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00:00:166 min.
Smith, Gordon H. - U.S. Senator, [R] Oregon

Good morning, ladies and gentlemen. We

welcome you all to this hearing of the U.S. Senate Special

Committee on Aging. We have a very important...

00:06:521 min.
Kohl, Herbert "Herb" H. - U.S. Senator, [D] Wisconsin

Well, thank you, Mr. Chairman, and, of

course, we welcome all of our witnesses today. This hearing

will kick off a series of Committee meetings...

00:08:46
Smith, Gordon H. - U.S. Senator, [R] Oregon

Thank you, Senator Kohl.

00:08:4623 sec.
Wyden, Ronald "Ron" Lee - U.S. Senator, [D] Oregon

Thank you, Mr. Chairman. Mr. Chairman, I

think I mentioned to you back when I was director of the Oregon

Gray Panthers, we used to...

00:09:09
Smith, Gordon H. - U.S. Senator, [R] Oregon

Thank you, Senator.

00:09:092 min.
Wyden, Ronald "Ron" Lee - U.S. Senator, [D] Oregon

I think it is well understood that

escalating health care costs are hitting America like a

wrecking ball. This was seen again yesterday...

00:11:37
Smith, Gordon H. - U.S. Senator, [R] Oregon

Thank you, Senator Wyden.

00:11:371 min.
Talent, James - U.S. Senator, [R] Missouri

Thank you, Mr. Chairman. I want to echo

what the other Senators have said about the importance of this

hearing. Medicaid is a vital...

00:13:26
Smith, Gordon H. - U.S. Senator, [R] Oregon

Thank you, Senator.

00:13:263 min.
Stabenow, Debbie - U.S. Senator, [D] Michigan

Thank you, Mr. Chairman. I want to

particularly thank you and Senator Kohl and all of my

colleagues for beginning this series which...

00:16:381 min.
Smith, Gordon H. - U.S. Senator, [R] Oregon

Thank you, Senator Stabenow.

Let me also now introduce, as well, our other witness who

is the Governor of the great State of Arizona, Janet

Napolitano....

00:17:489 sec.
Napolitano, Janet - Governor, [D] Arizona

Senator, thank you for that. I would

like to hear from Mr. Wagoner first and then I will dive in,

and then we will get to questions from...

00:17:57
Smith, Gordon H. - U.S. Senator, [R] Oregon

Thank you so much, Governor.

Mr. CEO of General Motors, thank you so much for being

here, and we invite your testimony now.

00:17:579 min.
Wagoner, G. "Rick" Richard Jr. - Chairman and CEO

Thank you very much. I very much appreciate

it. Chairman Smith, Senator Kohl, members of the Committee, it

is an honor to have a chance...

00:27:53
Smith, Gordon H. - U.S. Senator, [R] Oregon

Thank you, Mr. Wagoner.

Governor.

00:27:534 min.
Napolitano, Janet - Governor, [D] Arizona

Well, thank you, Mr. Chairman and

members of the Committee, for inviting me to be with you today.

I am sorry I can't be there in person,...

00:32:1015 sec.
Smith, Gordon H. - U.S. Senator, [R] Oregon

Thank you, Governor, and we will include your

full statement and we value very much your participation and

your insights.

Did you...

00:32:2530 sec.
Napolitano, Janet - Governor, [D] Arizona

Yes. This is based on a study done by

the Lewin Group looking at how we manage our health care costs

versus other States in the Medicaid...

00:32:5515 sec.
Smith, Gordon H. - U.S. Senator, [R] Oregon

Well, that has been my point all along

through the Medicaid debate earlier in this Congress, and I

have to say $83 billion is--by the way,...

00:33:10
Napolitano, Janet - Governor, [D] Arizona

Ten.

00:33:1052 sec.
Smith, Gordon H. - U.S. Senator, [R] Oregon

Ten years. That is enough even to get the

attention of the U.S. Senate. But I think even more important

than the budget number, my point...

00:34:0239 sec.
Napolitano, Janet - Governor, [D] Arizona

Mr. Senator, I think it is a little

too soon to know what the DRA really has done. What I do think

we need to communicate to HHS and the...

00:34:4110 sec.
Smith, Gordon H. - U.S. Senator, [R] Oregon

Are other States learning from you, asking

these questions, and specifically the State of Oregon?

00:34:5128 sec.
Napolitano, Janet - Governor, [D] Arizona

I can't speak to Oregon, but I can say

that States and other Governors have been speaking with me. Of

course, we are all speaking with the...

00:35:1938 sec.
Smith, Gordon H. - U.S. Senator, [R] Oregon

Well, obviously the way you have worked it

out, it serves health, Medicaid and the budget, and I think

that that is the better approach...

00:35:5715 sec.
Napolitano, Janet - Governor, [D] Arizona

Thank you, Senator, and I would be

happy to be speaking with you as we go through the

implementation of the Deficit Reduction Act. I am...

00:36:1214 sec.
Smith, Gordon H. - U.S. Senator, [R] Oregon

Well, that is terrific, and I hope that my

Udall cousins are all treating you well. Turn them over to me

if they are not.

00:36:26
Napolitano, Janet - Governor, [D] Arizona

Your Udall cousins are treating me

very well and we could use more of them. Thank you.

00:36:2639 sec.
Smith, Gordon H. - U.S. Senator, [R] Oregon

I think I have about 5,000 of them in

Arizona.

Mr. Wagoner, thank you again. You know, as I listened to

your testimony and have considered...

00:37:051 min.
Wagoner, G. "Rick" Richard Jr. - Chairman and CEO

We haven't, Senator, added them up. Frankly, I

think as the Governor mentioned, it is a little bit of, in some

sense, a dicey practice of...

00:38:0611 sec.
Smith, Gordon H. - U.S. Senator, [R] Oregon

Are you mindful of Fortune 500 companies or

perhaps even your competitors following similar enlightened

models as General Motors is in health...

00:38:171 min.
Wagoner, G. "Rick" Richard Jr. - Chairman and CEO

Yes. I think different companies have begun to

seriously focus their best thinking on health care costs at

different times because I think,...

00:39:461 min.
Smith, Gordon H. - U.S. Senator, [R] Oregon

Richard, 2 weeks ago we had in this Committee

a most fascinating hearing on a topic called medical tourism.

We had testimony from an ESOP-owned,...

00:41:0010 sec.
Wagoner, G. "Rick" Richard Jr. - Chairman and CEO

I have to say I am familiar with it, having

read about stories such as those you are citing, but it is not

something that we have studied.

00:41:10
Smith, Gordon H. - U.S. Senator, [R] Oregon

Is it something you will have to look at?

00:41:1031 sec.
Wagoner, G. "Rick" Richard Jr. - Chairman and CEO

It is not something that we are looking at in

detail right now. I would say just from the practical

perspective, as we see it, because of...

00:41:41
Smith, Gordon H. - U.S. Senator, [R] Oregon

All the pre-ops were done by

teleconferencing, like we are doing with Governor Napolitano.

00:41:41
Wagoner, G. "Rick" Richard Jr. - Chairman and CEO

Right.

00:41:4117 sec.
Smith, Gordon H. - U.S. Senator, [R] Oregon

I was astounded by what I learned in that

hearing and I just simply note it to you because there is a lot

of difference between $6,000 and...

00:41:5853 sec.
Wagoner, G. "Rick" Richard Jr. - Chairman and CEO

I think, Senator, if I could comment, I think

perhaps something that we would learn from that is why can they

do that for $6,000. Certainly,...

00:42:5113 sec.
Smith, Gordon H. - U.S. Senator, [R] Oregon

Well, there are a lot of Republican and

Democrat Senators wondering the same thing. So, anyway, my time

is up and I want to note Senator...

00:43:0446 sec.
Kohl, Herbert "Herb" H. - U.S. Senator, [D] Wisconsin

Thank you very much.

Mr. Wagoner, you talked about the cost of health care

spending, of course, and the fact that almost 40 percent...

00:43:501 min.
Wagoner, G. "Rick" Richard Jr. - Chairman and CEO

Senator, I think you have stated our position

very well. Our experience is as you suggest and we do think

there has been progress in enhancing...

00:44:579 sec.
Kohl, Herbert "Herb" H. - U.S. Senator, [D] Wisconsin

In your statement, did you give us an

estimate on, in your judgment, what generic drug usage in your

company is saving you?

00:45:0653 sec.
Wagoner, G. "Rick" Richard Jr. - Chairman and CEO

Well, yes. We said that of all of the

formularies that offer generic drugs, generic alternatives, we

have had about a 90-percent success...

00:45:5921 sec.
Kohl, Herbert "Herb" H. - U.S. Senator, [D] Wisconsin

So can I conclude that you would suggest that

we need here--to the extent that we are in a position to

influence the process, we need here...

00:46:2042 sec.
Wagoner, G. "Rick" Richard Jr. - Chairman and CEO

Our experience has been very good. It has got,

obviously, to be done on a thoughtful basis. I think that has

worked out very well from our...

00:47:0233 sec.
Kohl, Herbert "Herb" H. - U.S. Senator, [D] Wisconsin

Thank you very much, Mr. Wagoner.

Governor Napolitano, some States that have expanded home

and community-based services, such as your State,...

00:47:351 min.
Napolitano, Janet - Governor, [D] Arizona

Yes, Senator, thank you. We have

avoided the woodwork effect because we use a pre-assessment

screening tool, which is a very effective device....

00:48:4017 sec.
Kohl, Herbert "Herb" H. - U.S. Senator, [D] Wisconsin

Do you think that the relatively smaller size

of your State, as opposed to the really larger States in our

country, gives you a somewhat...

00:48:5738 sec.
Napolitano, Janet - Governor, [D] Arizona

We are the 17th largest State in the

country, so we are at least medium, and we have a large senior

population. In fact, by the year 2020,...

00:49:35
Kohl, Herbert "Herb" H. - U.S. Senator, [D] Wisconsin

That is very good.

Thank you, Mr. Chairman.

00:49:3521 sec.
Smith, Gordon H. - U.S. Senator, [R] Oregon

Thank you, Senator Kohl.

So you won't think we are rude, they have called a vote. I

would propose that Senator Kohl and I rush over and...

00:49:5659 sec.
Wyden, Ronald "Ron" Lee - U.S. Senator, [D] Oregon

Mr. Chairman, thank you.

Mr. Wagoner, as you know, since 1945 and Harry Truman, this

country has been trying to come up with a way to make...

00:50:5557 sec.
Wagoner, G. "Rick" Richard Jr. - Chairman and CEO

I obviously can't speak for everybody,

Senator.

I can say from General Motors' perspective--and

certainly I talk to my colleagues...

00:51:5243 sec.
Wyden, Ronald "Ron" Lee - U.S. Senator, [D] Oregon

Tell me your thoughts about the idea of

shared responsibility, that there is a role for a government,

there is a role for the private sector...

00:52:351 min.
Wagoner, G. "Rick" Richard Jr. - Chairman and CEO

Well, obviously, our model, Senator, is one

that involves the three parties really working together to fund

the health care expense, and...

00:53:4834 sec.
Wyden, Ronald "Ron" Lee - U.S. Senator, [D] Oregon

I think you are right, and my seat-mate,

Senator Clinton, has done very important work in the technology

area, but I do want to come back...

00:54:2257 sec.
Wagoner, G. "Rick" Richard Jr. - Chairman and CEO

Well, again, I don't think I am in probably a

position to tell you what should be required of all employers.

You know what we do. My experience...

00:55:1956 sec.
Wyden, Ronald "Ron" Lee - U.S. Senator, [D] Oregon

Let me ask you about one idea that I am

looking at with respect to the role of the employer. I hear

constantly from businesses that their...

00:56:1541 sec.
Wagoner, G. "Rick" Richard Jr. - Chairman and CEO

Well, I know that some companies have done

that. We have done that at specific sites and I think have had

some success doing it. I think...

00:56:5613 sec.
Wyden, Ronald "Ron" Lee - U.S. Senator, [D] Oregon

My time is up and, as you know, my seat-mate

has a longstanding interest in this issue, as well, and I am

going to give her the gavel and...

00:57:09
Wagoner, G. "Rick" Richard Jr. - Chairman and CEO

Thank you.

00:57:09
Clinton, Hillary Rodham - U.S. Senator, [D] New York

Thank you. It is good to see

you again, Mr. Wagoner. Governor, welcome. We are delighted to

have you be part of this hearing as well.

00:57:0910 sec.
Napolitano, Janet - Governor, [D] Arizona

Thank you.

00:57:1913 sec.
Clinton, Hillary Rodham - U.S. Senator, [D] New York

GM does business all over the world. You

obviously are an American company with global reach and we hope

that continues. You have employees...

00:57:32
Wagoner, G. "Rick" Richard Jr. - Chairman and CEO

I would say we have employees probably in 40,

45 countries.

00:57:3210 sec.
Clinton, Hillary Rodham - U.S. Senator, [D] New York

Have you done an analysis of your health

care costs in those other 44 countries?

00:57:42
Wagoner, G. "Rick" Richard Jr. - Chairman and CEO

We have. It is concentrated primarily on the,

let me say, 20 countries where we have most of the employees.

00:57:4212 sec.
Clinton, Hillary Rodham - U.S. Senator, [D] New York

Do those include Canada, European

countries, as well as Asian countries?

00:57:54
Wagoner, G. "Rick" Richard Jr. - Chairman and CEO

They do, Senator, yes.

00:57:5410 sec.
Clinton, Hillary Rodham - U.S. Senator, [D] New York

Is that information that could be made

available to this Committee in some non-proprietary way for a

basis of comparison?

00:58:04
Wagoner, G. "Rick" Richard Jr. - Chairman and CEO

We would be glad to share that information

with the Committee.

00:58:043 min.
Clinton, Hillary Rodham - U.S. Senator, [D] New York

Obviously, what I am trying to get at is

that I think American companies are being put in an impossible

position when it comes to a global...

01:01:4960 sec.
Wagoner, G. "Rick" Richard Jr. - Chairman and CEO

Senator, I share many of your views and I

think your analysis is correct that if you compare the cost of

health care that we pay for employees...

01:02:4911 sec.
Clinton, Hillary Rodham - U.S. Senator, [D] New York

Mr. Wagoner, I am so sorry, but they have

told me if I don't go to vote, I am not going to get to vote. I

would love to get the rest of...

01:03:00
Wagoner, G. "Rick" Richard Jr. - Chairman and CEO

I would be glad to do that.

01:03:00
Clinton, Hillary Rodham - U.S. Senator, [D] New York

Thank you so very much for being here.

01:03:0048 sec.
Wagoner, G. "Rick" Richard Jr. - Chairman and CEO

Yes, ma'am. Thank you.

The Chairman [presiding]. Thank you, Senator Clinton.

Before we let you go, just a couple of follow-ups I had.

Governor,...

01:03:4850 sec.
Napolitano, Janet - Governor, [D] Arizona

One is we are really one of the

largest purchasers of health care in the State and that gives

us some market power. What we do is we have...

01:04:38
Smith, Gordon H. - U.S. Senator, [R] Oregon

Did I understand you to say that you are the

purchaser of prescription drugs as well?

01:04:3836 sec.
Napolitano, Janet - Governor, [D] Arizona

Well, that is part of the capitated

costs. It is a full-risk, capitated program, and part of that

is the pharmaceuticals. So we leave it...

01:05:1431 sec.
Smith, Gordon H. - U.S. Senator, [R] Oregon

Richard, as you are no doubt aware, the

Centers for Medicare and Medicaid Services have tried without a

great deal of success to publish...

01:05:451 min.
Wagoner, G. "Rick" Richard Jr. - Chairman and CEO

We have been able to do this successfully, I

would say, on a limited basis, in areas where obviously we have

concentrations, high numbers...

01:07:21
Smith, Gordon H. - U.S. Senator, [R] Oregon

Senator Kohl has a follow-up.

01:07:2130 sec.
Kohl, Herbert "Herb" H. - U.S. Senator, [D] Wisconsin

Thank you.

Just a word from each of you, if you would, on the

importance of health information technology programs, their

startup...

01:07:5126 sec.
Napolitano, Janet - Governor, [D] Arizona

Thank you, Senator Kohl. Over a year

ago, I issued an executive order and what I did through that

executive order was create task force...

01:08:17
Kohl, Herbert "Herb" H. - U.S. Senator, [D] Wisconsin

Very good.

01:08:172 min.
Wagoner, G. "Rick" Richard Jr. - Chairman and CEO

I wholly endorse what the Governor said. I

think she laid out the benefits. The case is compelling. You

would be sensitive from your...

01:10:18
Kohl, Herbert "Herb" H. - U.S. Senator, [D] Wisconsin

Those are good answers. I thank you both very

much.

I thank you, Mr. Chairman.

01:10:1832 sec.
Smith, Gordon H. - U.S. Senator, [R] Oregon

Richard Wagoner and Governor Napolitano, we

can't thank you enough for sharing your time on this very

important issue, an issue that eventually...

01:10:50
Wagoner, G. "Rick" Richard Jr. - Chairman and CEO

Thank you very much.

01:10:50
Napolitano, Janet - Governor, [D] Arizona

Thank you, sir.

01:10:501 min.
Smith, Gordon H. - U.S. Senator, [R] Oregon

Thank you.

Mr. Don Marron is the acting director of the Congressional

Budget Office.

We welcome you. Thank you, Don.

He will...

01:12:016 min.
Marron, Donald B. - Acting Director

Thank you, Mr. Chairman. It is a pleasure to be

here today to discuss the Medicaid program and the challenges

it faces as a result of rising...

01:18:40
Smith, Gordon H. - U.S. Senator, [R] Oregon

It gets its name from people coming out of

the woodwork for it?

01:18:40
Marron, Donald B. - Acting Director

Exactly.

01:18:40
Smith, Gordon H. - U.S. Senator, [R] Oregon

All right.

01:18:4023 sec.
Marron, Donald B. - Acting Director

You may not get the reductions in overall

spending that you might have thought just by comparing the per-

capita costs of the two systems....

01:19:0341 sec.
Smith, Gordon H. - U.S. Senator, [R] Oregon

Well, on that issue--and I know that has been

the problem with home care, is the woodwork effect, and yet it

does seem to me if they are...

01:19:44
Marron, Donald B. - Acting Director

Yes.

01:19:4438 sec.
Smith, Gordon H. - U.S. Senator, [R] Oregon

Their report has shown that the Medicaid

program would secure $83 billion over 10 years in savings if

all the States moved to a full capitation,...

01:20:2243 sec.
Marron, Donald B. - Acting Director

Certainly. We took a very quick glance at the

study this morning. We have not reviewed it in any great

detail. What I took from it from...

01:21:05
Smith, Gordon H. - U.S. Senator, [R] Oregon

Yes.

01:21:0536 sec.
Marron, Donald B. - Acting Director

As I understand it again basically just from a

quick glance, their analysis presumes that these changes would

essentially happen overnight....

01:21:41
Smith, Gordon H. - U.S. Senator, [R] Oregon

Why isn't it?

01:21:4152 sec.
Marron, Donald B. - Acting Director

Well, it is interesting. Arizona is clearly a

very special case. As the Governor mentioned, they were the

last entrant into the Medicaid...

01:22:3316 sec.
Smith, Gordon H. - U.S. Senator, [R] Oregon

Can you give me an example of some

challenges, say, hypothetically Arkansas would have adopting

what Arizona has? Are there States that...

01:22:498 sec.
Marron, Donald B. - Acting Director

I think the primary challenge would be that

Arizona has worked at managed care since 1982.

01:22:57
Smith, Gordon H. - U.S. Senator, [R] Oregon

Managed care isn't as accessible in other

States?

01:22:5710 sec.
Marron, Donald B. - Acting Director

That not every other State has chosen to go

that far. So it is not something where you can easily just

switch from a more fee-for-service-oriented...

01:23:07
Smith, Gordon H. - U.S. Senator, [R] Oregon

It takes a more mature industry in health

care to deal with their system.

01:23:0717 sec.
Marron, Donald B. - Acting Director

Yes, and then there may also be differences in

the population covered, but I am afraid I don't have those

details at my fingertips.

01:23:2413 sec.
Smith, Gordon H. - U.S. Senator, [R] Oregon

Do you ever do studies that actually make

recommendations to CMS on these kinds of things or

encouragement to give these kinds of waivers...

01:23:3716 sec.
Marron, Donald B. - Acting Director

We at CBO studiously avoid recommendations of

any kind, if possible. Our job is essentially to serve you and

to give you the kinds of information...

01:23:531 min.
Smith, Gordon H. - U.S. Senator, [R] Oregon

Well, obviously, we are going to have to do

something continually on the whole entitlement category because

eventually we will have no choice,...

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