Today, we are delighted to welcome Colleen Grogan as our speaker. Professor Grogan is in the School of Social Service Administration and shares the graduate program in health administration and policy and co-chairs the Center for Health Administration Studies here at the university. Professor Grogan's research interests include health policy, health politics, participatory processes, and the American welfare state. She also is currently the editor of the Journal of Health Politics, Policy, and Law. Professor Grogan is published extensively on the history and politics of Medicaid. In 2007, she co-authored a book with Michael Guzmano entitled Healthy Voice, Unhealthy Silence, Advocating for Poor People's Health, a book which explores efforts to include representatives of the poor and disadvantaged in health policy decision making. I'm told that Professor Grogan is currently working on a book to be titled America's Hidden Health Care State, which examines the evolution of public health care spending by private entities in the U.S. health system. Today, Professor Grogan will be speaking on the topic that you see, the politics of the ACA Medicaid expansion. Please join me in welcoming Colleen Grogan. Colleen. Can everyone hear me okay? Sounds like it. They were having trouble with the mic, but it sounds like everything is working well now. Thank you for coming out today as Mark said on such a cold and snowy day, especially those who came from outside the building and had to make the trek across the midway. So I also want to thank, before we begin, my doctoral student, Sun Gwyn Park, for helping me put many of the slides together and for working on parts of what I'm going to present to you today. I also want to acknowledge the Kaiser Family Foundation for providing access to their most recent public opinion data on the ACA and the Medicaid expansion. So if you get anything out of this talk today, what I want you to kind of come away with is that the Medicaid expansion under the ACA is really, really significant. That it has the potential to significantly change the way that states will structure not only the way people get health care coverage, but even the ways in which states will provide the delivery models for care. So that's kind of the main kind of key point I want you to get from this today. And how I'm hoping that we can get there to kind of get this understanding of its significance is first to sort of think about what does optional Medicaid expansion coverage look like across the 50 states? So very looking at this today, what does it look like and what are the implications? And then I want to think a little bit about, well, why do some states expand coverage and some don't? What influences that decision? And then I want to pause there and think about, as the series implies, the title of this series implies, the ethics of the coverage gap. What do we think about the distributive justice of this coverage gap and what that means for the ACA more broadly and across the 50 states? And then I want to move from that and say, OK, that's what we want to think about now. But what's the trajectory going forward in terms of the coverage gap? Will states expand? Will states eventually adopt the Medicaid expansion? And I want to make the argument that I think by 2020, it is highly likely that nearly all 50 states probably will have adopted a Medicaid expansion. So hopefully by the time I get there, you'll have a better idea of why I think that's the case. So when Medicaid was passed in 1965, it's coming to its 50-year history. We've had this 50-year anniversary. We've had this program for a long time now, right, almost half of a century. And so it's gone through a lot of changes. But when it was first passed, and this was true actually until we passed the ACA, that it wasn't just, it's our means tested targeted program, but it wasn't just a means test that determined eligibility. What's really important to understand about Medicaid prior to the ACA is that it had these really important categorical requirements, which meant that it was primarily for dependent children, the disabled and the elderly. And early on it was tied to the receipt of cash assistance. So we tended to think about this program as many people termed it welfare medicine because of that tie to cash assistance. So when the ACA passed in 2010, it was really seen from the Medicaid perspective as a significant breakthrough because it got rid of the categorical requirements. So it was the first time in this almost 50-year history that we said, okay, it's now a means test and that's it. And it will cover everybody up to 138% of poverty. So that still sounds pretty minimal, but it had pretty significant implications for thinking about enrollment across all 50 states. And the key there is just that a lot of the American states are much poorer than you think they are. So 138% of poverty in some states means that 30 to 43% of the population in that state is actually covered by Medicaid, which is really kind of striking when you think about it. Here's how it's distributed. So I'm sorry, let me just explain. So what I'm showing here is just that in 2007, you can see that in 13 states about a quarter of the population is already covered by Medicaid. So there's quite substantial coverage. The program's doing a lot of work even before we pass the ACA. But the ACA kind of pushes that even further to the right on the graph. And then again, here's how it plays out across the 50 states. And you can see that in the southern states in particular, that's where you're really going to see a lot of significant coverage of under the Medicaid expansion if it was passed. Now, this is all assuming in 2010 that it was a mandated Medicaid expansion. This is what people looked at after the bill was passed and said, wow, this has pretty major implications for Medicaid coverage. Now, of course, right after the bill passed, a number of states rose up and submitted a lawsuit against the ACA, claiming that it was unconstitutional. Now, most of the focus was on the individual mandate. That's what got a lot of coverage in the press. But of course, the other claim in the suit was that the Medicaid expansion, the mandate, was too coercive and that it moved beyond the bounds of what was reasonable to require states to do. And so what we ended up with was not this, but this. Because the Supreme Court decided that, in fact, it was too coercive, I might say that everybody, I would say across the political spectrum, was actually quite surprised by this Supreme Court decision that it was too coercive that has major implications for a number of intergovernmental programs, not just Medicaid. And we don't really know how that's going to play out in the courts. How it's playing out, though, for the Medicaid expansion, of course, is that now it's an option. States can expand or not under the ACA. And it's exactly, it's a big group of southern states that decided not to expand. And then a lot of mountain states have decided not to expand coverage under Medicaid. So what's the implication of states not deciding to expand their Medicaid program? Well, here I think it's helpful just to think a little bit about how people are supposed to get coverage under the ACA. And of course, we have the Medicaid expansion for people up to 138% of poverty. And then we have states set up their state-level exchange or their marketplace. Both terms are used now. And that was sort of how we envisioned getting to universal coverage. Well, obviously, when a state decides not to expand Medicaid, what we end up is the group up to 100% of poverty that don't meet these traditional categorical requirements now have no coverage or unsubsidized. There's nothing in the ACA for them because we didn't, nobody sort of anticipated that the mandate would be overturned. So what this means in terms of people falling in this area of unsubsidized coverage is so we're just looking at the non-expansion states. It means for a number of states that a very large share of their uninsured fall into the coverage gap. So obviously the dark brown states, it's quite significant. Over 60% of their uninsured fall into the coverage gap. So that's very important. What it means is the ACA was intending to do to most importantly get to universal coverage, make sure people that were currently uninsured are no longer uninsured. And in these states, that's just not the case. The ACA, because of the Supreme Court decision, and states now deciding not to expand are left with a number of uninsured. About 5 million total, a large proportion of those are in Texas and in Florida. So let's now think a little bit about why do some states decide to expand and others don't expand. And I think the first thing that probably comes to mind for all of you is political ideology or partisan politics. You have to kind of have been hiding, I guess, in a sack to not think about partisan politics around the ACA more broadly. And the fact that we have a very, very polarized politics today compared to our past. So this is significant and it plays out in the Medicaid expansion decision as well. So you see Republican governors that are strongly against, have openly stated publicly that they're strongly against the Medicaid expansion, and indeed their state has not expanded. This is just obviously the state legislatures play a significant role here, but I'm just focusing on governors to simplify, visually simplify this. And then you can see the blue just shows how well Democratic governors are very supportive and the state has expanded. But I think what's interesting, so that's kind of what you already knew.  What I think is interesting is to look at the cross-hatched states, like Nevada, Arizona, New Mexico, Iowa, Ohio, Michigan, who have Republican governors, who initially, many of them signed the lawsuit against the federal government, said Medicaid expansion was too coercive, eventually moved to saying now we support the expansion and their state has adopted it. So what's happening there? I think that was part of what we were interested in. And so one thing we wondered is, what about public opinion? Is it that in those states, they're actually having to respond to some constituency pressure that people really are demanding this Medicaid expansion? If you look at national opinion polls done by the Kaiser Family Foundation, there is really not significant support at the national level for the Medicaid expansion. It's really divided. 52% is by no means a kind of major mandate among the populace. I think part of what's happening here, and I'll show you some other public opinion polling a little bit later, but because the Medicaid expansion is really tied directly to the ACA more broadly, you find the same kind of very divided public opinion that you find with the ACA consistently, about half. But we were curious, do you find more support when you look at the state level? So from the national survey data, we came up with these state-level estimates of public opinion estimates. And I don't have time to go into how we estimate this, but we used a fairly common technique now to come up with state-level estimates using census data. And you can see that a number of states actually are divided. They're right in the kind of the tan and the light, and the light brown, are right around the 50% mark. You do see some, many of these southern states, though, that did not expand, there is majority support for the expansion. So it's kind of going against public opinion in those states. So I think that's kind of interesting to think about, and I'll return to that. The third factor that I think you would think is influencing state decision-making around the expansion is the cost of the expansion. I mean, after all, that was sort of the argument that the lawsuit states launched around the lawsuit was that it was pervasive in large part because they said it would be too costly to the states, right? That even though it was a very generous federal match, federal financing, but it still had significant financial implications for the states. So if you look at, again, if all states would expand coverage under the Medicaid expansion, what would be the cost in 2020 to the states? So total cost of new eligibility bills and then the state share, which by 2020 should be 10%. And you can see that it does vary quite significantly by region, of course by state, but here I show you by region. And it makes sense that in the red here with the South Atlantic states, they're the poorest states, they have the most increases in enrollment, they're going to assume the most cost, they're also the poorest states. So 1.2 billion means a lot more to the South Atlantic states than it would, for example, to the east nor central states, right? So it's not a completely hollow argument, right? The price that all the states face is very low, right? The price of expansion is quite low, but the absolute cost is not insignificant. So the third or fourth factor that we also kind of interested in, I think, is important is interest group pressure. So it's what puts states kind of over the tipping point in terms of deciding to expand is that interest group pressure. And here it's kind of interesting around Medicaid, right? Because you often think, well, there's no advocates for Medicaid. But you do have a good number of safety net providers in the states who care a lot about the Medicaid expansion, because they're covering the uninsured through uncompensated care, and would do a lot better under the Medicaid expansion. Here's just one estimate that's been done. There are other estimates as well that have been done recently that show here what they did is said in 2016, let's look at the non-expansion states, the states that have decided not to expand. What if they had expanded, what would be Medicaid spending for these states? And given that they haven't expanded, what is the cost of uncompensated care? So they're trying to dis-isolate the cost to the state. And here you can see that on net, clearly the state is worse off, right? So it's a strong argument from interest group, from safety net providers that we're losing a lot of really important federal money, but also it's actually more costly to our state under uncompensated care than if we would go ahead with the expansion. Finally, we were also wondering about whether views of the recipients, notions of recipient deservingness, were still slightly at play around this decision. And the reason for thinking about this is in the U.S. states, there's a kind of long history of, a very substantial literature, I should say, that has looked at this question of what determines state-level decision making around welfare programs. And a fairly consistent pattern is that the race of the recipient actually explains the level of generosity. So controlling for other factors, the level of African Americans, the proportion of African American recipients, as that increases, states tend to be less generous. So this has been a disturbing finding throughout the literature on welfare state politics. And we were curious to see whether this was playing a role here as well. So what we did was just look at a simple logistic regression, states expand coverage, states do not expand coverage. And we have five different estimates of the equation. The only thing here that we're doing is just with per capita income, here we go, per capita income and state cost of the Medicaid expansion are highly correlated. So we were taking them in and out of the equation to see if that was making a difference for the estimates. And what we found is that consistently across different ways of estimating the equation, public support was significant. So basically, if public opinion increases in the states, states are more likely to expand coverage. And just as we would think with partisanship, states that have Democratic Party control, that's control in the legislature as well as the governorship, they're more likely to expand coverage, to have adopted the Medicaid expansion. The other finding that was fairly significant, although some of the equations it was weak, but kind of persistently significant was race. And so this was this disturbing finding around the kind of views of recipients, and in particular African American recipients. So as the percent black in the state population increases, states are less likely to adopt the Medicaid expansion. Now we were really concerned about the race finding, and so we wanted to look at that a little bit more closely. And I think one thing that's just really important to understand about race, and these are national data, is that people of color, and in particular African Americans, are much more supportive of the Medicaid expansion than whites. And this is pretty clear, I think, in this bar chart. So when we used public opinion data, national public opinion data, to estimate the state support for the Medicaid expansion, what was really driving those estimates we found was the race variable. So what that means is, if you're trying to estimate state level public opinion, you usually use age, education, gender, and race to understand public opinion across the 50 states. In this particular instance, with public opinion regarding the Medicaid expansion, what was really driving the state level support estimates is race. You can see that it's a much better fit in the blue line. And so if we look at this by the sample, so we looked at whites only, and estimated the state level public opinion. And this is the estimates if you look at whites only. And what you can find is it's normally, fairly normally distributed, but you have about 45% to 47% average in the middle of support for the Medicaid expansion. When you add in Latino and other, it shifts it significantly to the right, so increases support. And then when you add in blacks, again, significantly shifts it to the right. So when you add in the black population, what you're doing a much better estimate of public opinion at the state level, and it's significantly shifted to the right is the idea here. So when you break this down by the logistic regression, what we're finding is it's really significant when you're looking at the total population. But what's happening here is it's not just the proportion of the black population is increasing. So this variable here. But it's knowing something about the amount of support coming from African-Americans for the Medicaid expansion. So I'm going to return to that point in just a second. But what does the coverage gap mean for African-Americans? And I think when you look at just the share of black households across the 50 states that are living under the federal poverty level, you can just see that the impact of the lack of a Medicaid expansion is quite significant in the South. None of this, we sort of know our history, but to see it, it makes it quite clear. When you have over 40% of African-American households living below poverty, this is exactly the group that's not being covered when the state denies the expansion. So I'm going to pause here and think a little bit about what are some of the ethical considerations of having a coverage gap that has such a significant race effect and has serious racial implications. I think one perspective just from a democratic question about democratic legitimacy is the tyranny of the majority perspective. So you have the Supreme Court saying that the Medicaid expansion, the federal government, the mandate is too coercive on the states. But another really serious concern is that states that are allowed to have this discretionary power are now really acting in sort of the tyranny of the majority. They're denying the public opinion, the support of a significant portion, that's systematically tied to race in their states. So I think that's a real serious concern. I think when we think about the history of racial exclusion in national welfare programs more broadly in the US, we should really be concerned about what's happening under the ACA. And I don't have time to give you that whole history, but I just want to talk a little bit about what happened with the New Deal and how there's a similarity here that's really troubling. So I don't know how many of you know when we passed the Social Security Program in 1935. It's mandatory compulsory payroll taxation, where we would then distribute benefits across the nation. It was national program, again, our kind of middle class entitlement program first passed in 1935. At that time, Southern congressional leaders fought very, very strongly to have domestic workers and agricultural workers excluded from the payroll tax. Well, of course, at that time, the majority of African Americans in the South were domestic and agricultural workers. So essentially what happened was a systematic racial exclusion of African Americans in the South from Social Security benefits. And that was not actually rectified until well into the 1950s. So again, something we thought was a national program had serious racial exclusion problems. And we're seeing that again with the ACA. And I think there should be a lot more mobilization around what's happening with this. Let's think a little bit, though, just about set-aside race, the distribution of costs and benefits with a coverage gap. Clearly, it's highly regressive. And I think you kind of already know that. But just to show it visually, you have very low-income people having access to none of the benefits that the ACA is providing and people at much higher income levels who are getting subsidized coverage. Just from a distributive justice perspective, there's kind of no logical argument for why we would structure the distribution of benefits in this way. And of course, there wasn't any logical argument. It just was something that happened because of the Supreme Court decision. But this is the implication. And again, it's not an insignificant number of people that are falling into those gaps in those states. So you have more people in the gap in Alabama that are actually being covered below them and an equal number of people that are getting subsidized coverage above them. So I think that's just really important to kind of pause and say serious ethical concerns about what's happening around the Medicaid expansion, the fact that we have this coverage gap. But I want to set that aside now and think about the longer-term picture with the Medicaid program and make the argument now that even though this is really troubling, I do actually think that by 2020, most states will adopt the Medicaid expansion. And so I want to spend a little bit of time now telling you why I think that's the case. And it's going to rely on kind of thinking about Medicaid's history and kind of learning from that to sort of look forward and think about what might happen. So Medicaid, what's really important to know about Medicaid is that even before the ACA passed in 2010, Medicaid had moved quite substantially into covering more and more people. There was quite a substantial expansion. So that by 2009, it was already our largest health insurance program in the US. It was covering 20% of the US population in 2008. There's a kind of series of statistics here that just sort of illustrate, I think, this point that the program was doing a lot of work, really kind of arguably reaching into the middle class. Even before the ACA, it covered a third of US children. It's a de facto long-term care program for the elderly and disabled, 70% of elderly in nursing homes. It pays for Medicare premiums and drug costs. 20% of Medicare beneficiaries receive Medicaid coverage, disabled non-elderly adults. This is really what Harold was talking about last week. Just an example of that is it pays for 44% of health services to AIDS patients. So people just, this is sort of my argument about the significance of this program even before the ACA. It's just really doing a lot of work. One last statistic to kind of drill this home. This is first financed by Medicaid. It's just striking how in a good number of states, 50 to, in this case, Alabama, 65% of births in Alabama are paid for by Medicaid. And this was before the ACA. So I was making this argument before the ACA passed. And others around the country, I think, have been making the argument as well that Medicaid was arguably at a crossroads even before the ACA, where it was when it was first enacted kind of clearly well for medicine, but it seemed that it was moving into something that maybe could be called a middle class entitlement. When the ACA passed and we had mandate, it sort of felt like, yes, the ACA was sort of solidly pushing this program into something quite different from what we would think of in terms of well for medicine. Now with the option, it kind of raises the question. So why does Medicaid expand? Why did it expand even before the ACA quite so substantially? Why did it expand? I want to talk about two institutional design factors of the program. The first is what's called optional groups and benefits, sounds really boringly technical, but I think I'll be able to show you pretty quickly why this is an important structure in the program. And then intergovernmental financing. And this is just what kind of, again, everybody seems to, I think, already know about Medicaid, which is that it has a federal match that's fairly generous. It's extremely generous under the Medicaid expansion. It starts at 100% and then goes down to 90% by 2020. But even aside from the ACA Medicaid expansion, Medicaid, the match, is 50% in some states up to, I think, most recently, about 84%. And what that means is states leverage. They want to push things into Medicaid to leverage those federal funds. So huge incentive to take services that are paid for with state-only money and put it into the Medicaid program so they can leverage those funds. So that's just a really obvious example of a kind of institutional design that expands this program. There's also just political pressure at the state level to do something about the uninsured and at the same time to keep taxes low and to be fiscally responsible so states have to balance their budgets. And when you're trying to be fiscally responsible and expand coverage, it turns out Medicaid is often your best solution because it's relatively cheap. And I think many of the providers in the room know why that's the case. The flip side of the expansion is that it's always been very, very meagerly on the payment side. And hopefully, I'll have a chance to talk a little bit about that. But let me talk just very briefly about why this optional coverage design has important kind of expansionary effects. You'll see that in terms of enrollees, the vast majority of Medicaid and Relay 70% are mandated. That is what that means is the federal government says, you have to coverage people who look like this. And 30% are by state option. But there's also a number of mandatory services that states have to cover. So what that means is, OK, when you bring somebody into your program, you must provide these services. These are mandatory services. But there's a whole slew of optional services as well. And some of them are really important and really expensive. A lot of them have to do with services for long-term care services. So when you look at Medicaid expenditures by eligibility enrollees and the services, hopefully this isn't getting too bogged down, this is really important implications. What it means is that only 40% of Medicaid expenditures are actually mandated by the federal government. So 60% of Medicaid expenditures are optional. That's what states, by their own discretion, are deciding we're going to spend this money. I think that's really important to grapple with. Because, again, it's an option. And it doesn't actually vary that much across the states, which is surprising. Because you would expect poor states to not do a whole lot of optional coverage. But they do do quite a lot. There's only six states that spend less than 50% of their expenditures on options. Arizona is an outlier. It doesn't spend that much. But all the other states do spend quite a lot. And of course, really where most of those optional expenditures are coming from, again, is on the disabled and aged side. But what that means is states are responding to political pressure and to public pressure to do something for people that they don't have to do. And it's significant. So how does this optional and mandate coverage work politically? So how has the federal government structured options and then mandates into Medicaid's history? Can we learn something from this? Because that's essentially what the Medicaid expansion is an option, right? What do we expect states to do now that it's an option? So through the 1980s, there were a whole number of legislative changes in the Medicaid program. And it was primarily around children and pregnant women and infants. And what the federal government did was to start with optional coverage and then as it became more popular and adopted more broadly across the states, it switched it over to mandatory coverage. So you can kind of see that with the boxes I highlighted and read. It started with options, got states on board, and then mandated coverage. That's also for pregnant women and infants. And you can see how this played out. So when the federal government decided to make children up to 100% of poverty and mandate in 1988, 76% of the states were already doing it. So it didn't mean anything to them. By their own discretion, we're already covering kids up to that level. In 1990, it wasn't quite as many states when they moved to 133, but they had kind of already gotten states on board with covering children in a different way under the program. Then in the 1990s, we have a similar kind of expansionary effort that begins under the ESCHA program, the state children's health insurance program. Again, it's an option for states to expand coverage on this program. None of the states had to do it. None of them were mandated to do it. And you can see that huge take up, huge take up, again, at state discretion. And how that played out across the 50 states, again, states were quite generous with the ESCHA program. They really, the incentives were very much in place under the option for states to expand. And of course, children were very viewed as very deserving and politically favorable group. But you only have four states that are actually less than 200% to coverage. So what this means, these sort of these expansionary efforts leading up to the ACA, is that by the time the ACA passes, we don't even really have to do anything around children and pregnant women. So the mandate doesn't even impact those other expansionary groups. It's kind of already beyond what the federal government is asking states to do in those two groups. So it's really around working parents, jobless parents, and childless adults. So adults that are uninsured that kind of fall into these categories that Medicaid has put them in in the past. So the reason there is some coverage prior to the ACA among with working parents and jobless parents is that the states where, again, the federal government said, you have an option to coverage parents under the Medicaid program before the ACA made it a mandate. So we were kind of seeing some of this action in the 2000s that you were seeing in the 80s and in the 90s. Make it an option first, and then shift it to a mandate. The problem, so I'll return to that, the problem is that not a lot of states actually took up the option for working parents. There wasn't as much support for expanding coverage for working parents. So you can see that the majority of the states, if they did anything for working parents, it was actually at levels below 100% of poverty. And I think that does have some implications for the ACA. Nonetheless, adults are relatively cheap. So they're not as cheap as kids, but they're obviously not what states are doing for the aged and the disabled. And this is just how it plays out across the 50 states. So again, in these non-expansion states, this is where they really were doing very little for the groups that they're asked to expand under their options, right? OK. So of course, the matching rate is much more generous under the ACA, Medicaid expansion than it was prior to the ACA. So that may change things. But what have states been doing since 2010? So ACA passes a number of states submit this lawsuit. They say they hate the mandated expansion. They don't want anything to do with the federal government. But it turns out they still like the federal government's money, OK? So even a state like Texas is willing to take some grants. They don't talk about it. But behind the scenes, not a lot of money for what Texas could take, but very few states, only four states took no grants, right? And this is money around exchange development, things that they said they want nothing to do with. They were taking grants. They were also taking grants on infrastructure development for their Medicaid programs. So states behind the scenes are taking, planning money from the federal government to get their infrastructure ducks in row to improve their Medicaid programs. Just they have to do it. There's front stage politics and then kind of backstage sort of bureaucratic developments happening. The other things that states were doing, we kind of thought states were all retrenching their Medicaid program. But it's not entirely true. So these are all the areas where states had discretion. And this, again, is after 2010, 2011, 2012, states are still in lots of physical stress. And yet, there's still many of them are expanding eligibility when they don't have to expand eligibility. And what's really important about that is once, so on the discretionary side with benefits, this is a clear pattern over time with Medicaid. States will adopt some benefits and then retract benefits. So we saw this in Illinois under the SMART Act, where states got rid of dental benefits. It will reduce dental benefits and expand eligibility. So states are trying to balance their budgets, and that's a decision that they'll often make. But they don't see benefits as so stuck in place. So once they expand, they provide a benefit, it's a little bit easier for them, given the politics, to retract that benefit. But it's not the case with eligibility. If they expand eligibility, they're much less likely to retrench eligibility. And that's kind of illustrated here. Retrenching eligibility is not a popular act at the state level. And again, that has huge implications for the Medicaid expansion. Because states, I think, know that once they adopt the Medicaid expansion, there's no turning back. They're not going to do the Medicaid expansion. And then two years later, say, oh, just kidding, we decided not to do that. So they know it's a pretty big step because it's very sticky. They can't retract it. OK, so where am I with time? OK, so I'll finish up in about 10 minutes. All right, so why are states reluctant to cut? Where is the pressure coming from? Clearly, there's the Medicaid maximization that I already talked about, the intergovernmental financing. But I think there's also a little bit of public opinion that might be playing a role. And this is more broadly about the Medicaid program. So not about the ACA Medicaid expansion, but public support for Medicaid more broadly. And here, what's interesting about when you ask people about Medicaid more broadly is that it's actually, over time, benefited from quite a bit of public support. So the blue line, of course, is this question was, do you think the federal government and the state should increase spending for the Medicaid program? Do you think they should increase, decrease, or keep funding the same? And you actually had the majority of the public saying you should increase Medicaid funding throughout this early period of the program. Next, people saying it should stay the same. Very few people saying we should actually decrease spending on the program. Now, by 2008 and 2011, that changes. But the question also changed. So it's a little hard to know how to interpret this change. There was sort of this gap in even asking the question at all. And then we have national surveys, again, that asked about Medicaid. But they prefaced the question by saying, thinking about the federal deficit, do you think we should increase funding, decrease whatever? And so, but given the way the question was posed, thinking about the federal deficit, the fact that you still get the majority of people saying increase or stay the same, I think is really important. There's similar findings, which I mean, there's lots of public opinion pulling about Medicaid now. Another question that was asked, should we cut spending on Medicaid? And so people have to affirmatively say, no, we shouldn't cut. And the majority of Americans say, no, we should not cut Medicaid. So there's actually pretty much persistent support. And so the question is, well, why is that? Why is there a fairly good amount of public support for the Medicaid program? And I think just looking back at this graph, especially during this period, I think what people thought is it was kind of the generosity of Americans, right? Middle-class Americans support taking care of poor people. But it's clearly sort of when you ask them about the Medicaid program, they're supporting increasing coverage or keeping it the same because they want to help people other than themselves. They want to help poor people. By 2008 and 2011, it's not clear that that's what's motivating them to support the program. There was a question that the Kaiser Family Foundation asked in 2012 that I think is really important here. So 50% of Americans report some level of personal connection to the Medicaid program. That means 20% have received coverage in the past, and 31% of the American public has either had a family or friend covered by this program. And that's unbelievable, really, when you think about it, right? Supposedly, our welfare program, half of Americans have some personal connection to this program. It's not, I want to help them. I want to help those other people. It's sort of, oh, that's my mom and needs that help, right? That's a really different calculation. And what that means, then, is among those who have this personal experience, this personal connection, not surprisingly, 82% support Medicaid, either very strongly or it's somewhat important to them. It's really an important program. So I think what's happening is when I talked about it's becoming a middle class entitlement, that's exactly what middle class entitlement programs do is people have a connection to this program and make claims on the state because they believe they need this program. That's a very different connection to the program than thinking I want to help poor people. So if all states expand Medicaid, so we asked this question in 2012, and half of Americans have a personal connection to the program. If all the states do the Medicaid expansion, especially in those dark states, that could be 75%, right, of Americans have a personal connection. And I think that has really, really important implications for state politics around this program. And I think it does help explain why a number of Republican states are actually quite resistant to thinking about the Medicaid expansion. It has created this huge political battle around the program because they know it will really change the politics of this program when so many people in there, among their constituency, have a connection to the program and are putting more demands on the state. So let me just close by talking a little bit about some recent alternatives to the Medicaid expansion that certain states have pursued. And what I mean by alternatives is they submitted a waiver to the federal government to do something other than the Medicaid expansion. Now the one that's maybe gotten the most press is the Arkansas private option. Some people have called what Wisconsin's done the third way approach. Let me just show you what Arkansas is doing relatively briefly. So Arkansas has a very meager traditional Medicaid program. It covers people up to 17% of the federal poverty level. So you can imagine that that's part of the reason why this Medicaid expansion is so significant for a state like Arkansas. That's really expanding this program. Again, not for pregnant women and infants and children, but for all the other groups, it's quite substantial. So what Arkansas wants to do is say we don't wanna put them in Medicaid. It's a conservative state. It doesn't wanna say that 35% to 40% of their population is gonna be on public insurance. So it says, okay, we want to do the Medicaid expansion because we want to leverage those federal funds, but we wanna put them in the Arkansas marketplace because that's the private option. So they will take all of these people, they'll keep the kind of traditional Medicaid program as is, they'll take the newly eligible that would be in the Medicaid expansion and put them over into the Arkansas marketplace along with the people that receive federal subsidized funding, the 138 to 400%. They have something called a medical frailty portal, which is quite interesting. They basically look at people's ADLs and IADLs and determine if you're really sick, they scoot you over to traditional Medicaid, okay? Take you out of the group that's gonna go to the private plans. So what does the marketplace mean and what does Medicaid mean? What's actually quite interesting, I think, is basically under the Arkansas marketplace, you have a system that's heavily, heavily financed by the federal government and somewhat by the state of Arkansas. Ton of public financing here, but they contract with private plans. So the private part of the private option is the contracting of private plans. It's not private money, it's public funding. Under Medicaid, the state is a very, very heavy Medicaid managed care state. So they take public money, federal and state, public money, and contract with private plans. About 85% of their Medicaid recipients are in private plans in the state of Arkansas. So what's actually quite interesting here, I think, is the framing of this system. This is public insurance, supposedly, and this is private. This is the private option. The mechanisms are really not all that different, but the framing is really important politically, okay? So I'll also return to that. Here's Wisconsin's third way, which I don't think I have time to talk about, but doing something similar, which is saying, we're not gonna do the Medicaid expansion because politically, that is not acceptable at this time, but we're gonna take the new eligibility, put them in the marketplace, and it's subsidized by the federal government, and we'll just increase Medicaid eligibility up to 100%, so we still get the federal match, but under traditional Medicaid. So they're giving up some federal subsidies, but they're still getting to universal coverage. Similar type of system, everybody's in managed care here, everybody's in private plans here, private plans, private plans, but they call the two things different. One is public, one is private, okay? The state of Michigan calls their Medicaid expansion, they also submitted a waiver, they call it Healthy Michigan, kind of take out Medicaid and the title altogether. They are gonna do what is essentially the Medicaid expansion, but they're saying they're not, okay? And they got the waiver, and they're putting people up to 138% of poverty in the Medicaid program, but they say, well, we're gonna contract with private plans. Well, they were already contracting with private plans, and most of the state's contract with private plans, but it was really important for them politically to get the Medicaid expansion to say, we have to submit a waiver to do something different than the Medicaid expansion. So just to illustrate New Jersey did, supposedly a traditional Medicaid expansion, it's identical to Michigan, okay? So just the importance of political framing, I can't kind of emphasize enough, Iowa just got an approved waiver to do the Iowa Marketplace Choice Plan, similar private option to Arkansas, Healthy Pennsylvania, their waiver is pending. Same type of rhetoric around that program. So it's still kind of out, it's out across roads, Medicaid is out across roads. I think we're clearly kind of ACA and where states are moving, moves it into middle class entitlement, but it also, if we're moving in the direction of the private option and submerging Medicaid, it's not clear whether we'll still be able to think about Medicaid as creating a middle class politics. And the reason is because in a place like Arkansas, when you submerge the fact that this is actually public funding that's being financed through what would be the Medicaid expansion and call it your private option, it hides to the citizens of Arkansas, it hides the role of government and the role of public financing. And this has significant implications for creating that kind of public demand for the program. So people think I have to put claims on my private plan, not I have a right to put claims on the state. And that's really important for thinking about the future of this program, I think. So I'll stop there. We'll start with questions and Bob. That's a great talk, thinking about all the pressures to a stand. And looking beyond 2020, do you think that Medicaid might have the potential sometime to become like a single payer, maybe especially with the way you can label it, not Medicaid? You know, that's an interesting question. Part of it depends on how you define single player, single payer, sorry. So in Vermont, I mean Vermont's really the only state that's actually thinking about, or is quite intentionally planning to do a single payer model, which is actually really interesting and they're planning to submit a waiver in 2017 to do a single payer. But what they're doing intentionally is saying, we're taking private insurance out of the mix altogether. And so what's interesting to me is I think given the proportion of the population that will end up on Medicaid, there's kind of a single financer, right? So there is a sort of single payer, it's the federal government, well, or you could say multiple payers in the sense of a shared payment, the federal government and the states, but they're doing the bulk of the financing work, right? But they are contracting with private plans. So we typically think of single payer models as not including private plans in the mix, but in terms of the actual term, payer, yes, I think it very, and that's what's important. The contracting though is important, right? It's the last point I just made, which is that if you contract with private plans and people go to the marketplace and choose their private plan, the role of the state, again, it can often be very hidden to people and they don't understand that government is doing the heavy lifting in terms of the financing and that's their money that they've contributed to the state and to the federal government. And so they have a stake in this, they have a right, again, to make claims on the state, but they think when there's a problem, oh, they should submit a grievance to the private plan, which maybe they should submit a grievance, but they should also submit their grievances to their politicians, right? So I think that it's hard to negotiate kind of people thinking about the single payer, I mean, Medicare honestly, which was our single payer plan, right? For the elderly, it's also moved in an interesting trajectory where we're most of in certain geographic areas, it's contracting out with many private plans and I think it's had this similar impact on the elderly thinking, well, I now kind of have, it's Medicare, they know it's Medicare coverage, but they're also a bit confused about where they should launch their concerns, right? I mean, there's sort of these famous quotes from elderly constituency saying, don't let the federal government take away my Medicare. And it's exactly this kind of submerging the role of the state. I think he was pointing up there first, but I'll come back to you over here. Because I do, I do want to go on the point that you put in any response to this last question, and it's not just the fact that the government role is hidden from us, and so we don't appreciate what the government is doing, but by contracting with these private plans, we're also spending a hell of a lot of money that's not going into health care. It's going to the private insurance companies that are spending 20 to 30% out of our health care dollars. And I just wanted, you've done a brilliant job of talking about politics of this. Since this is an ethical series, I wanted to ask you what you think of the ethics of having a system that's so complex, so multi-tiered, so giving different preferences to people depending on how much money they have, what state they live in and so on. Yeah, I think that's a great question, and if you guys don't bear with me, I just want to go back to the Arkansas model. So there's two ways to think about this model, and I think it does get to your point. Clearly it's the private option, so it completely relies heavily on private plans. You do have the administrative complexity of contracting out with multiple private plans, there's no doubt. You have the administrative costs associated with that, which most estimates suggest that it's more costly to contract with multiple plans than to administer it yourself. So people have looked at those cost estimates in the Medicare program where you had kind of traditional Medicare. Administratively it was cheaper than when Medicare started contracting out with multiple plans. So I think that's pretty clear that it's cheaper. What I think is important in Arkansas though, it's sort of saying, okay, if we have this system, if we contract with private plans, which is certainly what we do, right? That was the ACA. The ACA was we're gonna create state marketplaces and contract with private plans. We're gonna do a Medicaid expansion, the vast majority of states contract with private plans. We have employer-based health insurance where employers offer private plans. So if we have that system and you take all of these people and put them into the marketplace, what's actually I think very interesting about that, which does have potential to be more equitable, now I wanna, I have a caveat for this, but it has the potential to be more equitable than for example, the Michigan plan is that poor people in Arkansas will have the private plan options that they will have will be identical to people up to 400% of poverty, which in Arkansas is like, you're at 60% of the income distribution at 400% of poverty. So the vast majority of people in Arkansas are all having, are all being able to choose exactly the identical healthcare plans, which has never happened before, okay? We've had, this is what we've had so far and in most states they're gonna keep at this structure. So the structure is the same and I think that's very important that why do we call this public and this private? It's public funding behind both and both contract with private plans. But what's really important is when the marketplace contracts with private plans, these plans offer different products than when Medicaid contracts with private plans and the plans are often with providers, much more kind of traditional private providers, they have options too and this is with the safety net providers. So we still are offering them kind of access to two different types of delivery systems and that has huge implications for equity, right? And I think that, surprisingly enough, I have lots of worries about this frailty portal. You're taking very sick people, are you cream skimming and putting all the good risks and letting the healthcare plans run away with making a lot of money? That's a potential and that's hugely problematic.  That's a potential. On the other hand, they could take this seriously, which I think the current Medicaid director really I think genuinely wants to create really good managed care plans for people in particular disease categories. Now whether he can get the support to do that is a big question, but I think he really believes people with mental illness, for example, need really specialized care that they're not gonna get over here. And so it's not equal, but it could be better. Huge problem to say something like that in a state like Arkansas, right? But the fact that all these people have access to the same plans and they're all putting equal demands on the state that they want these contracts to be good, I think is hugely important. So it's kind of, it's a big, you wouldn't expect the private option to potentially be more equitable. But it might be, and I think that's important. Yeah. I was wondering about the middle class buy-in to Medicaid and how much of that do you think it consists of the sort of scheming that children sometimes do to shift their parents' money out of their own bank accounts and into other places that they're prepared to be on Medicaid when they need skilled nursing care at the end of life? How much is just generally middle class people who are elderly spending down all their money and getting into nursing homes and then having Medicaid pay for that? And what's the sort of political future and implications of those sorts of systems with respect to the middle class? Yeah, I think that, I think more and more over time, it certainly is middle class children looking towards Medicaid as a solution for long-term care for their elderly parents. Now, whether that's gaming the system or not depends on kind of your ideology, your political ideology about this program. I mean, the absence of national long-term care insurance, we haven't given people, we haven't given people another option, no middle-class person, even relatively upper-income people can afford to pay for private nursing homes, right? I mean, so to me, I think the long-term care side of the Medicaid program has been hugely important for thinking about this as a middle-class program. Nonetheless, it's a relatively small, it's a small percentage of the population that ends up relying on the program because, but it's potentially a large proportion of the population that anticipates that they might need it from the long-term care side, right? In terms of children, though, and families relying on this program, that expansion, I think it's gonna come more, one states adopt the Medicaid expansion, it's gonna be more on just the straight, acute care side of insurance, that you're gonna have just so many families that are actually on Medicaid. The question is whether or not they'll, again, they'll realize it's Medicaid and it will create a middle-class politics to demand that this program is of the quality that they want it. So I just wanna say a word about that because I think advocates for the Medicaid program wanting to improve this program over the years made a kind of strategic decision, I think, back in the 80s and I think several of them were quite strategic about this and what they decided is we're gonna fight for eligibility and once we get lots of people on the program, then we're gonna fight to improve this program but we gotta get them on first and that's gonna create some constituency pressure for improving this program, right? Otherwise, if we try to work, you know, try to fight for quality and improving provider payments, but there's lots of problem, we all know there's lots of problems with the Medicaid program. If we fight for the quality side and the access or improving access to private providers, specialists, with such a stigmatized group on the program, we're not gonna win, right? So first we'll expand our reach and then we create a middle-class politics. So that's why at this critical juncture, for people when we're kind of at the point where you could have a group that really can start putting demands on state to say, okay, we're all on this program and we want something better for them not to actually realize that they're in a state-run program, raises the question about is this a middle-class program or not? I just said that it's not in the brochure but Tamara Kineska, the Department of Health Studies will be leading a session on long-term care and health reform in this series later on. Napa? Thank you for coming on this very interesting talk and after I heard the story, I feel more optimistic about universal coverage, regardless of the number of claims that will be involved. For two reasons, one, you said that more and more people feel personally committed to Medicaid and I think that is, as you said, is related to the fact that there are a lot of older people who need mental care and everybody is aging and everybody has risk of becoming disabled and because of the ageing population, I think there are more and more people who feel that way and I saw one person yesterday who became eligible for Medicaid and she was working all years and then she's eligible, she's really not happy about that but I'm sure that she's more connected to Medicaid people so that is one. And secondly, sometimes, if you don't have some space which don't have a very generous Medicaid program, actually may be more innovative in the sense that because there's nothing there so there's no real group, you know, these groups that have been providing services and they are there, it's difficult to change the dynamics so for two reasons. I was pretty much pessimistic about future but after I heard your talk, I feel more optimistic so I was curious what your thoughts were. I mean, I guess I'm cautiously optimistic. I mean, so again, I kind of look at Arkansas and I think there actually is potential there for more equity. I do think to improve but when I look at the majority of other states that are gonna have kind of separate, they're gonna have Medicaid contracts and then they're gonna have the marketplace contracts and they look different. I worry about kind of embedding, again, a two tiered system long term into the American healthcare system when I think we're all sort of hopeful that the ACA would bring us closer to more equity. I think given that there could be enough people in those like a state like Michigan, there's gonna be a large proportion of the population that's in that Medicaid group. If they're mobilized, they can appropriately, now I'm not saying they should get unlimited care by any means but I think they should have adequate access to specialists and primary care. They've never, Medicaid recipients have never had adequate access to specialists. They have a generous benefit package, no doubt but I think there's serious quality and access problems in the Medicaid program that have long existed. If they're mobilized, you can put pressure on the state, there's enough constituency to change that but you do need political leaders willing to mobilize them and that to me is kind of the puzzle honestly about liberals and Democrats and the states. They kind of still talk about the Medicaid program in very residual ways. When they advocate for Medicaid, they say, you know, this is for really, really poor people who are really, really suffering. It's like they're the dregs of society. Instead of saying Clinton actually was the only politician and it was hugely significant because it was the president of the United States who said when the Republicans were trying to block grant Medicaid in 1994, he argued, this program is a middle class program. He actually said that. He said this is for your elderly parents, it's for kids, it's for all of us. And it actually was amazingly, it was a successful strategy and they were able to kind of hold back this Republican led Congress being able to block grant Medicaid. I sort of thought this is a turning point for the program. I remember I was looking at this even back then and I thought that's really fascinating that the president actually made an argument for Medicaid as a middle class program. I've seen very little of that since then and to me, again, it's a puzzle because it's sort of waiting for liberals who want to create more equity to mobilize the public around it. Chris. Thank you very much. It's excellent to be here. I have a question. I think it's a bit off of that but in terms of slightly, what do you think going forward are the politics of the providers both individually and collectively here at the U of C? A very large Medicaid provider. And that plays in the politics internally in the institutional some groups more than others and that makes a difference in the budgets. How do you think that plays forward? And essentially, and I haven't thought of it this way, state by state, I mean it seems to me providers of certain states are disproportionately involved in other states. So, I mean, could you comment on that? Sure, just to your last point, I mean that's definitely true that the strength of provider interest groups varies across the states quite dramatically which is why Medicaid is Medicaid politics. You have these interesting kind of disjunctures where you have a state like Arkansas with really meager eligibility levels but actually quite comparatively generous provider payment rates because the provider groups are much stronger down there. But I think that the question about kind of what, how will providers react to having a large proportion of the population on Medicaid? I think one is obvious that they will try to put more pressure on the state to increase payment levels, reimbursement levels which I would be for at least up to Medicare payment rates. What I think is important is whenever you're thinking about payment rates is that there should be equity across the different payment groups, right? So the fact that people get paid less for poor people is just hugely problematic. It's always been problematic. So again, Arkansas surprisingly has huge potential for equity given that the providers won't know. This has never happened before. Providers won't know whether the recipient coming into their offices paid through the Medicaid channels or paid through the federal subsidy marketplace channel. They will just have a card that says Blue Cross with Shield and it will be hidden to the provider which that's never the payment, has never been hidden to providers before. So I think it will increase provider payments because they're not, the plans are gonna have to pay the rates they've paid in the past even though there's now Medicaid recipients who are their enrollees and I think providers may change the way they treat Medicaid recipients because they won't know who they are and that and they won't be paid differently. So and to the extent that states can keep kind of creating these systems where that's hidden to the financing and the enrollee, the way the Enrollee is financed I think is hugely important for equity. But and I think ACO should, I think that providers should fight to consolidate so that they don't know the difference between Medicaid and other marketplace groups and they can treat people more actively and also increase their payments. Ed. Yeah and on that point, was Jammar last week that on average after the Medicaid government was across the country the reimbursement rates, about 60% of the Medicare treatment was great for the same services. So with the AC expansion of Medicaid and the concern about access to specialty care don't think that these offer pressure on reimbursement generally with the AC Medicaid expansion. So pressure to increase rates, don't think that, yes, definitely, definitely. So Dr. Siegel had a question. You mentioned a lot of states, but did you manage Illinois? What can be anticipated Illinois strategy in the beginning? So Illinois looks more like this, although Illinois is one of, I think many people already know this, that it is a state that has had very little managed care penetration in the state, but it is moving in that direction where it wants to contract with private plans. And it is contracting with private plans and will continue for more and more of its enrollees will be in private plans. So that's my understanding is that I think it will, it will begin to look more like a kind of a state like Michigan or New Jersey, but it wants to use private plans to help control and manage the care of Medicaid recipients. I mean, that's really where I think the state is after. I think it is not talking about doing anything like moving Medicaid recipients into the marketplace. I've talked to a few of the different policy makers in the state and have sort of asked whether they've engaged in any conversations around doing something like the private option and there seems to be no movement for that at all. And interestingly enough, their response was, there's no way that the plans, the plans want nothing to do with Medicaid recipients. So they're kind of, the people, I was a little bit concerned to hear that, that there was a sense of they're really different and we have to, we're gonna end up with two delivery models to take care of these two separate groups in Illinois. This is a reminder that a few weeks, Julie Hamos, who directs Illinois' Medicaid or health insurance exchange, will be coming to speak. So, Harold. This question of the anxiety about having a two tier system of health, our audience, and the poor people and others, is certainly a legitimate issue. It doesn't seem to be the biggest advantage is having a huge Medicaid program that is responsible for the health of poor people, not necessarily how much they pay specialists, but in their ability to engage some of the social determinants and talk in a way that no private insurer or the rest of the health and financing system really isn't going to do. You can imagine in housing that it's safe over the poor in other areas. As Medicaid grows and becomes more powerful, it will eventually be able to do some creative things that no one else would do. And I just wonder if there's movement in that direction that we should pay attention to. Yeah, I think that's an excellent point. I mean, the first response to that, which I... So, safety net providers have argued that, I mean, since in the mid-90s, when a number of states were moving towards Medicaid managed care and advocates for Medicaid managed care, kind of privatization approaches would say, Medicaid recipients will finally have access to private providers, just like you and I have access to private providers. So this idea that they'll get a Blue Cross Blue Shield card and it'll be just like the state employee who gets a Blue Cross Blue Shield card or whoever else in employer-based coverage. Now, of course, that was never true, because, again, their Blue Cross card gave them access to a different network of providers, largely safety net providers than people in the employer-based system. But if it was true and safety net providers were very worried that it would be true, they said, we provide culturally relevant care that really thinks about the social determinants of health, and I think there's a lot to be said for that. But it's also problematic, right? I think you can't get over, to me, the problem with saying, making judgments about poor people need a specialized type of care and therefore it needs to be separate from other people. And I just, I think we're treading on very weak ground, shaky ground, when we try to move into that argument. Now, again, I am like, I can't believe I'm talking about Arkansas so much. It's just crazy.  They'll just stay here and they're gonna get exactly kind of disease management programs, very specialized type of programming for those groups. And the people that end up in this portal and go back over here, the plan is to do exactly what you're talking about. Now, to me, from an equity perspective, there's a better argument there to say, these are people that have identified problems and concern that really do need specific, they have specific needs that need specific care. If you're just poor, why not let them choose? And the important thing is safety net providers should be in here as well as everybody else. And I think they will be. But then you let people choose and the providers don't know who you are. If you're poor, they don't know. They shouldn't. They might assume in other ways, right? But. So just a reminder, next week, Nancy and DeParle won the key architects of the ACA, the Obama administration. And how about a round of applause then for Paul. Thank you.


onboarding that's a critical objective what's your target developer do you have any specific requirements are the specific open-source projects you're leaning towards speak to the developer community out there and tell us what your developers community mean that we they know that we're heavy on Eclipse as a do as an ID we're using open source all the different aspect from the application server the web servers in the Apache the Tomcat we are we are we're big on Java I've heard sometimes the question about versus I know it's gonna be both and we're big on Java personally again I'm using any any which way I can open source and I want to able I want to enable them to develop quickly those application that I cannot and I will be not I won't be able to develop there's a starving community out there entrepreneurs out there who are really got their tools out they know the markets on the upswing yeah they see an SAP kind of moving and shifting and saying come on there's a lot of white space pick some white space so I want to offer them a secure environment for again from an enterprise standpoint a secure environment where I want to offer them a performing environment so real time with the capacity I want to offer them an environment where the they can onboard the quickly they can develop quickly distribution and then they can and where all the services needed to develop an X an exciting mobile experience will be there so that's those are the goals of this business web so I think you you just talked about it but I want to put it into the context of some of the alternatives that developers have so and really the question gets down to how does SAP differentiate and appeal to those developers relative to some of your big competition so you've you've got a Oracle I mean Oracle's doing stuff in memory and flash and no big data you got IBM doing you know its thing with with the smarter planet and also doing a lot of in-memory stuff you've got SAS doing some things with mobile you've got Microsoft everywhere so how do you cut through all that noise and appeal to developers what's the key message to them and how is SAP different SAP is different I would say because we are connected with the back end we understand better than anybody else and we have access to the back end better than anybody can when I saw this morning talked about there was a question I think was question 9 or 10 saying how different is Hannah and he had a slide I said he gave 10 10 points it's not about the in-memory storage but it's also about the column storage and it's about the partitioning and it's about the multithreading and it's about the way you use aggregated information inside so the unique comes from the assembly of those elements which individually are not unique but when you assemble them and you add the access to the back end and you add access to the understanding of the SAP system as it is today then that gives you the unique things when Apple came with the iPod what was unique there I mean you could say the hardware was there but the combination of the software called i2 and then the hardware that makes it different and I think we're shooting for the same same how disruptive it's been since then I mean that's why I'm so excited about your plan right now because I think the sky's the limit and we were just speculating that with SAP's platform you could make a run at Microsoft's office franchise within the enterprise who just offer have a developer fellow wife space called business software beat out Google Docs I mean Google Docs is kind of clumsy wouldn't it be nice to have some new software you know let's again this we're talking about research here so this definitely the vision and intention but again this it's support the on-demand approach it support the mobile approach that Jim and and and Bill have highlighted and innovation cycles another message that which not they was here with us sitting down inside the cube he was talking about the innovation cycle and I've seen mobility is a big part of that and with cloud what's your view on the this this innovation cycle that we're living in right now it's it definitely seems like it's accelerating at least I can I can testify from the inside that is definitely accelerating within SAP again part of the and Jim bill the shell and everybody is pushing towards those fast innovation cycle and the company's responding to that so that's great now we still can do better than that and that's why we are working again with within our teams and within our the rest of the company in terms of processes in terms of enablement in terms of mindset attitude explain to the folks out there who are watching we have a few hundred people now hanging around still still great audience you're an experienced entrepreneur executive now at SAP you've been involved in a lot of the Silicon Valley and tech world what's your view of the current landscape of the marketplace right now obviously it's a crazy hyped up but really rapidly changing market so for entrepreneurs and for businesses what's how do you view the external market outside of SAP right now I think we're again one at this time in this where there are excitement and there are excitement on couple of very identified buzzwords on environment like we had in 95 and 95 in 2000 with internet now we have it with cloud and mobile and so that gives again the opportunity for great entrepreneurship and great ideas and great tentatives and some of them will fall flat on their faces well so bit but I think this is the time where we are because that we all seen disruptive technologies of business objects emerge out of that entrepreneurship movement very successful yeah there are those coming in those new companies right yeah and how was it I wanted to ask you are very Katerie when you came over from business objects you had to be a little bit nervous coming into this company you know reputation for complexity and maybe even a little bit not invented here were you nervous coming in and and were you pleasantly surprised at what surprised you then there's there's positive was very positive surprise because the quality of the people definitely is is superb and the the notion of they are friendly they are very professional very efficient getting the job done that was very very dressed very nicely that part of cultural changes yes it's it's more ties and and soon then I mean it's coast guy so I like that yeah I was wearing a tie for a while and all the listeners are like hey we John lose the tie we don't believe you come on yeah okay I lost the tie you know there it is you know they said put that button back up again okay so so we're able to influence the company on again the user experience the the fun the cool the good-looking it's good to be good looking doesn't have to be boring to be serious it could be serious and good looking at the same time and and I think we we also learned about the processes and and what it takes to run a fifty-five thousand people company versus a seven thousand people company so we got a question on the chat here where we get some people charming in what about the new developments at SAS in the analytics mobile sector how do you think they will compete with SAP SAS I mean SAS SAS the predictive company yeah yeah I would come in with SAS I don't know when we're not in this very sophisticated advanced PhD oriented geeky complex predictive model and predictive is how much prediction can you get I mean this is the key if you read the chaos theory there's so much you can predict a butterfly wings in Paris and you have a earthquake in South Africa or something like this so what we need what we're working on is more on the aggregation of data upfront and so if I can predict the weather today's from today's from now if I can understand what are my ice creams cabinet and where they are loaded what do they own what do they have in it do have my ice cream or they have fish from a competitor this is a real case if I can understand what's the Berlin marathon route will be and how whether the tourist pattern and if I understand what my ice cream supply chain is my inventory then I can I can decide can predict how much chocolate ice cream do I need to put in my ice cream cabinet to serve better the marathon or to take you but you know the marathon in Berlin that's a real life example but the prediction model is between temperature and ice cream is pretty simple the question is assembling the weather the weather information the marathon route information the supply chain information the ice cream cabinet content information which which requires a lot of tracking from the get go from three weeks ago to get to that done so that's more where we the data measure it's yeah it's context awareness it's a back end that again is your real core competency right that would that would be the back end that would be able to create sense out of and out of and combining weather information well this is the back end well and delivering that and delivering that on on the mobile phone because the truck guy will have to know okay I want to deliver five crate of chocolate ice cream to that ice cream cabinet on Potsdam and and under the London yeah I mean we're we're experiencing that too in our business whether we're in a new media business where we're clean sheet of paper we're doing things new as you know we're broadcasting these events in depth coverage so it's kind of like a new model except we don't have it's not like cable TV in America it's like the internet it's global right so a lot huge reaction just an advice question how should we be using big data I mean because we're building our back ends now as we speak to use gesture data Twitter data because you know we've been you can predict things so you can get a lot of real-time information obviously we are real-time with our publishing and our broadcasting any advice for us heterogeneity I mean if it's not a it's no longer about one source of information it is about merging and giving sense that that's the issue it's how can I create sense between something coming out of Twitter something coming out of Facebook something coming out of my ERP data what's the common aggregation what's the metadata out of that and that signal from the noise yeah the signal from the north and even signals from noses well we had a great conversation with Schnabe last night he wants to know more about our secret project that we're running called fish finder because he had fish up on his keynote I don't know if you saw that he had the little fish theory in which we've been schools schools of fish and you know patterns and John practically jumped out of a seat when he saw that yeah no he's smart I love it so good we think prediction from IDC is by 2020 there will be 50 billion of connected devices stuff like your refrigerator your car your wrist your watch everything how and every each one of them will send one piece of information yes I'm working on working I feel good no I don't feel good you we need something to manage that yeah and so it's going to be all about heterogeneity data and business intelligence my final question is and we're watching Silicon angle TV live at Sapphire we have the leading worldwide leading in tech coverage the cubes are flagship product we go on the ground with our anchor desk go talk to the smartest minds extract the data the metadata and share that knowledge with the world so you guys can enjoy it we are here the very seasons executive on the product side and my final question is for the folks out there that are watching and or will write about this in the blogs what's your advice to them as entrepreneurs because we get a lot of entrepreneurs out there who watch kind of our content and our analysis who want to read the tea leaves share with them your experience and advice in the current marketplace now not so much from an SAP perspective you know share that to come develop on SAP also but as entrepreneurs what advice would you give them in today's market how to build product what to do you're looking for some guidance mentor yeah maybe cloud mobile on demand you can't be wrong then get a customer don't lose reality don't lose contact with reality because that again you don't want to get again into the internet bubble of 2001 2002 so it's all about making money so getting a customer will validate the idea that with idea the prototype is fundamental real value yeah very much for coming on the cube great guest it was wonderful to have you that right champagne for you today yeah thank you thanks


Live from San Francisco, it's theCUBE. Covering IBM Think 2019, brought to you by IBM. Okay, welcome back everyone. We're live here in San Francisco for theCUBE's exclusive coverage of IBM Think 2019. Jeff, our student men and men, our next two guests are Greg Lodko, Senior Vice President and General Manager of the Main Frame Division of Broadcom, formerly with CEA acquired and Clayton Donnelly, Head of Security and Integration at Broadcom, both formerly of CEA, big acquisition, big value, you guys welcome to theCUBE, good to see you. Thanks a lot for having us. So we just talked before we came on camera here at IBM Think, a lot of content around software, AI, cloud, systems, and software working together. Kind of the thesis of the Broadcom CEA acquisition, that move was a big one. A lot of analysts liked it. Your thoughts, how that's playing out here in San Francisco. Yeah, I think it was really interesting. If you look at what Broadcom has gone after in the marketplace, is they're not looking for the flash in the pan or trying to chase the next new thing. They're looking for core businesses or components, software, products that they believe have real staying power and will be around for a decade or more into the future. And then they want to invest in those and nurture. They really want to be, even if it's in a niche space, they want to invest in something where they'll be number one or two in the marketplace. It's interesting, you're looking at the market with cloud, you see scale, you see data, all this stuff we've been talking about for years and years. But it really comes back down to systems and software working together. Cloud's one big complex distributed system. Software abstractions can maybe extract away those complexities. But in a day, it's software plus large scale systems. This is kind of what's playing out. This is in the wheelhouse of what you guys are doing. Can you guys add some color to that trend and what needs to happen to make it more and more viable, more performant, easier to use? Yeah, I mean, I think that what we see is that customers aren't having a lot of problems with individual pieces of software. They're having problems when they put all of this together. So if you look at even to your question about rock on a moment ago, they sort of came in enterprise software through the data center. Because they're providing everything from AI chips to fiber channel networks and other kinds of things that are running people's networks at the very largest scale. And what they realized is when you get to the enterprise software level, the customers have such challenges because they don't get to cherry pick just the cool things or the easy things to go integrate. They've got everything from mainframe to client server to interior to whatever they've picked up over the years. And that stuff has to work together seamlessly to get the kind of value that makes sense. And that's why I think when you start looking at kind of our focus is on helping customers bring that together to get that value. Great, talk about the hybrid IT environment because what we're getting at here is I got to make the legacy work with the new. But the beautiful thing about cloud native and some of these new microservices and containers is you don't have to kill the old to bring in the new. There's a great abstraction around software now that's making them work together. But yet the new stuff can work really great. This is the kind of the new architecture. Your thoughts on this? Yeah, I mean, obviously you're here a lot about that here at Think, right? They're talking all about hybrid IT or multi cloud. I think there's a stat out there that, you know, 75% of the large enterprises in the world say they'll be have multi cloud or hybrid IT environments by 2020. I think they all have it today, right? You think mobile to mainframe, right? There's not workloads that work in isolation.  It's going to kick off a transaction that's going to go to an edge device or an edge server. That's going to go through a network and maybe hit another server. And eventually it's going to go back to a mainframe to check the balance or to transfer funds or something like that. So they're having to deal with it already today. And there's two kind of sides of the coin. You want that interaction for the developers to be common across those platforms. Yet you want them to be able to leverage on the power, the strength, the security of the underlying platform without having to know all the gory details, which is why it makes a lot of sense for us mainframe and distributed if you look across what is the CA Technologies portfolio that Broadcom acquired, a lot of the capabilities that we have are the same capabilities that work across those environments so that the enterprise customers can interact with it one way. Yeah, Clayton, when I hear this environment there's certain things that I need to worry about everywhere. It's my data, how do I protect my data? And of course security is one of those areas where there are lots of different environments and unfortunately there's lots of different considerations depending on which clouds I have, which environments, mainframe, x86 power, all have different considerations. The mantra I've heard that seems to resonate is security is everyone's responsibility, up and down the stack from the chip level all the way through the application. So explain where CA Now Broadcom fits into this picture and lives in this even more heterogeneous world. And by the way, I totally agree. The multi-cloud is what customers have today. I mean, if you look at it, I mean, customers are building out, say new mobile applications and building them as services in the cloud and so forth. But what we're finding is that the transactions and other kinds of things are still happening in some of these other environments. Maybe those environments still live in a data center, maybe they've been moved to like a private cloud, maybe they're in a public cloud, running on IaaS or some other kind of bad as a service. What we're finding is that each, that transaction has to be protected. The API that gives you the ability to call that transaction from a mobile app needs to be protected. All of these things need to be protected. But then you need to be able to orchestrate that, make sure that you're laying down those bits, protecting those bits the same way every time, testing them the same way every time. And I think that if you look at what we're looking at and our value is really in digital, infrastructure management, right? Because you're bringing all these pieces in, cloud, multi-cloud, mainframe, all of these environments that you have, you've got to have a way to operate it, manage it as well as for security. Yeah, so Greg, when I look back my career, there's something that's been repeating a lot. It's like go back to the 90s, it was like, okay, what was some of the reasons why the XSP's failed? It was like, well, it was networking security. When cloud happened, it was, well, security and management, how do I figure out some of these? Management of a heterogeneous environment has typically been a downfall in IT. It's something that we've struggled at as an industry. So why will now be different? How is the industry helping to solve that issue and simple is something that we keep trying to hear but actually achieving it is pretty challenging. I think it's fundamentally realizing that the core large enterprises in the world today are using mainframes, right? And some of them have tried to migrate some things off and it's not about complexity of migrating it off, it's about whether or not you can land somewhere that has that same security throughput, resiliency, all that kind of stuff. But if you recognize that you're going to have these systems interacting and you recognize that we have to make it easier for people, whether they're coming out of university or they're coming from a background of distributed or open source, you want to make it easier to interact. It's what's informing everything we do in our strategy and mainframe. So we talk about open, frictionless and optimized. So it's all about the idea of that mainframe system and those processes that we're running, whether it's DevOps, whether it's databases and the tools, whatever we're doing, the security, the analytics that we're doing, that has to be open and be able to interact with other people's tools as well as other people's platforms. Frictionless is all about the idea of you got to make it easy to do that interaction. Somebody that comes at this from a non-mainframe context that maybe knows, I call them the cartoon characters of open source, Git or Gulp or Jenkins or whatever, that they can use that to interact with the mainframe and leverage it. And then you want to be optimized. You want to make it for the real deep technical professional to get the most out of it and focus where the expertise is or for the novice to not really have to need training wheels but to be able to ride that bike right away and perform the thing. So all of these things, you can see how they're kind of informed in setting that tone of thinking about a hybrid IT environment and connecting that mainframe in across, not sitting as an island onto itself. I mean, you bring up a good point, a couple points. One is distributed computing. It's been around for a while, mainframes. I mean, I'm old enough to remember that I was part of the client's server way. We used the point of the mainframe guy, ah, you're going to be dead soon. Most of them kind of went away, but it never died, right? We all know, but there's a renaissance. The rumors of my death are greatly exaggerated. A lot of them did go down a little bit, but they never really died. But here's the thing. There's a renaissance in mainframe because of cloud computing and cloud operations. If everything's cloud operationalized, then essentially you have a big, one big distributed computer called resource and edges that are subsystems. So the notion of buying a mainframe isn't a platform decision. It's a the right tool for the right job kind of decision. People are not looking at mainframes as a bad decision if it fits. So it's not like everyone should buy mainframes, but if you need it, you need horsepower. So the question is, begs the question is, why is there a renaissance in mainframes? What's the reason why people are buying them? Is it because it fits into a certain position? Is it certain scale? Is it because it can plug right into the cloud and be a big resource? I think there's also a realization. Think about if you're the newer CIO and you start looking at your estate and you realize that this mainframe thing that you're spending 20% of your budget on is actually doing 70% of your processing. That you kind of look at it and you go, wait a minute, that's really cost effective. So then you start looking at, well where is it most cost effective and does it make sense to use it there? And then when you can tie it into everything else, when you can get the same types of security tools and lock it down and lock the interaction down, you say, hey, this might, but this might make sense for me to do it. And I think it just ends up being dollars in cents. And then the resiliency, right? I mean, when people aren't having that downtime. Clayton, you've got to run your business. You want uptime if you're in e-commerce. You want high secure systems. So it really is the right tool for the, well, like thing for the right job. Is this happening? Give us the update on, are people buying more ratio because it just fits better? I think the part of it also is, why fix what isn't broken, right? The main friends running there, it's up, it's providing transactions. I think what you used to have is you used to have this impediment to getting access to it. You need to find some old Kobo guy, you need to find all this other stuff because you had your business process. Kobo programmer but now it runs Linux. It's like a foreign language to some people, right? You say Kobo, it's like I have to learn Chinese. So what we've done though is we've made it so you don't have to learn Kobo. You don't have to learn some specialized thing. You can come in with APIs. You can come in with the technology if they teach kids in elementary school to use JavaScript and other kinds of things to come in and access those same things that are now in the main frame. It's basically a big iron and the old expression. Big horsepower. It is. High horsepower, high throughput, high resiliency.  We've tracked it. I remember when Z-Linux on mainframe rolled out 15 years ago, you want to do the cool new Docker things, absolutely. But if I look at the DevOps people, the people that are going to pay for this, a lot of times they say, well, I'm used to more of the cloud model. How do I get, you know, they move to an OPEX model. We're still early in that trend, but does Z-Series mainframe, will it fit into the new modern paradigm from a CFO standpoint? I definitely think so. If you look at a lot of the stuff that's going on in the marketplace and even concepts that we're testing with clients today around, you know, you can refer to it as consumption-based pricing or value-based pricing, you know, looking at how much you're actually using and then charging for that with a known, you know, hey, if I grow my capacity this much, how much am I going to pay? Or if I go down, am I going to be able to redeploy those dollars elsewhere? All those constructs are stuff that we're already working with customers today on. So it is very much the idea of a cloud-like environment that can either be delivered on-prem through you buying your own hardware, or, you know, there's IBM that has the Z-Cloud, there's folks like Ensono, et cetera, that have clouds that have mainframe up in them today. And the developer environment clearly is going towards infrastructure as code, which is the abstraction of ways, just programmable infrastructure. They don't care where it's almost fast, right? Does it matter? Does it really matter? Look, we contributed to Zoey bright side, right?  We were actually using agile methodologies in our development and we gave, in each programming increment, we gave the engineers time to do what they wanted to do. You know, one sprint per cycle. And some of our young developers said, you know what? I wish I could use Git and Jenkins and Gulp and tie them into Endeavor or these other dev ops tools or IT ops tools. They developed it as an internal use tool for a command line and we stumbled over it on accident. We said, oh my God, this is something we think customers would want. And then as we got talking with Rocket, with IBM, Rocket had a web interface. IBM had the API mediation layer and we said, holy cow, you know, this is something if we got together and we contributed, we could really start a renaissance around mainframe. And a lot of people are going, well, why? You've got proprietary tools and software. Why would you open up? Because the reality is we want our customers to find it easier to work with the mainframe. And look, I'll compete on the differentiation of my underlying product, whether it be price or function. But I want my customers to be able to tie in my software with IBMs, with Rockets, with whomever and pick because of where the value is, not because they feel locked in. And that was one of the gripes about mainframe, right? People thought they were locked in. Locked in, proprietary, weird interfaces, friction. You take the friction away. And that's not, that's your father's mainframe. That's not today's mainframe. No, that was the old, exactly. The old kind of perception. When you bring Linux and all these tools and infrastructure as code, it's just another resource on the network. Guys, thanks for the insight. Appreciate it. I love talking about mainframes. Oh my God, made my day here. So do I. Mainframes in the cloud world. Final, give a plug quickly for Broadcom. What are you guys working on? What's the big news here for you guys? Give a quick plug. Hey, I'll tell you for me, Broadcom acquiring the mainframe business is all about investment. And I mean, we're a software business, so more than 90% of my expense is people. If I'm not hiring, I'm full of it. I'm not investing. I'm hiring. We're posting like crazy. We're hiring. We're expanding to the team. And the idea is all about, there's customers have used core products for many years and they want to count on them for many years to come. We're making those investments and we're going to continue to invest in the new capabilities to help make them more efficient, effective on the platform. Your thoughts?  If you look at Broadcom and a lot of people don't know, you know, what's their focus, right? They're not traditionally in the software space and so on. They are now. The first thing, well, they are now and one of the things that we're doing is if you look at our investment rate in R&D in general, it's up there. I mean, world class, you know, if you look at the largest, you know, most successful cloud players, forget about your large cap tech companies and so on in terms of the percentage of revenue they spend on R&D. We're far above that. We're at a very high level. We're going to continue to invest in a lot of innovation, you know, AI, machine learning, DevOps, and of course, you know, key areas of security. It's a cultural shift. You can see vinyl records making it come back. Now you got mainframes back. How much can I get a mainframe for? If I want to be the new cool kid on the block. Well, you got to go to IBM for the hardware. But I can talk to you about the software to help you with it. You got a mainframe for theCUBE, just so we have one in our house. Thanks guys. I'm going to appreciate it. I'll start with you guys. Cube Coverage here talking mainframes of IBM Think, Software Linux, The New World, Cloud Data AI. I'm John Furrier. Stu Miniman, back with more coverage after this short break.