    [Public Papers of the Presidents of the United States: William J. Clinton (1993, Book II)]
    [October 5, 1993]
    [Pages 1686-1693]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Remarks and a Question-and-Answer Session With the American Association
    of Retired Persons in Culver City, California
    October 5, 1993

        The President. Good morning, ladies and gentlemen. Thank you all for
    coming today. I want to thank Judy Brown and the other board members of
    the AARP up here and the AARP nationwide for their wonderful cooperation
    and work with the First Lady and our health care effort over the last
    several months.
        There is no organization in America that better represents the needs
    and desires of older Americans than the AARP. I've been working with
    them for nearly 20 years now, and it won't be long until I'll be old
    enough to be a member. [Laughter] So I have a vested interest in your
    lobbying on the health care plan.
        I want to thank especially Mayor Mike Balkman and the people here in
    Culver City for their warm welcome to all of us today. I thank the
    Mayor. I'd also like to say a special word of thanks to your
    Representative in the United States Congress who's here with me, and a
    great Congressman, and a great ally in this fight for health care
    security, Congressman Julian Dixon. Congressman.
        There are some people here from Congressman Waxman's district. I
    told him yesterday that since he had a longtime standing interest in
    health care I would mention today that the reason he's not here is that
    he's back in Washington having the next hearing on health care. So he
    took a redeye back last night to do the work that we have to do.
        Ladies and gentlemen, as all of you know by now, we have launched a
    major national debate on health care, with a proposal designed to
    achieve a disarmingly simple but exceedingly complicated task: to
    provide health security for all Americans, health care that can never be
    taken away, that's always there, for the first time in our history and
    to do it by trying to fix what is wrong with our system while keeping
    and indeed enhancing what is right with our system.
        The first and foremost thing is we have to have more health care
    security. There is an article today on the front page of many of the
    papers of the United States saying that last year there were more
    Americans living in poverty than at any time since 1962; that 37.4
    million Americans have no heath insurance; about 2 million Americans a
    month lose it, about 100,000 of them permanently because the system we
    have is coming unraveled. It is the most expensive system in the world
    and yet the only advanced nation which doesn't provide basic coverage to
    all Americans.
        We have gotten 700,000 letters to date, and

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    we're getting about 10,000 more every week at the White House from
    people describing their personal experiences and frustrations in
    problems with America's health care system, not only American health
    care consumers from parents with sick children to senior citizens who
    can't afford their medicine but also from doctors and nurses who can't
    do what they hired out to do, keep people well and treat them when
    they're sick, for all the bureaucracy and paperwork that's in our
    system.
        I have personally met many older Americans who are literally
    choosing every month between buying food and buying medicine. And I know
    that many of these people are actually, in the end, adding to the cost
    of the health care system because eventually they wind up having to get
    expensive hospital care for lack of proper medication in managing
    whatever health condition they have.
        We received a letter and then I had a chance to meet a man named Jim
    Heffernan from Venice, Florida, who came to the Rose Garden a couple of
    weeks ago. He volunteers at a local hospice trying to help people
    understand the tangle of forms they have to fill out just in order to
    get the health care they're entitled to. And he wrote the following
    thing to me: ``I can recall one patient who was in tears and shaking
    because the hospital in her hometown had placed the balance of her
    medical charges in the hands of a collection agency and wrote that she
    might be sent to jail for failure to pay her hospital bill. This kind of
    senseless action on an elderly, terminal widow is unforgivable.''
        Stories like this need to be told over and over again in the halls
    of the Nation's Capitol until, finally, we get action. Our plan will
    improve what is great about our health care system: the quality of our
    doctors and nurses; the depth of our research and our commitment to
    technological advance. Those things will not be interrupted. We will
    strengthen them. This plan has a lot of aspects which actually
    strengthen the quality of the American health care system, strengthen
    the stream of funds going to medical research to deal with the whole
    range of problems that now confront us, everything from AIDS to
    Alzheimer's to various kinds of cancer.
        We are committed to keeping what is best about this system. Indeed,
    more and more doctors and nurses who have had a chance to study this
    system say that we'll have more quality, because they'll have more time
    to practice their professions, they'll be able to spend less time
    filling out forms and hassling insurance companies.
        I also want to say one thing--[applause]--there's one frustrated
    doctor starting the applause out there. [Laughter] There's also one
    thing I want to say over and over again to the AARP membership of this
    Nation, and that is that our plan maintains the Medicare program. It
    will protect your freedom to choose your doctors.
        Let's face it, Medicare is one thing the Government has gotten
    right, it has worked. And its own administrative costs for the
    Government are pretty modest. There are a lot of problems with Medicare
    in terms of how doctors and hospitals and others have to deal with it,
    in light of the complexities of the health care system as a whole. But I
    think, on balance, the plan works well.
        However, if you don't like some parts of your Medicare program
    today, I can say this: This plan will increase your options. It will
    give you a chance to pick from any of the health plans offered where you
    live, some of which may offer plans that are more comprehensive and less
    expensive than what you receive today.
        Second, this health care security plan will give you the help you
    deserve in paying for prescription drugs. This plan, for the first time,
    will make people on Medicare who are not poor enough to be on Medicaid
    eligible for help with their prescription drugs. It also will cover
    prescription drug benefits for working families. We believe this is
    important, and if coupled with a reasonable effort to hold prices down
    and to stop practices that we have in America today, where some not
    experimental drugs but well-established drugs made in America still cost
    3 times as much in America as they do in Europe--that needs to be
    changed. If we can change that we can afford this benefit and still do
    what needs to be done.
        The third thing that I want to emphasize is that this plan greatly
    expands your options for finding long-term care services in the home, in
    the community, in the hospital, not simply in a nursing home. We're not
    going to be able to do all of this at once. We have to work in the
    system and make sure we have the funding before we undertake programs we
    can't pay for. And so we phase in the long-term care benefit between
    1996 and the year 2000, and

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    we start the drug benefit right away.
        But in the end, we have to have a comprehensive set of long-term
    care services. And again I will say, if we do it right it will save
    money. It is ridiculous for the only kind of long-term care to be
    reimbursed by the Government, that which is most expensive and which
    pushes people toward institutional care at a time when the fastest
    growing group of Americans are people over 80 and more and more people
    are more active longer. I think here in California there's probably as
    much support for an active independent approach to long-term care as
    anywhere in the United States. And I want you to stay after it, and make
    sure we maintain the commitment to long-term care and to choice in long-
    term care.
        Let me make one last comment that I think is very important. This
    program also provides for coverage for early retirees. A lot of AARP
    members are people between the ages of 55 and 65 who have retired early
    and who don't have access to adequate health care now. Under our
    program, those people with incomes will have to pay up to 20 percent of
    their coverage, just like they would if they were in the workplace and
    uncovered, but at least they will have access to comprehensive services,
    with 80 percent contributions by the Federal Government. I hope that you
    will all support that.
        Let me say, finally, that we are interested in passing a program
    that meets the basic criteria that I laid down in my address to
    Congress. I have searched this country, and the hundreds of people
    working with us who searched this country for better ideas: How can we
    continue to simplify this plan? How can we make it even easier to
    administer? But we must meet certain basic principles. The first one is
    security. We owe it to the American people, finally, to say that America
    will join the ranks of the other advanced nations and give every
    American health care that's always there, that can't be taken away.
        We have to simplify this system in order to pay for it. You live in
    the only country in the world that's spending at least 10 cents on the
    dollar--now that's a dime on a $900 billion health care bill--on every
    dollar, that's $90 billion a year being spent on paperwork that no other
    country finds it necessary to have: Hospitals hiring clerical workers at
    4 times the rate of direct health care providers; doctors seeing their
    income from the money that comes into the clinic go from 75 percent of
    what comes in down to 52 percent in 10 years, the rest of it being taken
    away in a vast wash of paperwork and unnecessary bureaucracy. I tell you
    we can do better than that. And we have to do it.
        We have to maintain quality. I've already addressed that. We have to
    maintain choice of physicians and other health care providers. I have
    addressed that. We will have to ask every American to be more
    responsible. And those that have no health insurance today, who aren't
    paying anything into the system, but who can afford to pay, should be
    asked to pay because the rest of you are paying for those.
        There are people who say--and I want to emphasize this--people say
    this will be terrible for small business. Folks, most small business
    people have health insurance. And I met a small business man yesterday
    in San Francisco with 12 employees whose premiums went up 40 percent
    this year, and he had no claims. Now, I'm worried about those small
    business people. They're going to go broke or have to dump their
    employees and make the situation worse. Those people are trying to do
    their part by asking everyone to do something in giving discounts to
    small businesses with low-wage workers, we stop the sort of
    irresponsible shifting of costs onto the rest of you. We also stop the
    practice of people getting health care when it's too late, too
    expensive, and when things don't work right and shift back to preventive
    and primary care services so people can stay well, instead of just be
    cared for when they get sick.
        Finally, let me say this: We have to achieve some savings, and
    that's been one of the most controversial parts of this proposal. People
    say, ``Oh, you can't get any savings out of Medicare and Medicaid.'' I
    hope we can talk more about this, but let me just tell you how this
    program is paid for. Two-thirds of the cost of this program will be paid
    for by contributions from employers and employees who pay nothing to
    this system today but still get to use it when they get sick, two-thirds
    of it. One-sixth of the money will come from a tax on tobacco and from
    asking big companies that will still have the right to self-insure,
    because many of them have their costs under control and have adequate
    benefits, they'll be able to continue to do that, but they will be
    asked, since their costs will go down, too, to pay a modest fee to pay
    for medical

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    research and technology and to keep the public health clinics of this
    country open to do the work that they will have to do. And then one-
    sixth of it will come from what we call savings.
        But I want you to understand what's happening. Today, Medicaid and
    Medicare are going up at 3 times the rate of inflation. We propose to
    let it go up at 2 times the rate of inflation. That is not a Medicare or
    Medicaid cut. And we have kept private sector increases so that they
    won't go up as much. So only in Washington do people believe that no one
    can get by on twice the rate of inflation. So when you hear all this
    business about cuts, let me caution you that that is not what is going
    on. We are going to have increases in Medicare and Medicaid, and a
    reduction in the rate of growth will be more than overtaken by the new
    investments we're going to make in drugs and long-term care. We think
    it's a good system. We hope you'll support it.
        Let me just acknowledge two other people I just saw in the audience
    I didn't know were here. First, Congresswoman Lucille Roybal-Allard.
    Thank you for being here. Are there any other Members of the California
    Congressional Delegation here? Congressman Martinez, stand up there.
    It's good to see you. I'm sorry. And I want to thank your insurance
    commissioner, John Garamendi, for all of the work he did to try to show
    us what's been done in California that we put into our plan.
        Thank you very much.

    [At this point, Ms. Brown thanked the President and introduced Anne
    Jackson, chair of the health care committee of AARP's national
    legislative council, who discussed the AARP health care proposal and
    invited participants to ask questions.]

        Q. [Inaudible]
        The President. He said much of the program is funded with cuts in
    Medicare; do I really think it won't affect the recipients? Absolutely.
        Let me just tell you. We just adopted a budget in Washington which
    cuts defense deeply, just as much as we can, and we shouldn't do a
    dollar more. But we have cut it dramatically. And that's one of the
    reasons the California unemployment rate is up, right, because defense
    has been cut since 1987. But there's a limit to how much it can be cut.
    It's cut, absolutely. It freezes all domestic discretionary spending.
    That is, if I want to put more money into defense conversion in
    California, or Head Start, or public health clinics, the Congress and
    the Members here will tell you, they have to find for the next 5 years a
    dollar in cuts somewhere else for every dollar we want to spend in some
    new program.
        The only thing we're increasing, except for the cost of living in
    retirement programs, is Medicare and Medicaid. Everything else is
    declining or frozen. And Medicare and Medicaid, under this budget that
    they just adopted, with an inflation rate of under 4 percent, Medicaid
    is projected to grow at between 16 percent and 11 percent a year, and
    Medicare at between 11 percent and 9 percent a year. In other words,
    over the next 5 year period, both will grow at more than 3 times the
    rate of inflation. What we propose to do is to let them grow at twice
    the rate of inflation, too. I think we can live with twice the rate of
    inflation. Yes, I do. Why? Because the rate of reimbursement increases
    to doctors and hospitals need not go up so fast in Medicare, because
    we're going to close the gap between Medicare in the private sector and
    what doctors and hospitals get. And they will actually save money
    because we're going to dramatically cut their administrative costs. So
    they will be getting a raise through reduced administrative expenses
    that they won't have to get through greater outlays of taxpayer money.
    And we're going to turn right around and invest that money and more into
    the drug benefit in the long-term care.
        I don't know anybody who has really looked at this thing closely who
    doesn't think we can get it. Now, there may be people who try to stop us
    from getting it, but if we can't get a Government health care program
    down to the point where it can run on twice the rate of inflation, we're
    in deep trouble. I believe we can, and the program explicitly provides
    that none of the benefits can be cut.

    [Ms. Brown introduced Jo Barbano, national chair of the AARP legislative
    council, who discussed the rate of inflation on prescription drug prices
    without health care reform. A participant then asked if the new health
    care plan would control the rising cost of prescription drugs.]

        The President. Yes. We have sought and received assurances from many
    of the drug companies that for nonexperimental or non-newly developed
    drugs, which do--it costs a fortune to develop a new drug and bring it
    to market.

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    And we all know they have to be priced at very high levels early on.
        The thing that has bothered me is that other countries have cost
    controls on their drugs, and so we have companies from America selling
    drugs made in America in other countries with incomes as high as our
    elderly people have, for prices one-third of what they're charging
    Americans. It's just not right. So we're trying to work through that.
    But a number of the drug companies, to be fair to them, have come
    forward and said, while you're implementing this program, we'll keep our
    cost increases to inflation. Then, when we get into the program, the
    drug services, like every other part of it, will be subject to
    significant pressures to stay within the rate of inflation or pretty
    close to it. But what the drug companies will get out of this program,
    they'll win big, because they will have people able to purchase drugs
    who never were able to do it before.
        So what they give up on the rate of increase they will make back in
    the volume of sales, if you see what I mean. So they're not going to
    lose on this deal, they're just going to have to stop increasing the
    same drugs more and stop charging people so much more for the same
    health care, but they'll be able to increase their volume.
        I saw one person being critical of our health care program the other
    night on one of these C-SPAN forums that I watched. And he said,
    ``Well,'' he said, ``you know in Germany, the President's always talking
    about Germany, and they only spend 8.8 percent of their income on health
    care, and we spend 14.5 percent, but they rely so much more on
    medicine.'' Yes, they do, as a result of which they don't have to go to
    the hospital as much.
        So the way our system will work, let me just briefly say, is that
    the drug benefit itself for elderly people will have a $250 deductible
    and a copay, but no matter how serious the drug needs are, no one can be
    required to pay more than $1,000 a year. And obviously, income needs
    will be taken into account. But we will also have the same benefit for
    people under 65 as for people over 65. To get the drug benefit, the Part
    B premium will go up modestly, but it will really help to provide that
    service to people.
        I think it's going to make a huge difference in the quality of life
    to millions of elderly people. And I think it's going to reduce their
    need for more extensive care by giving them a maintenance schedule with
    the most modern medicines. And it will be good for the drug company. It
    will be a good swap for them to let their regular prices go up less but
    to be able to sell more.
        Q. You were asking for information and those 25,000 older Americans
    that I just visited and were asking me these questions gave me a report
    to give to you today. Could I give that to your staff?
        The President. Absolutely.
        Q. Thank you.

    [Ms. Brown introduced Mildred McCauley, member of AARP's national board
    of directors, who discussed the high cost of care in nursing homes. A
    participant then asked about funding for prevention and treatment of
    Alzheimer's disease and coverage for home and community-based long-term
    care.]

        The President. Yes. Let me first say what was said here is
    absolutely right. As all of you know who have ever had a family member
    affected by this, if you're older and you go to a hospital, you can get
    care covered by your policies or by Medicare. If you go to a nursing
    home, you basically have to spend yourself into abject poverty to get
    any benefits. And as a result of that, we've got a lot of folks in this
    country who are in trouble.
        Also, the least expensive and best way to care for people might be
    in some community-based setting or at home, and there are relatively
    limited coverages available for long-term care services. And Alzheimer's
    is a particular example of this because a lot of people want to care for
    their loved ones at home, or want them to be able to stay at home for as
    long as possible, but can't get any help in that regard. I'll come back
    to the research issue in a moment.
        The way this program will work, the long-term care program, is that
    we will permit home and community-based care to be reimbursed just like
    nursing home care number one. Number two, the programs will not be
    means-tested. That is, if people have the ability to pay something,
    they'll be asked to pay, but they won't be cut out of the program
    because their income is above a certain amount. So that solves the whole
    Medicare-Medicaid differential issue. Number three, in order to be
    eligible for Medicaid nursing home care today you have to have--there's
    a spend down limit of $2,000. You can

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    only have $2,000 in assets to be eligible for 100 percent coverage under
    Medicaid. We're going to raise that to $12,000. And people who are in
    Medicaid funding in nursing homes--funded nursing homes--only get $30 a
    month in spending money, $30 a month. In 1977, when I entered public
    life and became an advocate for people in nursing homes, they got $25 a
    month. You can imagine--so in other words, in effect, people are getting
    less than half as much per month as they did in 1977. We propose to
    raise that to $100 which will take it back about to its 1972 levels.
        So I think these things will work if we also provide better
    regulation and some tax preference for private long-term care insurance
    to supplement whatever people want or get from our Government program.
    But this long-term care issue is a very big issue. Keep in mind, again,
    elderly people are the fastest growing group of our population. Most
    people would prefer not to be in an institutional setting if they can be
    cared for at home or in a community setting.
        And again, I will say to you, this is another example where
    sometimes we strain at a gnat and swallow a camel. Yes, it will cost
    more money to start this program, but over the long run, 20 years from
    now our health care system in the aggregate will be cheaper because we
    provide a wider range of care options and we don't shove everybody into
    the most expensive option to get any help at all. So that's how that
    will work.
        Now, on the Alzheimer's question in particular, the way this system
    of funding works, we are going to develop a stream of funding that will
    increase our investment in medical research of all kinds, including
    research in the care and treatment of Alzheimer's. So you'll get more
    medical research. I will say again, we have been driven here not to mess
    up what is right with American medicine and American health care, we
    want to enhance what is right and only focus on what is wrong in trying
    to deal with it.
        Q. Thank you for that response, Mr. President. I'm sure that you
    recognize that the issue of long-term care is one that is so very, very
    important to us and that we will be reminding you about it. You can be
    sure of that.
        The President. You don't have to remind me, you've got to remind
    Congress. Because there will be people who say, well, now, wait a
    minute. And that's why I really thank the three Members from California
    who are here today. They're going to have some tough decisions to make.
    You know, there will be a lot of people who won't want to go through
    some of these changes that we're recommending, and there will be a lot
    of people who say, well, let's just play it safe and take the--we know
    the least expensive course. There will be those who say, let's take
    these reductions in Medicare and Medicaid increases, these savings from
    projected increases, and put them into paying for the regular package
    that the President has proposed, and think about long-term care and
    medicine some other day.
        So we need you guys to show up and be heard in the Capitol to
    support the Members of Congress who want to see this as a critical
    element of the ultimate resolution of our health care crisis.

    [Ms. Brown introduced Marie Smith, chair of the economics committee of
    the national legislative council, who discussed cost containment. A
    participant then asked about cost containment provisions in the health
    care plan.]

        The President. Thank you. First of all, as all of you know, we have
    runaway costs now, both in the system as a whole and for individuals who
    are paying into it. To keep down individual cost increases as well as
    systematic cost increases, we seek to do three things that we've
    factored in. There are a lot of things we are doing, I want to try to
    emphasize this; we think we'll get more cost containment than we have
    budgeted for, and I want to explain why.
        Number one, if you simplify the system so that essentially every
    patient, every doctor, every insurer is dealing with a single uniform
    form, one for each category of people in the system, you will
    drastically cut the administrative cost of this health care system. We
    were at the Children's Hospital in Washington the other day; one
    hospital in one city in America estimates that they spend $2 million a
    year and enough time for their doctors to see another 10,000 children a
    year on paperwork that has nothing to do with the care of the kids or
    keeping up with their records necessary to monitor the care of the kids.
    That's the first thing.
        Number two, if you cover everybody and require everybody to make
    some contribution to the system, that will stop a lot of the cost
    shifting. Keep in mind, a lot of your costs keep going up every year
    more and more and more

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    because you are paying into the system, either through Medicare or
    through private insurance, and you pay for everybody else because the
    hospitals shift their uncompensated care bills to you or to insurance
    companies who turn around and raise the price or the Government who
    comes around and raises the price. So through simple administrative
    simplification and stopping cost shifting, you're going to have some
    savings.
        Number three, as a backup, we also propose a cap, a limit on how
    much the cost of the system can increase in any given year, moving down
    towards inflation plus population growth over a period of years. But
    still, I will tell you, that we still believe--this budget is very
    modest. We still project over the next 5--between now and the year 2000,
    the American health care system will go from spending 14.5 percent of
    our income on health care to about 18 percent, picking up the drugs and
    the long-term care. If we don't do anything, we'll have no drugs, no
    long-term care, and be spending over 19 percent of our income on health
    care.
        But those are very modest. Now, that means that we are calculating
    no savings from putting all the people in the country in these large
    buyer groups so that they can compete for lower prices. Look what
    happened to the California public employees plan. Look how little their
    inflation was this year. The Mayo Clinic managed care plan--most people
    believe Mayo Clinic provides pretty good health care--you know what
    their inflation was this year? 3.9 percent, and their prices before they
    started were lower than the national average.
        We don't calculate any of those savings in our budget, the things
    that will come from better organizing and delivering health care and
    giving consumer groups the right to bargain to keep their prices lower.
    We have an initiative to eliminate fraud and abuse, which is significant
    in this system. We calculate none of those savings into our budget.
        So we believe we will easily make the budget because a lot of the
    things we're going to do that will save money we don't even try to claim
    credit for to try to bend over backward to be realistic. So I think
    we'll get there. But you're right, you've got to have cost control.
        Let me just say one other thing. There's one other thing we need to
    help the AARP on. There are a lot of people in the Congress who say that
    limitations on the rate of increases amount to some sort of price
    controls, and we shouldn't have them. But look what we've had so far. If
    you have a third-party pay system, where the people who are working the
    system can get a check every time they send a bill, there are no normal
    market forces. You have to have some sort of discipline on the system.
    Now, I know the AARP favors that. And again, I want you to help us get
    that when this bill goes to the Congress. We believe we will more than
    meet the cap that we've set. We don't think we can ever necessarily even
    meet that cap, but we better have it in the law so people will have to
    know they're going to have to manage their business better, they can't
    keep breaking the bank.
        Ms. Brown. Well, Mr. President, the time has passed so quickly. I
    believe it's now time, if you have some closing remarks.
        The President. Let me say, first of all, I think when I leave, Mr.
    Magaziner is going to come up here. Ira Magaziner who has been the sort
    of leading light of our health care efforts in the First Lady's group on
    health care and who knows the answers to questions you haven't even
    thought of yet--at least questions I haven't thought of yet--is going to
    come up here and spend up to another hour answering any questions you
    have about the specifics of our plan. So I hope that those of you here
    who are interested will stay and continue to ask questions. He and some
    others who have come all the way to California with me, who are working
    in our health care effort, are going to stay. So we want to encourage
    all Americans to ask questions and to give us our ideas--their ideas. We
    don't pretend to have all the answers.
        I just want to make two points in closing. Number one, I am not
    interested in having this become a partisan, political issue. I am
    profoundly grateful to the distinguished Republican Senator from
    Vermont, Jim Jeffords, for announcing that he intends to be a cosponsor
    of our initiative. That's the kind of thing we need more of, working
    together.
        Number two, we've got to keep working on making this better, the
    evidence of other countries is, but you have to keep working every year.
    But that's why we've built this in a phased-in fashion, so that the more
    we learn, the more we can make adjustments and the more we can make
    improvements.
        The point I want to make, the two of you have already made out here
    in these questions, is if we do nothing, it will be more costly and

    [[Page 1693]]

    less satisfactory than if we take steps. And finally, let me say, we
    have to overcome the disbelief in America. A lot of folks don't think we
    can do this, but that's what they said when Social Security came in.
    People said we couldn't do it, but we did it.
        I hold this health security card up all the time, but you just
    think, if everybody had a Social Security card and a health security
    card, what a better country this would be and how much better life would
    be for all the American people.
        Thank you very much.

    Note: The President spoke at 8:50 a.m. at Dr. Paul Carlson Memorial
    Park.