    [Public Papers of the Presidents of the United States: William J. Clinton (1993, Book II)]
    [September 26, 1993]
    [Pages 1599-1608]
    [From the U.S. Government Publishing Office www.gpo.gov]

    [[Page 1599]]

    Remarks and a Question-and-Answer Session on Health Care Reform in New
    York City
    September 26, 1993

        The President. Thank you very much, Mayor, and all my good friends
    in Queens. It's great to be back in this diner again. We had a
    terrific--was anybody here when I was here before? Well, Congressman
    Manton was, and Lowey was here, and you were here, and you were here
    when I was here before. We had a great time here. A lot of you were
    here. Didn't we, Antonio? We had a great time. And I felt so good about
    it, I brought you a cap from my food service. [Laughter] You can wear it
    here. There you go.
        I came to this place during the primary as an example of a new small
    business and the kind of economic opportunity that I hope to support as
    President. In the last several months I've had the opportunity to work
    with the Members of Congress here present: Gary Ackerman, Tom Manton,
    Anita Lowey. Anybody else here from the House? I don't think so. And
    we've done a lot of things that I think will help the economy. We have
    passed the biggest deficit reduction program in history. We have record-
    low interest rates. We have created some empowerment zones that will
    help some distressed areas of our biggest cities and some of our rural
    areas to generate new private sector investment like this. We are
    pushing through some banking reforms that will make available financial
    institutions whose primary mission is to loan money to new small
    businesses, like this one was just a year or so ago. We are trying, in
    other words, to help to create an economy which will be connected to the
    future, and which people who want to work hard can win.
        We are revolutionizing a lot of the educational programs of the
    National Government. The student loan program has been completely
    rewritten to provide longer term, lower interest rate student loans on
    better repayment terms so that young people can pay them back as a
    percentage of their income, no matter how much they have to borrow. We
    passed a national service program to allow tens of thousands of our
    young people to work in community programs to pay off their college
    loans. So we are moving ahead to create tomorrow's economy and to try to
    help our people adjust to it.
        But one of the things that I have learned--and the reason this
    health care debate is so important is that it is absolutely impossible
    to get people to have the courage to change unless first they can be
    secure in their own circumstances. If you think about it, every one of
    you in your own personal life know that is true. Look at any child you
    raise up. A child, if you want a child to change his or her behavior, to
    try something new, the more personally secure the child is, the more the
    child is willing to try to do something new and different, to believe
    that you can change and win. The more insecure people are, the more
    focused they are on just surviving from day to day, the more difficult
    that is.
        The hard truth is that this country has seen a very long period of
    time, about 20 years, when most working people have gotten steadily more
    insecure. We have, according to your senior Senator Pat Moynihan, seen
    almost 30 years of steady deterioration in the supports the children
    have in their family units. And we are now facing a great challenge in
    this country: How can we get the security people need so that people
    will have the courage to change as we move to the 21st century?
        I've really thought a lot about that. That's at the core of the
    crime bill that's been introduced into the Congress, which will provide
    50,000 of the 100,000 more police officers I want to put on the
    streets--will pass at long last the Brady bill, very important in New
    York. The Mayor told me you confiscate thousands of weapons here every
    year and 90 percent of them come from another State. So we've got to
    pass the Brady bill. And I hope that before the year's out I will have a
    chance to vote on one of the number of bills in the Congress now which
    would ban assault weapons and take them out of the hands of teenagers in
    our cities and give us a chance to have a saner and safer place.
        That's one part of this. I want to compliment Mayor Dinkins. His
    program will have increased the size of the New York City police force
    up about 20 percent when it is completed. And New York City is one of
    the few big cities

    [[Page 1600]]

    in America which is reporting now, for 2 years in a row, a decline in
    all seven major categories of crime. That's something you can be proud
    of. Not very many cities have done it, and you should be proud of it.
        If you want people to be more secure you have to support families.
    And we have to make it possible for people to succeed as workers and as
    parents, because most parents have to work. And we have waited too long
    in this country to do this. That was at the heart of our party's
    determination, to overcome the reluctance of the last 4 years and pass
    the family and medical leave bill.
        I want to tell you a story. I got up this morning--and my mother
    spent the night with me in the White House last night, and so I got my
    mother and my daughter and my wife up and my stepfather, and we were all
    bustling around on Sunday morning. And then I went out for my morning
    run, and when I came back in I noticed in the bottom floor of the White
    House a family getting a personal tour on Sunday morning--the father,
    the mother, and three children--three daughters, one of these young
    daughters desperately ill with cancer. And she had been in one of these
    Make-a-Wish programs, and her wish was to come to the White House and
    see the President. So they brought her on Sunday morning so she could
    see the helicopter take off as I came up here. And I got to sit and
    visit with her a long time. But the father of that child looked at me
    and he said, ``My daughter has been sick a long time. And I don't know
    what I would have done without the family and medical leave law. I still
    have a job because you passed that law. Don't let anybody ever tell you
    it was bad for the economy.''
        The Members of Congress here present voted for a bill to change the
    tax laws so that people who work with children on lower incomes, lower
    wages, will be lifted above the poverty line as they work and raise
    their children, so that the tax system won't tax people into poverty, it
    will lift them out of it--the most sweeping piece of economic reform in
    at least two decades. Not very much noticed, but you will see it in tens
    of thousands of people in Queens who in the coming year will get a
    reduction in their income tax bill because they work for modest wages
    and they have children in their homes. We've got to try to do that.
        But here's why we came here today. If we do all of these things, and
    we don't fix the health care system, we will not restore security to
    American life. We won't be supporting families who are trying to raise
    their children or take care of their parents. And we won't give people
    the kind of inner strength and self-confidence they need to face a world
    that is smaller and smaller and smaller, to support expanded trade, to
    support new investments in new technologies, to support the kind of
    things I'm going to talk about at the United Nations tomorrow.
        This health care issue is uniquely a deeply personal one for every
    individual and every family and a massive national issue for the United
    States. It is inconceivable that we spend 35 to 40 percent more of our
    income on health care than any other country and we still have 37
    million people uninsured; that in any given 2-year period, one in four
    people will be without adequate insurance.
        This morning I was out for my morning run. This handsome young man
    runs by me, he says, ``Mr. President, do you mind if I run with you
    awhile?'' And I told him, not if he would slow down, I didn't. So he
    turned around, we're running along together, and he was an actor there
    involved in a play. And he said, ``My wife is expecting a baby, and
    we're going to have our first child in April. And I'm an actor. I work
    as hard as I can, but my work is not constant. And every year I am not
    sure whether I can have health insurance. You've got to pass this
    program.'' Just a guy running along The Mall, like a lot of these people
    who are going to talk to us today.
        We received 700,000 letters, the First Lady and her task force and
    I. We're still getting about 10,000 letters a week on health care alone.
        Let me say, I suppose most of you either saw the address I made to
    Congress or the Nightline show where I answered questions for so long
    that everybody who watched the whole program was sleepy the next day.
    But I want to just reiterate one or two things real quickly. First of
    all, the most important thing we can do with this health care system to
    fix it is to keep what's right, fix what's wrong, but guarantee the
    benefits of it to all Americans. We are the only major country in the
    world where people don't have the security of knowing that they have
    comprehensive health care that can't be taken away if you lose your job
    or someone in your family gets sick or something else hap-

    [[Page 1601]]

    pens. We have got to give that sense of security. We've got to fix what
    is wrong and keep what is right.
        What's right about the system? High quality, consumer choice. Our
    plan keeps them both and, in fact, increases quality by providing
    preventive and primary services that will save money over the long run
    and improve the quality of health care and increases choice for most
    Americans who today increasingly have only one choice of how they get
    their health care.
        What's wrong with the health care system? Well, it costs too much,
    it's too complicated, and it doesn't promote personal responsibility for
    every American. And it has no security. There is not a soul in this
    country that can't lose his or her health care, nobody. So that's what
    is wrong with it.
        Our system saves money without sacrificing quality, simplifies the
    system, which will elate the doctors and nurses and the people who have
    had to fool with it for years. We are now hiring clerical workers at 4
    times the rate we are adding direct care providers in most hospitals in
    this country. It introduces more responsibility because it asks every
    employer and every employee to do what the vast majority of employers
    and employees are doing now, and it rewards good behavior. And finally,
    it provides security to everybody.
        My dream is that before the Congress goes home, and after the finish
    of its business next year, it will pass a bill to give a security card
    like this to every American, so that no matter where you are and what
    happens to you, or whether you lose your job or whether someone in your
    family gets sick, you'll always be able to get health care.
        Now, I know a lot of people are skeptical that this can be done. But
    I just ask you to remember a couple of basic facts: We are already
    spending 40 percent more than anybody else. We are spending at least 10
    cents on the dollar in unnecessary nonhealth-related paperwork that no
    other country in the world is spending. Nobody. And if we have a system
    like the one we've outlined, that will provide discounts to small
    business and low-wage workers--so that a place like this, a great place,
    can provide some health insurance without running the risk of going
    broke because when businesses start and they have just a few employees,
    they can't all afford the market rate, and so we give them discounts to
    them--we can get this done.
        I just don't believe that we have to go on for another year or 5
    years or 10 years being the only nation in the world that can't figure
    out how to give health care to everybody. I don't believe that. And I
    don't think you believe that.
        So today we're here in Queens to hear from some of the people who
    wrote us from New York. A lot of you wrote us letters, but I'm going to
    call on eight people--and get rid of this so we can just have a
    conversation--who represent what I think may be the four biggest
    obstacles to health care security, that cause people to lose their
    health insurance.
        So we're going to first talk about the curse of preexisting
    conditions that you want health insurance. And the first person who's
    going to talk about the letter that she wrote to us is Linda Haftel.
    Where are you, Linda?

    [Ms. Haftel, who was recently diagnosed with multiple sclerosis,
    described her fear of losing her health insurance.]

        The President. Thank you. Let's give her a hand for doing that. It
    was great. [Applause] I wanted her to go first to make a point. First of
    all, a lot of people who have MS now, because of medication and because
    of rigorous exercise, are finding that they can maintain very high
    levels of mobility for much longer than was previously the case. So here
    she is, at the peak of her capacity to give to society, wondering if she
    has to lie on to her insurer to keep her insurance, because again, this
    is the only country in the world where you can lose your insurance
    because you really need insurance.
        So what we have to do is to change the rules of insurance to say
    that you cannot lose your policy because of preexisting conditions. To
    do that you have to make sure that insurers can't go broke, and the way
    you do that is to put us all in big pools called community rating, so
    that any person with a severe illness still adds a very small percentage
    to the overall cost of the operation. It's just something we've never
    done that we have to do.
        I thank you. Marcia Calendar, where are you?

    [Ms. Calendar described the problems with the health care system that
    her family encountered when her son was diagnosed with a terminal
    illness. In spite of these problems, she and her husband decided to have
    another child, who was

    [[Page 1602]]

    in the audience asleep.]

        The President. She's the smartest person here, she's sleeping.
    [Laughter]

    [Ms. Calendar recounted her family's financial difficulty prior to her
    son's death and her hope for a health plan that would ensure quality of
    life for all children.]

        The President. Thank you, and thank you for coming and for bringing
    your beautiful daughter. It is hard to say anything after that, but let
    me just make one point that you might have missed in the heart-wrenching
    story of this family. When Matthew's father lost his job because of a
    layoff, that was the beginning of a lot of their problems with the
    health insurance company, if you remember the story that she told. If
    you go back to what I said when I first started talking about what a
    dynamic, changing time it is, and how people can't be expected to change
    if they don't have security--the average person is going to change jobs
    eight times in a lifetime now because of the way the economy is
    changing. And it is cruel, it is unconscionable that people who get
    caught up in the ordinary course of economic changes today, stuff we
    take for granted, would have to go through what they did solely because
    the health care system doesn't move with people from job to job, or from
    job to unemployment to job. It's just wrong. It is wrong because there
    is no comprehensive system to put prospective employers in the position
    of thinking that they can't hire somebody because they only have 10
    employees or 15 employees, and that as a small business they can't
    afford to take on that risk, when most new jobs are being created by
    small businesses.
        No one can ever stop the fact, that for reasons none of us
    understand, some children will be born with life-threatening and
    ultimately terminal illnesses. That happens, but no family should have
    their grief compounded and their economic misery reinforced by this kind
    of problem. The rest of us owe it to families like the Calendars to make
    sure that this does not happen anymore. Thank you.
        Let's talk about what is the flip side of the preexisting
    conditions, where people use their health insurance, and that is they
    keep their health insurance at the cost of staying in a job whether they
    want to stay there or not. It's called the job lock syndrome. And we're
    going to hear first from Mary Jane Van Wick. Where are you, Mary Jane?

    [Ms. Van Wick explained that to cover ongoing costs associated with her
    liver transplant, she was forced to go on medical assistance.]

        The President. Now, there are literally tens of thousands, maybe
    more, people like Mary Jane in this country, who can get health care
    only if they're on public assistance and whose children have been not
    necessarily covered if they're on Medicare. Just think about that.
        A lot of you have seen the story of a woman I met in Ohio who has
    become one of the spokespersons for our campaign, named Marie Castos,
    who had six children, was raising them alone, had a job making a very
    good income. The youngest child had a terminal illness, a terrible
    problem. She had to quit her job and go on Medicaid and become a welfare
    recipient--she had a very good job--not because she wanted a welfare
    check but just so her children would have some health care. Her youngest
    child died recently. And I just saw her; she came back to the White
    House to see me and she's one of our health care spokespersons. And
    she's looking forward to going back to work.
        But she was so proud of being able to support those children alone.
    Why shouldn't this lady be able to work? Society is going to pay for her
    health care anyway, right? This is--it's bad for her. She's frustrated
    she can't work. It's also bad for the rest of you. If society is paying
    for her health care--if she works and makes a contribution to society,
    has an income and pays taxes, number one, her child gets health care
    coverage and, number two, she is repaying some of the costs of her own
    health care.
        The system we have now, everybody loses. And she's more unhappy.
    This will also be fixed if you have universal coverage that moves from
    employment to unemployment to employment again, and which includes
    families as well as individual workers.
        Where's Jean Townsend? You're next.

    [Ms. Townsend explained that because of cutbacks in her company, she no
    longer worked enough hours to qualify for health insurance.]

        The President. Interestingly enough, as I'm sure all of you have
    noticed, in the economy around here--you see it all around the country--
    there are more and more part-time workers, more and more temporary
    workers, more and more special businesses whose whole job

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    is to gather up folks who will work part-time and send them out to other
    employers. The big reason for this is the cost of health care, which
    then the employer can avoid.
        Under our plan, even part-time workers would be covered. But we
    would split the difference, so that if you're a part-time worker, your
    employer and the employee would have the responsibility of only paying a
    pro rata share of what the premium would be. And the Government would
    pick up the rest as they do for unemployed people, as if you were
    unemployed because you would be sometimes. So there would be discount,
    if you will.
        But that way you wouldn't unduly burden businesses that honestly
    need part-time workers. There are a lot of businesses that can't operate
    really functionally because of the changing demands in the schedule
    unless they have some full-time workers and some part-time workers. But
    a lot of businesses are weighing more to part-time workers now solely to
    avoid the health care costs.
        So what we would do is we would remove the incentive to hire part-
    time workers solely to avoid the health care costs. And for the
    businesses that really have to have some part-time workers--like a lot
    of restaurants, for example, really need both full-time and part-time
    workers. It's not an attempt to avoid anything, it's just the way the
    workload changes.
        So under our system we would be fair to those folks by saying you
    don't have to pay the whole cost of the premium. That's not fair; the
    person's not there all the time. You share it, and we'll give you a
    discount and then the Government will pick up the rest as if the person
    were unemployed. Or if a person has multiple employers, then they would
    all make a little contribution, as long as the part-time worker does 10
    hours a week or more. I think that is a fair resolution of the problem.
        Let's talk now about the fear of losing insurance related to the
    rising cost of it. Where is Josephine Angevine?

    [Ms. Angevine explained that her salary was frozen because her employer,
    a small business, covered the full cost of health insurance premiums for
    her son and herself, and she worried about losing her job as well as her
    insurance due to this cost of over $12,000.]

        The President. Wow! It takes your breath away, doesn't it? Let me
    make just a couple of observations about her situation. Part of it is
    common to millions of people in businesses large and small; part of it
    is--her problem--is unique to small businesses.
        You heard her say she hasn't had a pay raise in 3 years. There are
    millions of American workers who haven't had a pay raise in 3 years
    because of the cost of health insurance. And it is estimated that if we
    don't do something to bring health care costs closer to inflation,
    between now and the end of the decade, most of what otherwise would have
    gone to pay workers' pay increases will go solely to pay for more health
    care costs, and not for new benefits--more health care costs for the
    same health care.
        Now, that is something that is sweeping the country. Her premium,
    however, is unusual. You heard her--on a $52,000 salary with a $12,000
    premium, that means she's paying over 20 percent of payroll and more
    than her mortgage payment.
        So under our plan, we would begin with everybody at 7.9 percent of
    payroll for employers and a fifth of that at the most for employees. If
    employers want to cover their employees, they can, but it would cut that
    cost in half. Why? Because she's got a small business with five
    employees. They're probably in a very small pool with somewhere between
    50 and 200 people. And under our plan she would go into a pool with
    other small businesses, with self-employed people. There might be
    200,000 in that buying group, which would give you the economies of
    scale that other people have. This is unconscionable, and it's solely a
    function of the size of the business.
        And I'll bet you anything--I haven't seen the benefit package, but
    I'll bet you anything it's not as good as the one that will be in the
    national health plan--certainly not better.
        But the real problem here--this small business thing is a big deal.
    If we don't provide discounts for very small businesses and get all
    small businesses in big pools, you will see that small business will
    continue to have a bigger and bigger gap between their premiums and big
    business premiums. Right now, small business premiums are between 20 and
    50 percent higher than big business premiums on average and are going up
    at more than twice the rate of big business premiums. And yet what we
    want to do is encourage people who get laid off or who get restructured
    or the airline industries or whatever to go out and work in or

    [[Page 1604]]

    start up small businesses. So that if you look at what's going to happen
    in the next 10 years, a higher and higher and higher percentage of
    Americans will be working in smaller companies.
        That is another reason we've got to do this health insurance thing
    now, because we cannot stop the trend of big companies toward downsizing
    and we don't want to stop this trend of people starting small
    businesses.
        I am very glad you are here because even though your circumstance is
    somewhat extreme in terms of percentage of your payroll, it is not
    unusual in the kind of problem you have, and we've got to stop it.
        Where is Mark Fish?

    [Mr. Fish explained that he and his wife were self-employed and the cost
    of their health insurance was exorbitant.]

        The President. What's your deductible?
        Mr. Fish. It's $1,000, but it is spread out over 2 years since our
    medical bills are in 1993 and 1994.
        By the way, I would like to tell you that I am a registered
    Republican who voted for you, and I think you are doing a great job.
        The President. Thank you. Your problem is similar to hers. And if I
    were guessing, I would guess, since you're self-employed and she is in a
    small business and you both have family coverage for one child, but your
    premium is over $8,500 and hers is $12,000, my guess is, whoever your
    insurer is has done a better job of getting you in slightly bigger group
    than she has so you can spread risk.
        Let me tell you, now, I've hesitated to say this in the past
    because, even though our books are out and have been published, what our
    family premium winds up being to start--this health insurance program--
    depends in part on what the ultimate package of benefits are. But I
    think I can say roughly that a family package which would be the same
    price starting out for everybody, whether they were self-employed or
    not, would be about at least $4,000 cheaper than you're paying.
        And again, all that we would do is--I'd have to see the deductibles
    and the copays, but you'd save about $4,000 which means yours could go
    down about $8,000 to get a very good package of preventive and primary
    and comprehensive benefits.
        How could we do that? Because we have the most expensive insurance
    system in the world. No other country has got 1,500 insurance companies
    writing thousands of different policies, imposing literally tens of
    billions of dollars in paperwork benefits, and putting people in such
    small groups that company really could go broke with one bad illness. So
    we're just going to have to force people to rate everybody the same in a
    broad community basis and put people into big pools, so if something
    happens, God forbid, to you or someone in your family, you won't
    bankrupt your insurance carrier because you'll be in a big pool, not a
    little pool.
        But now, if you were working for a company with 6,000 employees, you
    could get the coverage you've got now for $4,000 a year less today,
    maybe even less than that given what they're covering. In addition to
    that, if you're self-employed, today, as you know, your policy is only
    25 percent deductible. Under our plan it would be 100 percent deductible
    for both you and your wife, which would make a big difference. So it
    will help.
        Now I want to talk a little bit about the criteria by which insurers
    make these decisions. Where is Susan Berardo?

    [Ms. Berardo described her problem with insurance coverage for a bone
    marrow transplant.]

        The President. This raises a very important point. If you've read
    your health insurance policies, for those of you who have them, you know
    that they cover certain problems. They do not prescribe procedures. For
    example, if the health insurance policy covers pregnancy-related
    services, it doesn't tell you that you can--it doesn't weigh whether you
    can have natural childbirth with Lamaze, but you can't have a C-section
    if you need it, right? It doesn't say that. It doesn't say what things
    will happen; it just says this issue is covered, this problem is
    covered.
        So that this lady's care is covered under her health insurance
    policy, but the insurance company has decided that this procedure, bone
    marrow transplant, shouldn't be covered even though it doesn't say that
    in the policy, right? It didn't say in the policy, bone marrow
    transplants aren't covered, did it? They decide if it's experimental.
        Now, just so you don't think--I know what a lot of you must be
    thinking, ``Well, it's probably more expensive than a regular
    operation.'' The answer to that is, in this case it probably is. But if
    it works, it will cost the economy a lot less money over the long run in
    the health

    [[Page 1605]]

    care system. But just so you don't think it always applies only to more
    expensive procedures, I talked to a doctor just 3 days ago who talked to
    me about some new gall bladder technique that's done almost like
    arthroscopic surgery on knees which is much less expensive and is also
    being denied by some health insurance companies, even though the policy
    doesn't say so, on the theory that it's experimental, too. So that in
    effect, doctors are not free to practice medicine and let their patients
    make informed choices about what is best for their health care because
    of conditions not written in the insurance policy, except a general
    ``well, if we think something is experimental, we don't have to let you
    do it.'' Big problem.
        Where is Ewen Gillies? Did I pronounce your name right?

    [Mr. Gillies described his problem in obtaining payment from his
    insurance company for his wife's intensive cancer treatment.]

        The President. Give him a hand.
        Mr. Gillies. May I add one postscript? A copy of the letter went to
    Senator Moynihan, among other people. And unasked, he got in touch with
    Blue Cross, who called me and said, ``We're reviewing this,'' and 2
    weeks later reimbursed us for $60,000 by placing it in a different
    category. [Applause]
        The President. Let me say, first of all, what you said is a great
    tribute to Senator Moynihan but a pretty terrible indictment of the
    system, right? I must say, I'm trying to fix it so you don't have to
    call the White House or your Senator or your Congressman or your mayor
    or a Governor or anybody else to make this work. I think you've said it
    all in your remarks. I'm glad you're here.
        How about anybody else in here? We've got some other people who
    wrote letters to us. Yes, ma'am.

    [A participant discussed her concern that the new health care plan will
    not cover persons with the genetic disorder ectodermal dysplasia or
    other severe dental disorders.]

        The President. You're right, I didn't know anything about that. I
    never heard of the condition before. And I will take it back and discuss
    it with our people. If you have something for me, I'll be glad to have
    it. The plan does cover in general dental benefits for children up to
    age 18 from the beginning.

    [A participant described his problem with increased insurance costs
    attributed to community rating requirements.]

        The President. Who is covered under your policy? You and your wife
    and one child. How old are you? For a family of three at your age, a
    community rating bill should not have raised your insurance premiums.
        But let me just say this. This is the hazard. You are going to hear
    all of this debate when we go along. I don't want to, again, sort of
    prefigure the congressional debate, but you'll hear a lot of people say,
    well, let's just do this little part of this, or let's do that or the
    other thing. The problem is if you go to community rating, you also have
    to allow people who run accounting firms, who are self-employed, to be
    in very large pools so that you have a representative community in the
    pool. And you also have to allow them to buy their services in some sort
    of competitive way so you can have the leverage there of the large pool.
        I hope you will all remember that when you hear this debate, when
    people say, well, let's do all this stuff, but don't really require
    universal coverage. If you don't do that, you'll have the same sort of
    cost shifting, the same sort of people falling through the cracks, the
    same sort of escalating costs you've got now, I think. I can't imagine
    how we could do it otherwise. And so, I appreciate what you said.

    [A Medicare recipient asked about medication coverage under the new
    plan.]

        The President. First, let me try to explain what he just said for
    those of you who don't understand it. If you're elderly and poor enough
    to be on Medicaid, that is if your income and resources are quite low,
    you today get drug coverage, you get medication. If you're $1 above the
    Medicaid line and you're on Medicare and you're elderly, you get no help
    for medication.
        You heard this gentleman say he has a $5,000 annual bill. Let me
    say, if he did not take those drugs--let's say he stopped taking those
    drugs--he might be in the hospital 2 weeks a year extra immediately,
    which would cost a whole lot more than $5,000, which would be completely
    reimbursed by the Government.
        You have all these people like him in this country today, a lot of
    people I have personally met, who are literally making a decision every
    week between buying medicine and buying food

    [[Page 1606]]

    because they are just above that Medicaid line. And if they chose to buy
    food and get off their medicine and got real sick and went to the
    hospital, Medicare would pay for all of it, at a far greater expense.
        So, therefore, I think it is very important to cover medicine. The
    answer to your question is, the medical coverage will be treated more or
    less as a separate benefit, and in that medical coverage there will be a
    deductible of about $250 and then a copay of approximately in the range
    of $10. But that's a lot better than $5,000.
        Thank you.

    [A participant asked how the new plan would reduce hospital and health
    care costs.]

        The President. There are two ways, even in a State with heavily
    regulated hospital costs, there are two or three ways that I think it
    will come down. First of all, one of the things that we've learned is:
    In a system, if you just regulate the price of something but you don't
    manage the system, what happens is that people, in order to avoid having
    their incomes go down, increase the supply. If you lower the price, you
    increase the supply, you get the same income. That's a serious problem
    with Medicare and Medicaid all across the country.
        Secondly, New York, for example, has been the beneficiary of a
    program called the disproportionate share. We give back to the hospitals
    that have very high percentages of low income people, because we have so
    many people who are charity cases who have to be given some care for
    which there is no reimbursement. The hospitals basically shift and the
    insurance companies shift those costs to people who are paying higher
    hospital bills or higher insurance premiums.
        If you stop the cost shifting, and the only way to do that is to
    have universal coverage, then for a lot of the people who have--I'll
    give you an example. The best example I can think of is a big company,
    let's say General Motors or IBM. They may have very high insurance
    premiums with very good benefits, but their insurance premiums are
    higher than they otherwise would be because they're paying for the cost
    shifting. And then a small operation like this lady's operation, her
    insurance premiums are very high in part because she's taken out
    insurance, so even she or even this family with their $8,000 premium, a
    portion of their premium is going to pay for people who get
    uncompensated care.
        Everybody in this country gets some care sometime. If you get real
    sick, you show up at the emergency room. It's more expensive, it costs
    enormously, and then they have to recover the costs. So that will
    happen.
        Another thing is that even in New York or New Jersey, States that
    have very good cost controls, or Maryland, the State with probably the
    best cost controls, even in those States if you look at what's happened
    to the manpower, health care is always going to be very labor-intensive.
    But in the last 12 years almost--not almost all but 80 percent of the
    new hires in health care have been to push paper, have been to deal with
    regulation, have been to deal with--the average hospital of any size
    will have 300 different insurers and hundreds and hundreds of different
    forms. And under our system if you go to one form for insurers, one form
    for the doctor basically, a standard care form, one form for the
    consumers, you will drastically cut the time and money allocated to the
    administrative costs of medicine.
        The average doctor--let me just give you one figure; this is a
    stunning thing--in 1980, the average doctor took home 75 cents of every
    dollar that came into a medical clinic. In 1990 the average doctor took
    home 52 cents of every dollar that came into a medical clinic; 23 cents,
    boom. Where did it go? A couple of cents went to malpractice; over 90
    percent of it plus went to increasing costs of administering the system.
        And again, you may say this is impossible to believe. The New
    England Journal of Medicine did a profile of two hospitals in the last
    couple of years--same size hospitals, same occupancy rate, one in
    Canada, one in the U.S., exact same size. In the U.S. there were 220
    people in the billing department; in Canada there were 6. And most of
    them were working to fill out American insurance forms. I mean, that's a
    lot--there is an enormous amount of money.
        One other thing: You find within States, even with all the price
    controls, you find from State to State there are massive differences in
    the cost of caring for people on Medicare and Medicaid with the same
    conditions. And within States that don't have specific unit controls,
    there are massive differences. You know, the Pennsylvania example I
    cited the other night on television said that open heart surgery varied
    in cost between $21,000 and $84,000 with ex-

    [[Page 1607]]

    actly the same outcomes on the study. So those are the things we're
    going to work through.
        The money has to be going somewhere. If we're spending 14.5 percent
    of our income on health care--Canada's at 10, Germany and Japan are
    under 9, nobody else is over 9 but Canada--the nickel on the dollar is
    somewhere. And it's not all in higher quality health care. An enormous
    amount of it is in a system that is wrongly organized with too much cost
    shifting and a dime on the dollar, I will say again, a dime on the
    dollar in administrative costs no other comprehensive system in the
    world has.

    [At this point, a participant complained about the inadequacy of
    Medicaid coverage.]

        The President. We've run a little longer than I thought we were
    going to, but I'm glad actually we got this question, even though I've
    got to stop now, because this is a very important thing.
        Enrollment by physicians in the Medicaid program is totally
    voluntary, and a lot of doctors won't treat Medicaid patients, by and
    large because in most States they are reimbursed at below the cost of
    service but the cost of dealing with the paperwork of the program is
    greater even than some of the insurance company paperwork, so it is a
    bigger hassle for a lower return. A lot of people don't do it.
        One of the important aspects of the health care plan that we have
    presented is that people on Medicaid would be treated just like
    everybody else and would be mixed in with everybody else in these big
    groups. So if you got a security card, you'd have it whether you were an
    employee of a big company or a self-employed person or someone on
    Medicaid, and you would be involved in one of these big care networks
    which would give you the bargaining power to get the highest quality
    care you can at the most reasonable price.
        Again, this is largely the way it is done in several other
    countries, especially in Germany, and it works pretty well. There is no
    reason we should have a separate Government system which then the
    providers can elect to participate in or not. Under this system, if it
    were in existence when you had your situation, it would have been
    totally immaterial whether you were on Medicaid or not because you would
    have the same reimbursement, the same paperwork coming from the same
    source. As a matter of fact, depending on how they set it up, the
    physicians and the hospitals might not even have known you were a
    Medicaid patient because the Government funds will go to the health care
    unit you would be a part of, and they would pay the bill.
        Let me talk about the freedom of choice issue very briefly. First of
    all, I want to say something I don't think is clear to everybody. If we
    pass this program--and for all the people who have better benefits, like
    for anybody who is in a work unit where the employer is paying 100
    percent of the premium, the employer can go right on paying it. In other
    words, this does not require anybody--what we try to do is set some
    floors on coverage not ceilings. So if an employer wants to continue to
    pay 100 percent of the premium and have fee-for-service medicine and let
    people choose their doctor, they can all do that under this system. They
    can go right on doing that. As a matter of fact, if anything, it will be
    easier for them to do it. If we can lower the medical rate of inflation
    closer to the regular rate of inflation, it will be easier for them to
    do it because their premiums won't go up as much.
        But under this system, people who don't have choices now will be
    guaranteed them. And let me explain why. Most employees in the employer-
    based health system we have now are losing their choices every year as
    the employers try to better manage the exploding cost of health care.
    For example, about 10 years ago 47 percent of the employees in an
    employer-financed health care system had some choices of plans. Now,
    it's down to about one in three.
        So under our plan every employee would have three options with
    comprehensive benefits. One, you could join an HMO. And on today's
    facts, it would probably be the least expensive, that is, for you. And
    your employer pays a flat amount regardless. If you did that, you would
    pay a certain amount every year and then you would get those
    comprehensive services, but you would deal with the doctors in the HMO
    unless you needed a specialty help that was from a doctor not in the
    HMO.
        Second option is, you get a lot of doctors together and they form
    something called a preferred provider organization. I have a friend who
    is a doctor in Nevada, who is in a PPO with 700 doctors--lots of choice.
    And they have kept their prices in the range of 2 to 3 percent up or
    down in the last 5 years. So big choice, big quality, low price
    increase.

    [[Page 1608]]

        The third option is fee-for-service medicine, which from today's
    facts would be more expensive, but it would be your choice and still
    much less. Again, 63 percent of the people in this country with health
    insurance would pay the same or less for the same or better coverage, if
    you did that. I think even that will go down in price because of the
    incentives in our plan to enable doctors to get together, even on a fee-
    for-service basis, and compete for this business.
        But most Americans would have more choices than they have now under
    this plan. Americans who have more choices than the minimums in this
    plan could keep them. But there's a limit to what could be taken away.
    You listened to all these people talk today, you know, a lot of this
    stuff can be taken away from you that you think you have. All that we're
    doing is limiting what can be taken away.
        Thank you very much. This has been great. I appreciate it.

    Note: The President spoke at 12:17 p.m. at the Future Diner in Queens. A
    portion of the question-and-answer session could not be verified because
    the tape was incomplete.