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DAVE COOK: Okay folks, here we go. Mr. Fall, am I okay? SECRETARY SEBELIUS: No, thank you. DAVE COOK: Thanks. Just a silent rebuke to our menu choices, right? SECRETARY SEBELIUS: No, just -- DAVE COOK: Thank you for coming on this rainy morning. Our guest this morning is Health and Human Services Secretary Kathleen Sebelius. This is her first visit at the heart healthy breakfast club, although her father, Ohio governor John Gilligan was our guest three times in the past. If memory serves, an increasingly dubious prospect, this is the first Monitor breakfast with a woman speaker whose dad was also a breakfast guest. For your breakfast trivia buffs, get a life. The only father-son team was Mitt "I'm a regular guy" Romney, and his father, Michigan governor George Romney. They actually appeared at a breakfast together during Mr. Sperling's time in the host chair. Kathleen Sebelius certainly must have gone into politics with her eyes open. Her dad was elected to the City Council in Cincinnati when she was five years old, and he later served as a member of Congress before being elected governor. She's a graduate of Trinity College here, which also counts Speaker Pelosi among its graduates. Our guest met her husband Gary while in college and moved to his home state of Kansas, where his dad was a Republican member of Congress. She was elected to the Kansas House in '86 and in '94 was elected insurance commissioner. In 2002, she was elected governor, giving her dad the satisfaction of being the first governor to see his daughter also elected a governor. She was re-elected handily in 2006, served as chairman of the Democrat Governors Association in '07, and was confirmed as Secretary of Health and Human Services in 2009. She's obviously made an impression with the Wall Street Journal editorial page recently accusing her of "thuggery," and Newt Gringrich of "Soviet tyranny." So we can hardly wait to your performance this morning. So much for biography. Now we're onto mundane matters of process. As always, we're on the record here. There is no embargo. There is no live blogging or tweeting. Let me repeat. There is no live blogging or tweeting, but after the session is over, feel free to give into your wildest multi-media urges. As always, if you'd like to ask a question, please send me a subtle non-threatening signal, and I'll call on one and all. We'll start off by offering our guest the opportunity to make some brief opening comments, and then we'll move to questions from around the table. With that, thanks again so much for coming. SECRETARY SEBELIUS: Sure. Well, thank you for inviting me. I didn't realize my dad had been here three times. So I'll have to call him this morning and tell him I'm trying to catch up. But I thought I'd just spend a couple of minutes talking about the Affordable Care Act, which seems to be a topic on lots of people's minds these days, and then have a chance to talk about whatever you all want to talk about. We just passed the six month mark with the implementation of the Affordable Care Act last week, and at six months, the way the law was constructed, a number of the new consumer protections began to be effective in the law for new plans on or after September 23rd, and a number of them for existing plans. What at least I'm beginning to see, as I travel and I've been in 26 states, I think so far, but also just in talking to people around the country, that as we predicted all along, health care is very personal. What people really want to know is what the law does for them and their families. So as benefits or changes begin to occur, I think people are getting a much clearer sense of at least some of the preliminary features of the bill, and that's been very good. I think parents, you know, I hear from parents of kids with -- who have graduated from college or aged out in a birthday and are really pleased that their kids can stay on the policy. We were with lots of families last week who have children with pre-existing conditions, who for the first time ever have some confidence that they really will be able to take care of their children and the treatments that they need into the future. Medicare beneficiaries got some good news last week that we were able to announce, and it will be clear when the enrollment booklets go out in a week or so. But Medicare Advantage, which was touted to be on its, on life supports by the opponents of the Affordable Care Act, saying that any changes in the program are going to eliminate Medicare Advantage, eliminate the choices people have, we were able to announce last week that that is hardly the case. We have a very robust program throughout the country. Beneficiaries will actually see a one percent on average decrease in their rates, as opposed to a ten and a half percent increase that they saw last year. We put a cap on what companies can shift to consumers in out of pocket costs, and the companies project a five percent increase in their enrollment for next year. So the plan is stronger than ever. We also were able to announce that all the companies are going to participate in the Part D 50 percent discount which begins next year for prescription drugs and the donut hole. Again, we think on average about a $500 per beneficiary savings. So some very good news for Medicare beneficiaries. You know, over 2,000 companies have now been approved for early retiree enrollment. Ironically, some of the companies who were the most vigorous opponents of the Affordable Care Act were the first to line up for this particular feature. But again it's, I think it's an important piece of stabilizing the market. What we've seen is employers drop early retiree coverage pretty dramatically over the last number of years. So in an attempt to bridge the gap between now and 2014, this is one of the key pieces of the puzzle, because early retirees are often enormously challenged buying insurance in the private market as individuals. Every state in the country now has access to a new pre-existing insurance pool. The majority of states set up their own pool. We're running a residual pool for the rest of the states, and I think people are very enthusiastic about the new website, healthcare.gov. We launched the Spanish version about ten days ago. Again, it's never been put together before, the kind of information that combines public options and private options and personalizes them to a zip code and an age category and a health status. Starting tomorrow, we will have pricing information that will begin to go out to the individual market. Again, information that, you know, consumers just have never had, particularly small business owners and individuals. That's been the most fragile part of the marketplace. And we're really beginning to show some visible results from the new fraud tools we've been given. We had our third fraud summit with the Attorney General, have now strike forces in seven cities, are beginning to re-enroll all the durable equipment providers, starting with the hottest fraud spots. But taking advantage of some new data systems we're putting together and getting much more serious about how to go after the systemic fraud that's out there. So the implementation, I think, has been going amazingly well for regulations that basically are being written by three agencies. We've got Labor, HHS and Treasury responsible in large part. Some are uniquely ours, but a lot of what has been happening so far are really a three-agency reg writing effort, and amazingly deadlines have been met in a very timely fashion. We've gotten a lot of input. We're doing a lot of outreach, and I think as the benefits begin to kick in, what we're hearing from people is they are beginning to understand what the framework is of the Affordable Care Act, starting with frankly fixing the current system, building to 2014, when there will be new eligible enrollees. But Step 1 was really trying to stabilize and fix the system, so people who have insurance actually got benefits when they needed them. No more rescissions, no lifetime caps. Some of those features have really made it very difficult when people get sick, even if they have health insurance, to use the insurance that they bought to protect themselves and their families. DAVE COOK: Thank you for the comprehensive overview. SECRETARY SEBELIUS: So that's where we are. DAVE COOK: Let me do one or two, and then we'll go to Mort Kondracke, Susan Page and Lynn Sweet to start. I hate to do this to -- as my opening to a first-time visitor, but anyway, in the new NBC-Wall Street Journal poll, respondents were asked about possible election outcomes, and one of the outcomes that they were given was the health care reform plan that was passed earlier this year is repealed. That was viewed, in the Journal poll anyway, as an acceptable outcome by 51 percent of those surveyed. What does that tell you about either the content of the plan or the way it's been sold? SECRETARY SEBELIUS: I think it's an indication to me that again, people are still wondering how this impacts me and my family, and that's a question that's not an easy sound bite to answer. It's, I think, a lot easier to charge lots of -- that the current system will just get worse and break down, as opposed to having any real solutions to fixes. So again, what I'm finding as we can engage in the conversation, and it has to be sort of by age group, by person, because health care, you know, if I'm 25, I might be interested in Medicare but not very. And if I'm 65, I may find, you know, some of the features for children, again, apply to my grandchildren maybe. But what I really want to know is about my health plan, my doctor, my security. And what at least again, I think that the debate will be not with HHS or with the law, but with constituents all over the country, who begin to see the benefits of the plan. And as they begin to engage in the notion that, you know, they do have affordable coverage; they can keep their coverage when they have it, they have new tools, they have friends and family who are in a different position, I think that the debate about repeal becomes less conceptual and more personal. DAVE COOK: Even though six months in, you've got 51 percent of the people saying it could go away; no problem for me? SECRETARY SEBELIUS: Well, no problem for me, they think. DAVE COOK: Okay. Let me ask you one other, and then we'll start with Mort. As you know, the theory goes that if Republicans take control of the House, they're interested in defunding health care reform. Minority Leader Boehner was saying "I'm committed to doing everything that I can, and our team can do, to prevent Obamacare from being implemented. And when I say 'everything,' I mean everything." So what is there that you can do to prevent them from defunding Obamacare? SECRETARY SEBELIUS: Well first, we can win the elections. That's Step 1, and I guess having run eight times in Kansas as a Democrat, I tend to be always optimistic about outcomes. I mean I am not one of the people who believe that the House and Senate is going to be majority Republican come January. I could be wrong, but let's start there. Step 2 is we use the resources that we have, and figure out how to, you know, make the law work for people. There were resources allocated as part of the Affordable Care Act, and so we'll continue to talk to Congress about when we need additional resources and where those should come from. But I don't, you know, I don't -- DAVE COOK: We would think that you have 900. The President's budget request for you this year was 900 billion. So what you're saying is we'll move some of that 900 billion around? SECRETARY SEBELIUS: Well, most of that, let's be clear, goes out the door. Medicare and Medicaid are the lion's share of our budget. It's a really big number, but it is not funding programs. But there are resources, there are things that, you know, again, I've been a governor at tight budget times, and you know, you do what you can with what you have. So we reassess everything, and we figure out ways that we can move forward. DAVE COOK: Mort? MONITOR BREAKFAST: Madam Secretary, there are a lot of people, and not just the Wall Street Journal (inaudible), who think that you and maybe even the President have a kind of an animus towards health insurance companies, and that what your intent is is to load them up with mandates, limit their premiums, and either convert them into a public utility or maybe even drive them out of the market, so that eventually we've move to a public plan or maybe even a single payor. Could you respond to that? SECRETARY SEBELIUS: Well first of all, I think that there were definitely a lot of supporters of a public option. Get rid of the private market altogether, have, you know, whether it was Medicare for all or some version of that. From the outset, the President rejected that notion. This is a health care model built around the private market, anticipating that frankly, it may be the salvation of the private market. Because if you look at what's been happening in the private insurance market over the last number of years, as rates go up, they are losing their customer base. Employers are dropping coverage, individuals are dropping coverage. So we were looking at a business model that wasn't working particularly well, left entirely on its own. So one could say that in 2014, when there become, depending on whose estimates you look at, somewhere between 30 and 40 million new customers, that is a kind of new opportunity for the private insurance market. So that's Step 1. I think that the notion of having a single payor plan or having a government takeover was rejected from the outset. Secondly, I do think there is a balance. In exchange for all these potential new customers, there are, at least in the exchanges, the new marketplace that states will run and be put together with some competitive plans, there are going to be some new rules dealing with elimination of the opportunity for companies to cherry-pick, and really essentially creating a framework for them to compete on price and quality. But no longer be able, by selective underwriting or various methodologies, eliminating certain treatments from benefit packages, be able to, you know, not serve people who may get sick. Which again I think has been a, you know, a fairly successful market strategy. It's cheaper to insure people who won't make a claim than people who do a make a claim. But in the long run, it doesn't serve folks very well who want and need health insurance for when they get sick. Third, we have done a lot of outreach and a lot of meetings with not only insurance CEOs but association execs on a regular basis. They have been involved and have input to every regulation that's been written, to -- you know, they certainly work very closely with the National Association of Insurance Commissioners. I know that well because I was one, and they are very actively engaged in that process, and we're working closely with NAIC. But I do think there is also a brighter light that we intend to shine on activities, that really has never been there in the past. In the past, it's been individual insurance commissioners who deal with the industry one at a time. Some of the insurance commissioners come right out of the industry and go right back into the industry. Others have been pretty actively engaged and involved. But there really hasn't ever been a federal focus in health insurance on the private insurance market. I think, I'm a believer that transparency and, you know, having an opportunity to highlight some of the practices of the past, is a helpful way to change behaviors. So calling out the practice of rescissions, which some companies, and this isn't me making these accusations; this has been proven in court cases, you know, had algorithms to find disease patients and drive them out of the market. Go back and find, you know, a technical mistake or charge them with fraud. The policyholders assumed it was just them, until later in the day, they found out no, this was actually a fairly widespread practice. In one case it was AIDS victims; in another case, it was breast cancer victims. I mean those kinds of practices are pretty despicable. Highlighting them, I think, is important and is a way to hopefully guard against a repeat of that behavior. So we're going to do that moving along. We're going to publish data and information. I'm a huge believer, again having been an insurance commissioner, that having consumers armed with data. You can get a lot more information right now about a car you want to buy, or what kind of big screen TV you should have, where the best bang is for your buck, if you want to get, you know, 15 ESPN channels, where to go, than you can about health insurance. So changing that balance a little bit, changing those dynamics, arming consumers with some tools, I think, is an important piece of this puzzle. DAVE COOK: Susan? MONITOR BREAKFAST: You've said you've gone to 28 states? SECRETARY SEBELIUS: 25, I don't know. Yes. Around there. MONITOR BREAKFAST: And you have, of course, a lot of political experience yourself. What's your sense of how the health care law, what impact it's going to have on mid-term elections? SECRETARY SEBELIUS: You know, I think that the number one issue, wherever I go, is jobs and the economy. I mean that really is probably one, two and three. People are worried, concerned, anxious about themselves, about their kids, and I think that is by far the dominant theme. You know, I find that where I've been, at least, I have been invited into districts to participate with members, highlighting various health care initiatives. Some of it is around the Recovery Act investments that were made. Some of it is about the Affordable Care Act. So we've done fraud summits with seniors, and I've been with, you know, parents of kids with pre-existing conditions. We visited with health care providers. Interestingly enough, most of the doctors and nurses I talked to are very enthusiastic about a new platform, are very enthusiastic about finally getting a payment system under a lot of their patients, and are also very excited about the opportunity to work in accountable care organizations and create medical home models, and the things that they think are really good ideas, that they've been trying to do for a while, and the notion that Medicare will begin reimbursing for those ideas. I know in some areas, you know, this bill is being used as an indication of, you know, government takeover, that we have sort of over-reached. Again, I think it's important that people understand that, I mean we aren't taking over anything. It's really the private market. Frankly, this is the most state-friendly bill I've seen in my experience. I mean I was a legislator and a governor, and my typical experience with Washington big ideas is it gets passed, we're told what to do. There's a big stick about you will lose your highway funding, education funding, your youngest child, whatever, if you don't do this. But rarely is there any money attached to -- I mean there's a big stick, and you know, no carrot. This bill actually is just the opposite. It assumes at every point along the way that the state takes the lead, you know. Set up the pre-existing pool, run the exchange, you know, have additional resources for your regulation. Only if the state chooses not to do that do we act as the backup, and at every step along the way, money comes with, you know, if you want to set up IRS pool, here are the resources to do it. If you are willing to enhance your regulatory oversight at your commissioners level, here is money to hire new staff and new actuaries. We've begun, we'll begin today to put out the grants for states to begin planning exchanges, exchanges that won't be up and running until 2014. But what we know is that this is not an uncomplicated process, to put together a platform for not only a new market, but an enrollment system that could be seamless, and a call center. So we're going to begin to provide resources to states to do that. So you know, I think Susan, depending on where I go, it's different. What I find though, and since I have all your attention I'll deviate for just a moment. I really think the untold story of 2010 is not the Tea Party or not the health care bill or a number of these issues. It is the amount of money that is flowing in districts around the country, and particularly the amount of anonymous money. I haven't been anyplace where there aren't dozens of ads now being run, and nobody knows who's behind them. I mean, you know, there are no -- I'm used to a political system where people engage in battles, and you know, you know who brought them to the dance, and that becomes part of the discussion. You vote for Susan Page and she actually is a big friend of, you know, consumers and nurses and docs, or she's a big friend of insurance companies, and that becomes at least something that voters can talk about and think about. I think the President was absolutely right, you know, at the State of the Union, when he talked about the Supreme Court decision being a real turning point. This election is, I mean there is money flowing in unbelievable ways and very anonymous. So to try and get a handle, for constituents to try and figure out who is it that is behind this, whose friends are you, who is standing up for you, I think, is difficult if not impossible right now, and I think that's pretty dangerous. DAVE COOK: We're going to go in our remaining time, Lynn Sweet, John Ward, John McCormick, Paul Bedard, Matt Dubai, Jim Landers, Christina Villatoni and Jennifer Habercorn. We may not get to everybody. Just keep doing your answers. SECRETARY SEBELIUS: I'll just stop answering. DAVE COOK: No, no, no. No, no, no. Just to give them a sense that I've seen their non-threatening gestures at me. Lynn? MONITOR BREAKFAST: Madam Secretary, I'd like to know what it's like to work with Rahm Emanuel, what is his style, and could you tell me what deal or deals that he cut that were most important to getting the health care bill passed? So three things. What he's like to work with, style and deals. (Laughter.) SECRETARY SEBELIUS: Rahm is never boring. You know, he's active, he's engaged, he's got ideas about everything, and is really involved in everything as a chief of staff should be, in terms of, you know, a wide range of topics. His dealing in the health care area was I would say not as much deeply involved in the policy decisions. The President really did that. There were a number of times along the way that, you know, the President would become very engaged in making a policy choice. But more in just the tactical how do we get from here to there. What is the pathway, what's the vote look like, who do we need, who don't we have, and he was very hands-on in every step of that process. It was an interesting and somewhat torturous process, because it changed a number of times. MONITOR BREAKFAST: And his style? I mean you used the words "actively engaged." That's what he's like, but what -- when he wanted you to do something, what's the style? How does it work? SECRETARY SEBELIUS: I didn't have, you know, I was more in meetings with him that involved lots of principals. I don't, I'm not in the White House inside operation, but you know, Rahm is 24-7 all the time. If he has an idea, it should have been done yesterday, you know, or the day before. So it's a pretty -- to call it fast-paced is an underestimate. MONITOR BREAKFAST: Does he deserve the blame for the public option? That's how -- I know what you just said, but that's the jacket that some people put on him. SECRETARY SEBELIUS: No, no, no. DAVE COOK: John Ward. MONITOR BREAKFAST: Thank you. MONITOR BREAKFAST: Yes, I have two questions, one (inaudible). There has been some dispute, debate over how many employees HHS will need to add by 2014 to ramp up and implement the regs in the health care bill. That would be one. What's your latest estimate of that? Second, you know, the President didn't talk about health care very much over the summer, and so, you know, a lot of lawmakers were upset that he didn't give them the backup that he promised back in the spring. That's also got to impact somewhat the way that you're going around talking around the country. You're also trying to promote a health care bill, where a lot of stuff doesn't even kick in for four years. So when you're at home with your husband, talking with him -- SECRETARY SEBELIUS: He's in Kansas. MONITOR BREAKFAST: Well, when you're in Kansas with your husband talking to him about, trying to explain to him about the challenge that this is to promote this, how do you analogize? How do you explain that? SECRETARY SEBELIUS: Well, in terms of numbers of employees who we need by 2014, I really don't know the answer to that, because what we're frankly doing at every step along the way is making assessments of who we have and how much more they can take on. So I don't have a finite number. I don't think anybody has a finite number at this point. MONITOR BREAKFAST: More than 1,000 or less than 1,000? SECRETARY SEBELIUS: You know, my guess, I really don't, and I'm not trying to be coy. But I really don't know, because it's -- I'm insistent that everybody start with the assumption that we're going to do what we need to do with who we have, and then you've got a make a case before we add on. So we had to stand up a new office, because we didn't have an Office of Private Insurance Regulatory Oversight. Most of the other pieces of this bill are in an agency that already exists, and so we don't start with the assumption that you have to add, you know, 50 people here. Probably the biggest number we're going to need are for some of our systems, some of the new computer systems, some of the new operations particularly within CMS, but that was coming anyway, because we have a lot of outdated and outmoded. So we are constantly revisiting, you know, the count, and there isn't a finite count, and there certainly is no promise that we're going to have X number of new people. MONITOR BREAKFAST: How many new employees in the new office? MONITOR BREAKFAST: 378 or something. SECRETARY SEBELIUS: I can get you the current number. In terms of just the sell, you know, I think the President spent an extraordinary amount of time, energy and focus on health care, up to and including the day he signed the bill, and then has continued to visit and revisit it on a regular basis. I think what he heard from a lot of people, certainly from members of Congress and others, is your focus needs to be on a lot of things other than health care or in addition to health care, because this has been a long journey and we need to actually multi-task and have a lot of other messages. So the notion that then he began to talk about other things and didn't talk about health care was actually kind of in response to the requests from lots of folks to ask him to do just that, and really focus some time. Now whether it was, you know, more time and attention and focus on international issues or on education or, you know, certainly jobs and the economy, to get his high level spotlight on it. So this has been sort of a back and forth of you are, you aren't, you are, you aren't. I don't think there's any question this is one of the areas he cares a lot about. He doesn't ever lose attention on what's happening. He talks to me on a regular basis about how things are going and what's moving along. I mean this is something that he's paying very close attention to and wants it to work. Believed in it strongly and wants to make sure it works. You know, and I get, in the conversations that I have about implementation, I mean our piece of the puzzle, I think, is still going very well, and frankly, I'm stunned every day with every deadline, just because there's so many things at this point that could have gone awry, and so many areas that may not have actually been implemented in a timely fashion. So the fact that pretty seamlessly we're at six months and, you know, the body of work that's been done has been done very well, is always enormously impressive to me. It's frustrating at times to talk to folks, who still have no idea, you know, are repeating some of the myths of the past. I remind myself that after 18 months of debate, after a lot of misinformation and, you know, a lot of, a couple of hundred million dollars' worth of TV ads that drove that misinformation, I shouldn't be surprised that people still have some beliefs about what is or isn't -- should I answer it? (Phone ringing.) SECRETARY SEBELIUS: I could say hello. What a surprise. So I get sort of frustrated at times that there's still -- I'm debating in some ways mythology. But it's real as far as people are concerned, so that debate needs to continue. DAVE COOK: Mr. McCormick? MONITOR BREAKFAST: Madam Secretary, you spoke earlier about the health of Medicare Advantage. SECRETARY SEBELIUS: Of what? MONITOR BREAKFAST: Medicare Advantage. Earlier this week, Harvard Pilgrim Health Insurance Company announced that it would no longer offer Medicare Advantage plans to 22,000 seniors in New England. So what do you say to those 20,000 seniors who thought if they liked their plan, they could keep it? On a related note, the Wall Street Journal reported this morning that McDonald's may cancel its mini, so-called "mini-med plans" to 30,000 people, and again, what do you say to those workers who thought if they liked their plan, they could keep it? SECRETARY SEBELIUS: Well, let's start with my favorite newspaper today, the Wall Street Journal. I mean the McDonald's story is flat-out wrong, and I am sorry that they were not more accurate in their reporting. The McDonald's HR director, Steve Russell, has put out a statement flatly denying the statement that they are considering withdrawing from the insurance market. In fact, there are two steps in the process dealing with the limited benefit plans. One is a waiver about limits. We have that in our administrative authority, and McDonald's came into HHS, discussed that with our folks two weeks ago, and within 48 hours we'd approved their waiver. The medical loss ratio issue is one that isn't even settled. We do not have the report yet from the National Association of Insurance Commissioners, which by law has to inform our regulations. So we haven't written a reg. We can't waive the reg that doesn't even exist. We have assured the folks at McDonald's and others that as soon as we have a regulation that has a process in it, we will begin those discussions. So the report somehow that, you know, because they couldn't get a waiver from the MLR, they're dropping out of the market is just flat-out wrong. In terms of the Harvard Pilgrim situation, I don't know what the company status is. But again, companies moved in and out of Medicare Advantage all the time. That is not a new phenomena in the marketplace; it's an existing phenomena. They do it because of business plans, they do it because of others. We actually made some Medicare decisions to narrow the number of plans, not in the Harvard case, but narrow the number of plans, because there were some insurance companies that offered plans that were very similar to one another, but just slightly different in benefits. What we heard over and over again from beneficiaries was that they were very confusing. I can guarantee you that in the market where Harvard Pilgrim operated, every Medicare Advantage beneficiary will have the choice of a couple of new plans to choose from. They are not losing an opportunity to enroll in an MA plan. They may be losing the opportunity to enroll in their plan because, you know, that company chose to pull out. But that's been the case since the early 90's with MA plans, and it will continue to be the case. MONITOR BREAKFAST: Harvard Pilgrim (inaudible) just cited the Medicare cuts being used to fund national health care as a reason that they were leaving. Would you like to say that that's not true or -- SECRETARY SEBELIUS: Well, our updates to Medicare Advantage plans is they're being paid exactly the same that they were being paid in 2010. So they are not getting cuts from Medicare. We made that clear six months ago before the bidding process started. They are well aware of that. So they can cite, you know, what evidence they want, but it is not based on a cut that they have received from CMS. DAVE COOK: Paul? MONITOR BREAKFAST: I have two questions. First, you were talking to Dave earlier about what if the GOP takes over one of the other Houses and they try to freeze or take away spending, and you said you would do with whatever you have. How much, I mean what can you do to -- well, what can they do to you? SECRETARY SEBELIUS: To me? MONITOR BREAKFAST: What can they -- no. What can they do? What can they freeze that's going to be like, you know, in the next two years, something that's really significant to screw the whole thing up? SECRETARY SEBELIUS: Well, I think what happens with resources, again, most of the resources are not to build an empire in HHS. It's really money that will fund these various programs. So cutting off money to pre-existing pools mean that whoever's enrolled in those plans, you know, will, I gather, not have benefits or drop them. The early retiree program could be jeopardized by cutting off funding, you know, that states certainly are counting on resources to set up these new marketplaces. Absent the resources, that will be very difficult. So a lot of the funding really is not, is going into building kind of the infrastructure, or paying for the sort of bridge strategies, if you will, to get us from now to 2014. I think all of that could be jeopardized. MONITOR BREAKFAST: So it would actually hurt not so much HHS and the administration, but recipients of -- SECRETARY SEBELIUS: Right, you bet. I mean that's where the bulk of the funding flows, and then in 2014, you know, there would be funding available to provide subsidies for anyone below 400 percent of poverty, to actually purchase health insurance. So you know, eventually that would also be in jeopardy. But that's really where the, you know, the money goes, is to the framework. Again, it's not HHS money, it's not to hire employees. It's really building the systems around the country. DAVE COOK: Matt? MONITOR BREAKFAST: Thanks. Madam Secretary, you didn't have to send Rahm Emanuel to McDonald's to get them to retract so quickly, did you? (Laughter.) MONITOR BREAKFAST: Well, it is a Chicago company. My question, since the McDonald's question was asked, Republicans really, really, really want you and Don Berwick to come to the Hill to talk to them, not so much in the capacity that you did yesterday, but more in front of Finance and some of the other committees that have jurisdiction. Do you have plans to meet with them in a formal and public setting? SECRETARY SEBELIUS: Well again, you know, I am deferential to the Congressional process, and the last time I looked, the chairmen of committees schedule hearings and ask for witnesses. I have appeared at any hearing that I've been asked to appear. I, you know, go to all the budget hearings. And so I have been before Finance and been before Health and the three House committees this year in that capacity, talking about our HHS budget. We're lucky enough to have five committees of jurisdiction. I make a lot of rounds, and you know, will continue to do that. But I think when members who are not -- don't have the jurisdiction call hearings, it's unlikely that we'll respond. DAVE COOK: Jay? MONITOR BREAKFAST: A lot of the opposition to the bill right now seems to center around projected cuts in Medicare spending in the future, and those are being turned to, you know, warning seniors that they're about to lose half a trillion dollars of benefits in order to fund other programs that the bill calls for. How do you respond to that? SECRETARY SEBELIUS: Well again, I find that discussion sort of disheartening and disingenuous. The $500 million of various Medicare spending issues is really two primary areas. Some of it is ceasing the overpayment for Medicare Advantage, who are the companies being paid on average about 12 percent more than fee for service Medicare. It was set up that way intentionally by Congress in the early 90's to get private plans to participate and offer some competition and choice. But it has continued, and the data is pretty clear that there are no medical advantages for that overpayment. The health impact is not more significant, the outcomes are not better. So we are gradually over time going to not cease to pay them, but cease to overpay them. But what we're really talking about slowing the growth of Medicare spending. It's not that Medicare won't spend more money next year and the following than they are; it's that it won't grow at quite the rate it has been growing at. And over time, to slow from, I think it's a 6.8 percent growth rate to a six percent growth rate, you actually get $500 million. That's really what we're talking about in terms of a ten-year projection of growth spending. In the meantime, I think there are some strategies that are finally going to be implemented, to begin to look at Medicare as a value purchaser and not just a volume purchaser. Every private medical director I have met with, every head of the highest quality health clinics in the country, whether it's Geisinger or Cleveland Clinic or Mayo or Rocky Mountain says "Medicare is in the 20th century. We're trying to move them to the 21st century." We are trying to provide incentives and protocols for providers, to offer the best possible care but the right care at the right time for the right person, and Medicare pays for anything done to anybody at anytime. If you do more, you get paid more. It doesn't really matter what the outcome is. We just, you know, we are just a volume payor. So changing that system and Don Berwick is the perfect person to have at the leadership of this organization, because he's worked on this effort over this country for the last 20 years. It not only produces better patient care, and that can be demonstrated, but it will lower costs, and that can be demonstrated. I think that the opportunity to have that platform now and that framework for Medicare to really move into a new era of not only using our payment system to create a better environment for higher quality care each and every time, but give providers the tools to do that, with electronic medical records, with some virtual integration, allowing bundling care payments, working more closely with hospitals and nursing homes, medical home teams. All of those reimbursement strategies which don't exist right now, I think, really get us to the point where Medicare looks very different. But it does slow down the overall growth rate. DAVE COOK: Christina? MONITOR BREAKFAST: Good to be here. So I was actually surprised to hear you mention campaign finance, and sort of the -- DAVE COOK: Could you speak up Christina please? MONITOR BREAKFAST: I was surprised to hear you mention campaign finance using some of the terms President Obama often uses, and might you take that message to help Democrats for the mid-term elections out on the road, and then more to the point, this morning a Kansas man posed a question on Twitter, what would you ask Secretary Sebelius? He said "Ask her when she's running for President. I'm a huge fan from way back in Kansas." SECRETARY SEBELIUS: Oh Lord. DAVE COOK: Give us our headline. (Laughter.) SECRETARY SEBELIUS: You know, the campaign finance, I have to tell you, I was on the Common Cause board in the late 70's, early 80's, served on the national board and, you know, went through a lot of the early campaign finance. I was on the committee in Kansas. When I first got there, my first act of public service was being on our state disclosure commission. So I have been a huge believer. I'm not a big fan, frankly, of a lot of limits, because I think they're arbitrary and they just sort of set up, it's just a -- you know, you get limits on one committee and so people set up five committees. I mean I've been in that situation. I'm a huge believer in transparency, and knowing what money is flowing and where it's coming from, and then voters can make a decision. I just am struck by the fact that I have never seen a situation like this in at least my lifetime, and I've been watching politics for a long time, where first of all, the amount of money being spent is just staggering. But the opaque nature of that money, and in fact, you know, funding grassroots operation by millionaires and billionaires behind some of the big interests is just, I think, pretty alarming. I'm not sure we'll know much about it until after the fact, but there's been a tremendous amount of focus on the visible tumult going on, and I think not nearly enough focus on kind of what's behind the scenes, and still behind the big curtain, which is a lot of money flowing in a brand new and, as far as I'm concerned, fairly dangerous way, because people cannot then make a value choice. They can't make a decision. If you don't really know who is supporting Candidate X, Y or Z, you don't really have a framework for what it is that they're going to stand for, who they owe when they get into office, whose allegiance they have, who are the first seats in the row at the table. Those, that pieces of information, I think, are real important. MONITOR BREAKFAST: Do you have a favorite example of that that you've seen? SECRETARY SEBELIUS: That I've seen? MONITOR BREAKFAST: Yeah. SECRETARY SEBELIUS: Well, I mean every place I go, I see ads run by various groups who have the nicest -- I mean somebody must be making a fortune naming groups. You know, "Americans for A Better Life" and "Free Air Breathers of the United States." But every candidate I talked to says the same thing, you know. They literally don't know where this is coming from. They don't know when it's coming next. They don't -- You know, usually you could watch TV buys. You could look at your opponent's filing month to month and get some sense of what was coming at you. I mean this is like -- DAVE COOK: Is it also directed against health care, and then we need to get Christina's question about your candidacy or not taken care of. SECRETARY SEBELIUS: No time soon. Just tell him. MONITOR BREAKFAST: And will you take that message on the campaign trail? I mean will you be engaged politically this fall? SECRETARY SEBELIUS: You know, I'm definitely engaged politically this fall. I doubt it will be around campaign finance, as much as -- I just thought you were the perfect audience to plead with here, a little less than five weeks out, to take a look at that, because you've got the big megaphones, I think, out and about. DAVE COOK: We have one minute left. Jennifer, last question? MONITOR BREAKFAST: Okay. It's a (inaudible), but what's the latest on the child-only plans? I know you guys put out new guidance last week. Have any insurers signaled that they're going to come back in the market? SECRETARY SEBELIUS: Well actually we had the spokesperson for AAHIP, the American Association of Health Insurance Plans, indicate that they were in discussion with a number of their members, and it is -- the child-only policies, we're trying to get some accurate numbers right now. But they appear to be a relatively limited market, which has, we think, most parents have some alternative choices, family plans, the new high risk pool, a variety of other things. Having said that, we're going to continue to work hard with companies about rethinking their strategy of just walking away, because most of those companies are not going to cancel existing healthy child policies. They'll continue to renew that market, which has been frankly pretty lucrative. But what they don't want to do is write in a market where they have to insure kids with some pre-existing condition. I think that's -- I cannot believe that there aren't pooling strategies, mechanisms using open enrollment, that won't allow them to balance the risk going forward, other than just walking away from the marketplace. We had a commitment in March. Karen Ignagni, on behalf of that association, said absolutely we will work with you. Our plans are committed to making sure parents of children with pre-existing conditions, you know, will be able to buy policies, and we're going to work to try and make sure that happens. DAVE COOK: Apologies to my colleagues who don't get their questions answered, because we ran out of time. Thank you so much for doing this, Madam Secretary. SECRETARY SEBELIUS: Glad to do it. Thank you. DAVE COOK: We appreciate it. (Whereupon, the meeting was adjourned.)