ally that still does not have a status of forces agreement with us that will enable us to continue providing aid to them. and i think in connection with that question what additional kinds of resources we should consider stopping if there is no status of forces agreement. >> senator a, on the mi-17s i, i support continuing on the path we're on to get the after -- afghans as capable as possible by the end of 2014, and that will require us to stay

committed to that fleet of mi-17s. there's no way we could transition at this point and put them in anything other than that airframe. what i suggested to you is that if we can achieve a lasting, enduring relationship with them and live up to, if they live up to their end of the deal and we live up to our end of the deal, we'll be investing in them through foreign military sales for some time. and there is a likely point where we could transition them to u.s.-built aircraft. but in the interim period, we cannot -- i shouldn't say we cannot. it would be my recommendation that we stay the course with existing program. >> and is that interest sufficient, do you think, to justify the national security waiver under the legislation that's currently included in the national defense authorization act? >> i do, sir. >> and what would have to change for those helicopters to be purchased from an american

manufacturer such as sikorsky or any of the others that are more than capable of providing -- >> right. >> will -- better aircraft to the afghans? >> right. well, we actually have experience in making that transition in iraq where we've initially outfitted them with soviet aircraft and are now making the transition into an american airframe. and it starts with training and long lead time procurements. but that effort is unlikely to begin until we establish a bilateral security agreement. >> admiral winnefeld, i was at a briefing recently that you gave, an excellent briefing on threats to our navy, and i wonder if you could comment to the extent you're able on the importance of the ohio class replacement in terms of nuclear deterrence, the importance of of continuing with that program and any possible

jeopardy that might be impacted as a result of sequester. >> senator, we are, of course, remain committed to the triad. we believe that's the right approach for nuclear deterrence for this country. and, of course, the fleet ballistic missile submarines are an absolutely essential element of that triad. it's the most survivable element that we have, it's very reliable platform, a very reliable missile that goes with it. and so we're very committed to the next class coming down the line. i think we've delayed it about as far as we can, we need to know and we are getting into the requirements and the design of this missile-carrying submarine. and, again, we're just committed to the program. it's terribly important that we get this right. we're going to try to control the costs on it, we're going the try to make this like all the programs we're working right now from the beginning a successful acquisition program. i know the undersecretary of defense for acquisition

technology and logistics and the cno himself are all committed to making this a successful program. >> and you'd agree, wouldn't you, that this program really has to be spared any impact as a result of sequester? it's so vital to our national security? >> i would agree with that, yes, sir. >> mr. general dempsey, wonder if i could move to a personnel issue. i know because of your personal commitment to the well being of our troops it's of great interest to you. the electronic medical records system which still is incompatible, the department of defense medical record systems with the va medical record systems despite questions i and others have asked repeatedly under this secretary of defense and the previous one. i remain concerned, to put it mildly, with the fact that interoperability still is a goal, not a reality, and i

wonder if you could comment on what can be done to increase the pace of making those two systems compatible. i had thought originally that they would be one system, a billion dollars has been spent on making them one system, and i ask you to comment. >> thank you, senator. i share your concern. i can also assure you that secretary hagel, who as you know has a background in the veterans administration, shares it. he's taken a decision to move the responsibility of the ram management into a -- program management into at and l where i think you will see it will be much better managed. we've done other things, for example, agreed to certify as complete medical records that pass from active duty into the veterans administration which then relieves the burden of them having to do continual research the figure out if the record is complete. that's what, that's the path we're on. but your oversight and interest in it will be an important part of achieving it.

>> thank you. my time has expired, but i, again, want to thank you both for your extraordinary service and just to reiterate, general dempsey, i remain unhappy, very strongly unhappy with our current position and posture vis-a-vis those mi-17s, and i am not going to let the issue go, with all due respect. i understand your position and thank you very much for being so forth right in your answers. thank you, mr. chairman. >> thank you very much, senator blumenthal. senator mccain. >> thank you, mr. chairman. i must tell both the witnesses at the onset i'm very concerned about the role you have played over the last two years. your view of your role as the chief advisers to the president on national security and the state of the world over the last two years since you have been, hold the office you hold.

general dempsey and admiral winnefeld, do you believe the continued costs and risks of our inaction in syria are now worse for our national interests than the costs and risks associated with limited military action? >> senator, as we've discussed -- >> i'd like to know an answer rather than a filibuster. i have six minutes and ten seconds. >> i assure you, senator, i won't filibuster. this is a regional issue, so i would say that the issue in syria is, we are at greater risk because of the emergence of -- >> you're not answering the question, general. >> sir. >> do you believe the continued costs and risks of our inaction in syria are now worse for our national security interests than the costs and risks associated with limited military action? >> with all due respect, senator, you're asking me to agree that we've been inactive, and we have not been inactive. >> we have not been inactive.

>> that's correct. >> this, again, gives validity to my concern because, obviously, we may have not been inactive, but any observer knows that bashar assad is prevailing on the battlefield. 100,000 people have been killed. hezbollah is there. russians are there, and the situation is much more dire than it was two years ago when you and admiral winnefeld came to office. and so your answer is that we haven't been inactive. >> that's correct. we haven't used direct military strengths, but we haven't been inactive. >> i will ask you for the third time -- >> sir. >> do you believe that we should take military action rather -- which is more, has greater risk, our continued limited action or significant action such as the establishment of a no-fly zone

and arming the rebels with the weapons they need which they haven't been getting, general, i know. i know perhaps better than you because i've been there. which do you think is a greater cost? the action that we're taking now which is, has had no effect on the battlefield equation or doing nothing? >> senator, i am in favor of building a moderate opposition and supporting it. the question of whether to support it with direct kinetic strikes is a president -- is a decision for our elected officials, not for the senior military leader of the nation. >> this goes back to my concern about your role as chairman of the joint chiefs. >> i understand. >> the chairman of the joint chiefs is supposed to provide the best advice he can as far as our overa all national -- overall national security is concerned. you testified this february you had advised the president to arm units of the syrian opposition.

in april you testified you no longer supported the position. now we read in published report that is the administration has decided to arm the syrian opposition units. how do we account for those pirouettes? >> i wouldn't accept the term pirouettes, sir, i would accept the term that we have adapted our approach based on what we know of the opposition. and if you recall in the beginning of the year, there was a a period where it was pretty evident that the extremist groups were prevailing inside the opposition. so i have not been wavering -- >> is it your position that the extremist groups are revailing inside the opposition -- prevailing inside the opposition? >> you asked me that in february. in february i had that concern. >> so that's your answer to why in february you advised the president arm them, in the april you said that we shouldn't, and then now, obviously, we are arming the rebellings. you support that policy? >> i support the building of a moderate opposition and including building its military capability.

be. >> here's an example of my concern. quote, you told cnn on july 8th the war in syria's not a simple matter of stopping the fight by the introduction of any particular u.s. capability. quote: it seems to me that we need to understand what the peace will look like before we start the war. the war has been going on, general dempsey, to over 100,000 people killed. we didn't start the war. and we wouldn't be starting a war. we would be trying to stop a massacre that's going on. we are, we would try to stop the hezbollah with thousands of troops, we would try to stop the fact that the russians continue to supply heavily bashar assad's forces. and what would be a great

triumph for iran in the entire region. but you say it seems to me we need to understand what the peace will look like before we start the war? do you think we ought to see how we could stop the war by intervening and stopping the massacre? >> senator, would you agree that we have recent experience where until we understood how the country would continue to govern and that institutions of governance wouldn't fail that actually situations can be made worse by the introduction of military force? >> actually, general dempsey, you and i went through this in 2006 when i said that it wasn't succeeding and that we had to have a surge and that only a surge could succeed in reversing the tide of battle, and you disagreed with me then, way back then. and i think history shows that those of us who supported the surge were right, and people like you who didn't think we needed a surge were wrong. so i guess my question to you

is, is it, is it in any way a good outcome for this situation on the battlefield to continue as it is with, obviously, bashar assad prevailing and a great victory for iran can and continued slaughter of thousands and thousands of people, the detablization of jordan -- destabilization of jordan, the destabilization of lebanon and what is clearly reyou wanting into a -- erupting into a regional conflict. is that your answer? >> senator, somehow you have got me portrayed as, you know, the one who's holding back from our use of military force inside of -- >> no, i'm not saying that. i'm saying what your advice and counsel is to the president of the united states and your views are very important because that's your job. >> >> it is. and i, and i've given those views to the president. we've given him options. there's members of this committee that have been briefed on them in a classified setting.

we've articulated the risk. the decision on whether to use force is the decision of our elected officials. >> you know, i just asked, the chairman just asked you if you would give your personal opinion to the committee if asked. you said, yes. i'm asking for your opinion. >> about the use of kinetic strikes. that issue is under deliberation inside of the, our agencies of government, and it would be inappropriate for me to troy to influence the decision -- to try to influence the decision with me rendering an opinion in public about what kind of force we should use. be. >> so your answer to the chairman's question about giving a personal view is circumscribed by decisions that are still being made. >> i will give, render my -- let this committee know what my recommendations are at the appropriate time, yes, sir. >> and when might that be? >> sir, if the administration and the government decides to

use military force, we have provided a variety of options, and you know that. >> well, if it's your position that you do not provide your personal views to the committee when asked only under certain circumstances, then you have just contradicted what i have known this committee to operate under for the last 0 years. 30 years. thank you, mr. chairman. >> thank you, senator mccain. senator donnelly. >> thank you, mr. chairman. and thank you, general, thank you, admiral. and i want to get back to syria in a second, but first i want to ask you, general dempsey, in regards to mental health services for our service members one of the things that has recently happened is that at camp lejeune, they're reduced by about 50 appointments per month because of the sequestration. and what i was wondering if you know if there has been any increase in suicide or suicide

attempts since sequestration took effect. >> i don't have that data readily available, senator. it is a good question. we are aware of some of the reduction in services, and i can take that for the record. >> okay, great. and then follow up on that would be are there efforts in place right now to try to minimize the effect on mental health since it has such a dramatic effect on our service members? >> there are any number of efforts, and it's got the attention of not only the department, but also the joint chiefs. admiral winnefeld himself chairs a meeting with the vice chiefs of services. we meet in the tank. we are concerned because although we have prioritized care for wounded warriors, families and mental health service in the face of declining resources, how that is implemented in the field can

sometimes be missed. and so we're ammeter to it. >> okay. -- alert to it. >> okay. >> i was in afghanistan a few months ago and met with our commanders. and at the time we were on all of our metrics. everything was being, we were right where we wanted to be as we head toward the end of 2014. and to admiral and to general, are we still meeting the plan that we had laid out? are we still being able to hold the towns that we've started to hold, are we able to turn the taliban back? is the plan moving along on schedule? has it, is it going faster or lesser? are we meeting the numbers we were hoping to meet as we head toward the end of 2014? >> i'll, i'll start and see if the vice wants to add. besides speaking with general dunford be on a weekly basis and visiting him about quarterly, i

also reach out to as many other people as i can possibly reach out to who can give us other views. and so yesterday we had a woman from the congressional research service who had actually spent the last five months traveling around afghanistan visiting with civilian and military leaders, mostly afghans, and both -- and her report aligned with general dunford's assessment that we can achieve our military campaign objectives on the timeline that is currently established. >> okay. i appreciate the update because, you know, if we, if we are able to stay on that program, then the afghan forces have a chance to make work. to get back to the syria that senator mccain was talking about, if conditions do not change, does it look to you as it looks to many that in the near future dara could also fall to the assad government as well?

>> actually, the chairman asked -- >> and i apologize, i had to step out. >> no, sir, i was just reflecting on the fact that there are many people concerned about dara. i'll be visiting the king of saudi arabia next week, and we've got military contingency planning ongoing both back here, but also inside jordan. so, yeah, we are concerned about dara. the conflict tends to ebb and flow. that kind of conflict will always ebb and flow. and so we are watching and making sure that we would have options available to the national command authority if necessary. >> well, what steps short of a limited no-fly zone could have the kind of effect that could slow down the assad forces. >> let me pass that to the vice because we just did some significant work on this in preparation for his hearing on tuesday. >> senator, there are a whole

range of options that are out there. >> and the reason i ask that is because i know there's a whole range of options. but as you look at everything, the rebel forces are being moved from almost everywhere they're located. and so we have options, but the ball seems to be heading the other way. >> i wouldn't want to get into anything unclassified in a -- classified in an unclassified hearing, but where the opposition is most on the run right now is in the central and western part of syria around homs which is a very difficult situation for them right now. and that also happens to be the most important place other than damascus itself probably for the syrian regime to regain control of because that represents the pathway from damascus into their traditional homeland near the coast. so they really want that back. i believe, personally -- and it's only my personal judgment -- that if the regime

is successful in that area, they will next move north to aleppo which is their commercial center. i don't think they're going to go down to daughter rah yet, but we've got to watch. we've got to maintain vigilance and discern where this thing is headed. >> well, and then whether it's aleppo or dara, the old saying -- and i know there are contingencies, but to not take action is to take action and is determinative of what happens. so i think there is a concern as to how long does this go on before the momentum becomes irreversible. >> and we are ready to act if we're called upon to act. i think the current track that is being pursued by the administration is a diplomatic track, and all manner of other options will be discussed and are continually under discussion, and i would not want to get out in front of the president or anybody else on what choices he might -- >> so, in effect, you're waiting to hear at this point. >> as we should be.

we're ready providing every possible option we can. >> right. >> in case we're called upon to exercise the use of force which we believe is a political decision. >> and in regards to the rebel forces, as you look at them right now, general and admiral, we've been concerned aboutal not rah and -- us in rah and their activities. do you see the al-nusra piece growing stronger than the moderate piece? how do you see this moving? >> there was a period back in april, as senator mccain referred, where i was very concerned that on the al-nusra front and others, there are hundreds of different groups that shift allegiances and alliances on the opposition side, and it makes it very challenging to determine what we're really looking at there. the intel community is hard at it. i'm hard at it, we're hard at it with our regional partners. so there was a period of time when i was fearful that the extremist element, the jihadist,

salafist side of the opposition was gaining considerable strength. of late through some efforts that we've made to convince our allies to avoid creating a problem by empowering some of these groups we've had some success at that. we've also had some success at identifying more clearly a part of the opposition that could be built and trained not only militarily. this is the point i really want to make sure resonates. this opposition has to not only be prepared militarily, but it has to be prepared if it achieves a position of governance inside of syria. otherwise the situation will deteriorate even further. >> general, admiral, thank you for your service. mr. chairman? >> thank you very much, senator donnelly. now before i call on senator wicker, senator inhofe has a very brief comment. >> just a brief clarification. i was told by my staff when i came back that i might have been misunderstood in my comments about gitmo.

i'm probably, arguably, the strongest supporter of opening it up, using it to its fullest capacities for not just incarceration, but for trials. and the language that is in the bill i know, mr. chairman, i appreciate your good faith efforts in the language that was in there, but i am against the language that's in the ndaa, and thank you for giving me the opportunity to state that. >> thank you, senator inhofe. senator wicker. >> thank you, mr. chairman. general conference si, welcome back -- dempsey, welcome back. let's talk about the situation in egypt. there's been disagreement in washington about the wisdom of continuing to provide assistance to the egyptian military in light of recent events there. when i look at egypt, i don't see very many jeffersonian democrats. but i believe the egyptian military has acted with great professionalism and restraint throughout the three years of difficult transition since p the

2011 ouster of hosni mubarak. i believe one of the primary reasons there's not been far more bloodshed and suffering during this time of transition is the support the united states has provided to egypt through foreign military sales and military-to-military cooperation. in the light of recent events, some have called for the end to tease programs. let me tell you how i feel about this and our commitments you should the camp david accords and then let you respond. first, we must maintain the strength of this relationship to enable us to assist and influence egypt's military leaders. second, the united states would be shortsighted to overlook the return on investment we get from the egyptian military. for example, suez canal transits for our carrier battle groups, intelligence cooperation, counterterrorism cooperation. these are examples of the men facilities we derive from this relationship. third, the egyptian military has

played a stabilizing role during egypt's transition. and, fourth, our commitments under the camp david accords have yielded sustainable peace between israel and egypt. we must acknowledge israeli prime minister net netanyahu's statement this weekend on "face the nation" that the camp david accords have been, quote, the cornerstone of peace between us and our neighbors, and it's also been the cornerstone of stability in the middle east, unquote. general dempsey, do you agree with me regarding the importance of military-to-military relationships as enablers of u.s. foreign policy if. >> i do, senator. >> and do you agree with me that we should continue to maintain and foster the strength of u.s./egyptian military relationship? >> mr. i do. if our government decides that they have to take some action based on existing legal frameworks and restrictions, i

would, i would recommend that we find a way to restore those as quickly as possible even if that, if it meant conditioning them some way. but i very strongly believe we have to maintain our contact with the egyptian armed forces. >> and do you have any reason to believe as some are -- some have feared and as some fear now that weapons and equipment that we provide to the egyptians or that we have provided in the past have been used or will be used or would be used in ways that night eventually endanger the united states military or civilian personnel or united states interests? >> there's no indication at this point, senator, that that would be a concern. >> if your opinion, was the hechted government of -- elected government of mohamed morsi moving toward a dictatorship. >> >> if i could, i'd like to use

this opportunity to express my conversations with my counterpart. i can tell you they very strongly believe that. >> okay. well, let me just ask you then before i move on to another topic, i made some pretty emphatic statements. would you like to elaborate? i'll give you an opportunity to elaborate on what you've said about the relationship that we've had and the assistance and the sales that we've had with the egyptian military. >> thank you. it goes, my own personal experience with it goes back to when i commanded centcom in 2008, and they're a very key nation in the region. as you put it yourself, we enjoy preferential passage in the suez, dynamic overflight. they've committed to the camp david accords. israel -- the israeli military considers the egyptian military

a strong partner, and so in my personal experience which goes back now about five years they are worth the investment. >> and now, with regard then to syria, the chairman talked in his opening statement about a post-assad solution, negotiated solution. do you agree that unless the momentum shifts -- and i think senator donnelly was concerned about this also -- unless the momentum shifts back toward the rebels, there is hardly any chance for that sort of solution that the chairman seeks and is hoping for. >> yeah, i agree. i think that as the momentum ebbs and flows, each side feels

itself more compelled or or less compelled to seek a negotiated settlement, sure. >> and so if i can, you are, i think you answered a question from the chairman about ways in which military support could be gotten to the rebels, and i think he asked about enabling other governments to support the military efforts if we're unable politically or unwilling to do so. do you remember that question? >> i do. >> you elaborate at all, or is that something you just done feel comfortable talking about? >> no, i'm comfortable talking about the commitment to improve the capabilities of the opposition. and there's any number of ways to do it, directly -- >> the military capability.

>> that's correct. but you've also heard me say it's not just about improving or enhancing their military -- >> i understand that. but that's what my question is about. >> yes, sir. and, of course, other nations as well. and this is a significant dip tomatic -- diplomatic effort to bundle our efforts together into something that will increase the pace at which their capability could be increased. >> could you elaborate as to, as to who these allies might be that are a little more -- >> i would rather do that in a classified setting, senator. >> okay. thank you very much, mr. chairman. >> thank you, senator wicker. senator reed is going to yield momentary hi to another senator -- momentarily to another senator who was next in line who, i believe, was senator

gillibrand. senator reed is going to yield just for one turn. >> okay, thank you. thank you, mr. chairman. thank you both for your public service, for your dedication, for all that you do for our military and for our nation. i'd like to first focus and continue the conversation on syria. i have grave concerns over the broader regional security in the middle east, particularly when we're seeing the continued influx of jihadi and hezbollah fighters into syria. so i want to talk a little bit about what this means for syria's neighbor. obviously, hezbollah in lebanon, iran has been able to have an influence at israel's board or. will iran be able to do the same with regard to syria in your estimation, and what can we do to prevent both a jihadi haven as well as a stronghold for iran through hezbollah in syria? >> i'll take this and then if the vice chairman wants to add because we've been, as you probably know, deeply involved

in this issue collaboratively. first of all, you're exactly right to think of this as a regional issue, senator. and i'd add that iran is not just a challenge to the united states in its nuclear aspirations, but also through its surrogates, its proxies, its arms sales. and so there is -- and they're trying to foment a sectarian conflict that runs from beirut to damascus to baghdad. the approach to that, the strategy that would underpin our efforts should be regional, therefore, many which means we need to increase our support of the lebanese armed forces on one side of the iraqi armed forces on the other and of our jordanian and turkish partners on the thorne and southern flank. northern and southern flank. >> with regard to the broader question on iran specifically, i've heard both cautious optimism and grave concern about

the election of rouhani as the new president. what is your assessment of the impact of the election? do you expect his election to change iran's nuclear policy or its international policies? what's your initial assessment? >> first of all, we, you know, i reflect back on former secretary gates' oft-quote remark of looking for the elusive rain man moderate -- iranian moderate. he's made some moderate statements since he's been but he's not in office yet. and there are those of us who have the basketball -- opinion that he's going to struggle against the government that may prevent him if he wants to be a moderate from good becoming one. so i think the watch word here is prudence. it makes sense to reach out to him but not to do so naively, and i don't think anybody's going to do that. i think we're in a good position here. but it's an interesting development. nobody really expected imto be

lekked. at the same time, again, the elusive iranian moderate, we need to maintain the pressure that we're maintaining on the regime and make it very clear to them what our objectives are, number one, that they not develop a nuclear weapon. >> okay, thank you. turning now to cyber, both of you have testified that you believe that cyber is a growing threat and a serious concern for our military and for our national security and for our economy. we've been working on a bipartisan basis on a bill called the cyber warrior act, senator vitter and senator blunt are leading the charge for the republican side, in order to create a national guard unit that is dedicated solely to cyber defense of our nation as a way to get some of our best and bravest from the private sector who are dedicated to the military and to the rest of this country to be able to use their talents more fibtly in a -- efficiently in a more cost effective manner as well. can i have your opinion of what the impact of creating es