[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.