[Public Papers of the Presidents of the United States: William J. Clinton (1994, Book I)]
[April 7, 1994]
[Pages 605-615]
[From the U.S. Government Publishing Office www.gpo.gov]



Remarks in a Health Care Roundtable in Topeka
April 7, 1994

    The President. First, thank you, Congressman Slattery, for hosting 
us. Congressman Glickman, thank you for coming. Governor Finney, it's 
always good to be with you. I see former Governor Carlin out there; 
thank you for coming. Most of all, thank you to the small business 
people who are here on this panel.
    I'd like to spend most of my time listening to these folks talk here 
and dealing with how their specific circumstances would be affected by 
health care reform, if we can pass it. But let me try to set the stage, 
if I might, for how we came to this place and how I came to spend the 
amount of time that I have, that my wife has, that our administration 
has, working on this health care issue.
    Before I became President, as I think all of you know, I was the 
Governor of your neighboring State of Arkansas for a dozen years. I grew 
up in a family with a mother who was a nurse anesthetist. I grew up 
hanging around hospitals, talking to doctors and nurses all my life, 
having a passionate interest in health care from the point of health 
care providers. As a Governor, I was forced to deal with the problem of 
health care from the point of view of people who are paying for it.
    First of all, in State Government, we had huge burdens under the 
Medicaid program, which is a shared program for paying for health care 
for poor people paid for by the Federal and the State Government. And 
secondly, my job was to try to increase the economic base of my State, 
both small and large businesses. And I watched medical inflation driving 
up medical costs rapidly.
    I spent in 1990 an enormous amount of time as a Governor, long 
before I ever dreamed I'd run for President, talking to literally almost 
1,000 health care providers personally in my State and hundreds of 
business people about the problems in the health care system and what 
could be done about it. Without going into a great deal of detail, let 
me say I reached the conclusion that we could not solve this problem as 
long as we continued to be the only advanced economy in the entire world 
that could not figure out how to provide basic health care coverage to 
all of our citizens. Every country with which we compete has figured 
this out, and we haven't.
    Now, we have the best doctors, the best nurses, the best health care 
providers, the best medical research, the best medical technology in the 
world. We also have, by far, the most bureaucratic and administratively 
costly health care system in the world. There's more paperwork in our 
system today, and it costs more

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to administer this system, by far, than any other system in the world. 
We also discriminate against small business people, farmers, and self-
employed people in the provision of health insurance; they tend to pay 
more.
    We discriminate also against people based on their age or whether 
anybody in their family has ever been sick or not. We also, in a funny 
way--Jim Slattery alluded to this--we actually discourage people from 
leaving welfare for minimum-wage jobs because if you stay on welfare, 
you're covered by Medicaid, the Government program for poor people. If 
you take a minimum-wage job without health insurance, you're going to 
lower your income and put your children at risk because you lose your 
health insurance by going to work. Instead, you start paying taxes to 
pay for the health insurance of the people who didn't go to work.
    These are things that are present in our system that you don't find 
in other systems. In addition, a lot of people who pay health insurance 
just pay too much. This plant here, for example, where we are, as is my 
understanding, has offered health insurance to its employees since its 
beginning; with the price of health care going up has had to ask the 
employees to share the costs. I do not know what they pay, and I have 
not even discussed it with our host. But I'll bet you anything that on 
average, they pay more than they fairly could because here's what 
happens: The people who don't have any health care coverage in this 
country, if they get sick, will eventually get health care. But they 
tend to get it when it's too late and too expensive. They show up at the 
emergency room, and the hospital does one of two things. They either 
pass the cost along to all the rest of us who have insurance, and we pay 
it in higher rates, or they eat it, and they get in more trouble.
    I was in a rural hospital in North Carolina a couple of days ago 
with Mr. Bowles, who is from North Carolina, as you can see, and the 
hospital folks there told me one-half of all their emergency room bills 
were from people who had no health insurance who just waited until they 
got real sick and showed up at the door, couldn't pay. And they were 
either going to reduce the quality of care at the hospital or pass the 
cost along to everybody else in the area who had health insurance.
    So, is this a national problem? Yes, it is. At any given time in 
America, 39 million Americans don't have health insurance. During any 
given year, 58 million Americans will be without health insurance at 
some time during the year, out of a total population of 255 million. 
Eighty-one million of us, more than one in four, live in families where 
somebody has had a preexisting condition: a child with diabetes, a 
father with a heart attack, a mother who's had cancer. And we either pay 
higher rates or we can't get health insurance, or we've got a job with 
health insurance but we can never change jobs, because if we change 
jobs, nobody will insure us because someone in our family has been sick. 
One hundred and thirty-three million of us, a majority, are insured with 
lifetime limits. So if, God forbid, we should have a child with a 
pronounced and prolonged chronic problem, we could run out of health 
care coverage just when we need it most. None of these conditions exist 
in the countries with which we are competing for the economic 
opportunities of the 21st century. Only the United States has somehow 
not been able to figure out how to provide health care security to all 
of its people.
    Now, if we want to do that, we have some options. But none of them 
are simple or easy. If this were simple or easy, somebody would have 
done it already. What are our options to cover all Americans, to stop 
the cost-shifting, to allow small business people and self-employed 
people and farmers to buy insurance on terms that are comparable to what 
those of us in government or big business can get, and to stop 
discrimination against people who have had somebody in their family 
that's sick or who are older workers? What are our options?
    I would argue that we only have three. We can do what some other 
countries like Canada do; we could have a Government-run system. We 
could have private doctors and hospitals, but we could abolish insurance 
and substitute a tax and just pay for health care. The only part of our 
system today that's like that is Medicare and Medicaid for poor people. 
But the elderly program for Medicare is the thing that's most like that 
here. That's the way everybody gets their health care paid in Canada.
    We could, instead of that, just build on the system we've got, keep 
a private system with private insurance, private health care providers 
but organize it in a way that bad insurance practices would be abolished 
and that small business people and self-employed people could get a 
break by being in buying pools that would enable them, kind of like a 
farmer's co-op, to

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buy on better terms. Or we could say, it's too hard, somebody will be 
discomforted by this, and we're not going to do anything. Now, that's an 
option. But that option means--I just want you to know what that option 
means.
    If we do nothing, if we don't go to universal coverage, the 
following things will happen: More Americans will continue to lose their 
health insurance; medical inflation will continue to make less and less 
coverage available, especially to small business. And I want you to know 
what's going to happen to your Government, at a time when we need more 
money to invest in education, training, new technologies, and the jobs 
of the future. The budget I asked Congress to adopt this year cuts 
defense and, for the first time since 1969, cuts discretionary domestic 
spending. And the only thing that goes up is Social Security by the cost 
of living and health care costs by 2 and 3 times the rate of inflation. 
Pretty soon, you're going to be paying all your money to the Federal 
Government to pay interest on the debt and more money for the same 
health care because we are cutting defense, we are cutting investments 
in discretionary domestic areas.
    So I would argue that doing nothing is not an attractive option. I 
would argue that we shouldn't have a Government insurance system when we 
have a private insurance system now that is working pretty well for 
people who can take the maximum advantage of it. That's why I argue that 
what we ought to have is guaranteed private insurance for all Americans. 
Eighty percent of the people without health insurance in this country 
live and work in families. Ninety percent of the people who have health 
insurance, private health insurance, get it through their place of work. 
So the question is, should there be some system through which the people 
who don't have health insurance now or who have very minimal health 
insurance that doesn't amount to anything get an adequate insurance 
package through their place of work? I think the answer to that is yes, 
and that's why I'm out pushing this program.
    So let me just say, my program rests on five principles: Guarantee 
private insurance. Give the people who are insured, that is, the 
families who are insured, a choice, and give it to them every year, not 
just once but every year, of how they get their health care, either 
through fee-for-service medicine, just picking their doctor and paying; 
through a health maintenance organization; or through some other way of 
getting it. But we guarantee three choices to everybody every year. We 
would outlaw unfair insurance practices. I've already mentioned them, 
cutting people off because they've had somebody in their family sick, 
for example. We would protect the Medicare program for elderly people 
and not fold it in, because it works and most senior citizens like it. 
And we would do this--we would guarantee private insurance by using the 
workplace, because that's where most people get their insurance now, by 
requiring employers and employees to contribute to health insurance.
    Now, would that mean that some people would pay more than they do 
now? Yes, it would. It would mean that people that don't pay anything, 
for example, would have to pay more. But keep in mind, all those folks 
are benefited by the present system we have. It's just like the roads 
you drive on. We all benefit from the hospitals, from the medical 
research, from the doctors, from the nurses, from the work done at the 
Kansas Medical School. We all benefit from it. And when we get sick, 
we're going to take advantage of it whether we can pay for it or not. 
But if you want to stop cost-shifting and allow small business people 
and self-employed people to buy on competitive terms, you have to find a 
way to make sure everybody's covered from the beginning and everyone has 
some responsibility for what they do.
    Our figures--we'll talk more about it with each of these examples 
here--show that over half the American people would pay the same or less 
money for the same or better insurance if our plan passed just as it is 
without any modification, because so many people in the small business 
sector are paying exorbitant rates for limited health insurance.
    We do a lot of things to help small business. We already increased 
the expensing provision, as Erskine Bowles said, from $10,000 to $17,500 
a year on the income tax. For people who are self-employed, we extend 
the deduction, which is now only 25 percent for self-employed people, 
totally unfair for medical premiums, to 100 percent. These things will 
help to alleviate it. Furthermore, there are discounts for businesses 
that are quite small with limited profit margins and low average wages 
to try to keep the cost down. So we'll talk about all that by going 
through some of these specific examples that are here now.

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    The main thing I want to say is, we can discuss the details of this 
plan and whether you think all the details are right. But I do want to 
make it clear that if you say there should be no mandate and we 
shouldn't abolish private health insurance and replace it with a tax the 
way Medicare's funded, then we're arguing for continuation of the 
present system, never getting to the point where we cover everybody, 
having the most administratively expensive system in the entire world, 
more money on paperwork, less money on health care, and having this 
problem get worse. There are no simple, easy answers. We have to try to 
take the best answer for America.
    So having said that, let me start and ask--I don't know that it 
matters where I start, but I'll start with David Porterfield, who owns a 
flower shop in Topeka. Where are you, David? Tell us what your situation 
is, how many employees do you have, and what's your situation.

[David Porterfield said that he once provided health insurance for his 
small staff, but due to high medical costs for one employee, the rates 
tripled. He explained that in his efforts to find another insurance 
company, he learned that many insurance companies ``red lined'' florist 
businesses and would no longer provide policies due to the incidence of 
AIDS in the florist industry.]

    The President. I'd like to make an observation about this, if I 
might, because you see this quite a lot. Both cases--you have someone 
who has got a serious health problem, a diabetes problem, with a small 
business, it blows your rates up, and you can't afford to keep your 
coverage; or a certain industry gets red lined, a certain business. If 
you look at it today from the point of view of the person in the 
insurance business, trying to be responsive and trying to still make a 
profit in the American free enterprise system, if you insure people and 
they're in fairly small pools, and one person has a huge medical bill, 
that can wipe out the whole profit in the insurance policy in the small 
pool. If you have one or two AIDS patients in a small pool, the same 
thing can happen.
    Now, the reason that I think that what we're trying to do is so 
important to small business people is this: What we're trying to do is 
to create the conditions that existed in the beginning. When health 
insurance first started, when Blue Cross first got started, insurance 
was just what you would normally think. All of us were put in a big pool 
and paid roughly the same rates, and it was for the people that got 
sick. And we all bought insurance against getting sick, in the same way 
you buy insurance for life insurance. And the premiums are set based on 
the probabilities, but everybody is sort of treated the same at a 
certain point in time. Well, what's happened now is, we're the only 
country in the world with 1,500 separate companies, writing literally 
thousands and thousands of different policies, so that people are in 
smaller and smaller pools. And sometimes the administrative cost and the 
profit margin against the premium is enormous.
    What we need to do is to go back to community rating where you would 
be put into a very large pool, so if you had one patient, one employee, 
who turned out to be a diabetic, that problem would be spread over a 
very large number of people. And the insurance business would, in 
effect, have to make money the way grocery stores do, a little bit of 
money on a lot of people, instead of a sizable amount of money on a few 
people where you can't afford the risk of having even one person who's 
real sick or the policy becomes unprofitable.
    This is key. We cannot do this and be fair to small business and 
really do it unless we can go to community rating and all of us can 
share these risks. I think it's very important.
    I'd like to go to David Hoffman, if I might, now to make the point 
in another way with somebody who's kept insurance and had to pay an 
enormous premium for it or at least did until recently. Would you talk, 
David, about your experience?

[David Hoffman explained that as the employees of his architecture firm 
aged and needed more medical attention, his insurance premiums increased 
by 35 percent, to 12 percent of payroll for the firm's share of the 
cost.]

    The President. Let me try to make an observation here about these 
two cases. Under the plan that we propose, no one could pay more than 
7.9 percent of payroll, no employer, for the health insurance premiums. 
So in the case of the architectural firm, David's firm, they would 
actually pay less, considerably less than they're paying now. Why would 
they be able to pay less? Well, because they would be, again, in a big 
pool where they'd have more bargaining

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power and it would be more economical to insure them.
    Now, in the case of the florist shop, they would obviously pay more 
since they can't get insurance now. But because it's a smaller business, 
they would be eligible for a bigger discount. And for somewhere in the 
range of, let's say, 6 percent of payroll, they'd be able to get a 
comprehensive benefit package, and no one would get cut off.
    Again, it all goes back to the economics of scale. Now, the problem 
is that some people will say--and we'll explore this because we're going 
to come to some harder cases as we go around the table--some people will 
say, ``Well, that's fine, Mr. President, but I can't afford 4 percent of 
payroll. My payroll is 50 percent of my cost of doing business, so 4 
percent of payroll adds 2 percent to the cost of doing business. And I 
can't add 2 percent of the cost of doing business; my profit margin is 
less than that.'' Some people say that.
    Now, what we have to do is to--we need to kind of work through that. 
And that's one reason I asked Erskine Bowles to be head of the Small 
Business Administration, because he spent 20 years starting small 
businesses instead of in politics or doing something else, to try to 
work through these things.
    There's no question that the ability to bear this cost is greater if 
all your competitors have to do it as well. And that's one point that 
David Hoffman made, I thought, very eloquently. I was in a--we have 
someone here who's in the food service business--I know I was in a 
restaurant in Columbus, Ohio, with a woman who had 20 employees full-
time and 20 part-time and had had cancer. And she insured the full-time 
employees, she didn't insure the part-time employees, and she paid high 
rates because she had cancer 5 years ago. And she said, ``I'm in the 
worst of all worlds; I insure my full-time employees because I feel that 
I should; but my competitors don't, so they have an advantage over me. 
And I feel guilty that I don't help my part-time employees.'' And she 
paid very high rates because one person--it happened to be the owner 
there--paid for her previous illness.
    So again, this whole thing will only work if everyone contributes. 
But as a result of contributing, you get to be in big buying pools, so 
at least your rates are manageable. In your case, I just don't think 
anybody should be paying 12.5 percent of payroll for a reasonable health 
insurance policy. We know that the economics of the competition--we've 
had it analyzed by too many people--will permit us to have a ceiling of 
about 7.9 percent of payroll. And you might actually qualify for a 
modest, but not a great, discount there because your employees make a 
good living.
    I'd like to go on now to Sheryl Wohlford, who is from Wichita, and 
have her talk a little bit about her situation because it's slightly 
different. And it will get more complicated as we go around the table to 
show some of the problems we've got with this.
    Sheryl.

[Sheryl Wohlford expressed concern that her insurance premium costs of 
5.5 percent of payroll, to cover the majority of her employees, would 
rise even more under the President's plan. Representative Jim Slattery 
asked if she had discussed her projected cost increase with her 
insurance agent, and she said she had not. Small Business Administrator 
Erskine Bowles then stated that small businesses would get better 
coverage at better rates under the new plan.]

    The President. Sheryl asked two questions. I think we ought to try 
to deal with them as forthrightly as possible. The first question is, 
okay, if I have to go from 5.5 to 7.9, how do I know it's going to stay 
at 7.9? I mean, that may be the most important question of all. And the 
answer to that question is--I mean, I can only tell you where I'm coming 
from on this--is that we looked at what the average employer 
contribution was for a good health care plan that included primary and 
preventive benefits--because one of the ways you get health care costs 
down is to emphasize primary and preventive benefits; nearly any 
physician will tell you that--and it was about 8 percent. So we decided 
to go with 7.9 percent. And from my point of view, if we can't manage at 
that, we'll have to find some other way of dealing with it, not raising 
the payroll cost. I just don't think we can. The whole idea is to try to 
get health care costs as close to the rate of inflation plus population 
growth as possible.
    The second issue is what about people who--if you go back to 
Sheryl's situation, she went from 5.5 percent, let's say, to 7.9 percent 
of payroll. You should know that we provide discounts for small 
businesses if they have fewer than 70 to 75 employees, and if the 
average

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annual wage is $24,000 a year or less. Is that right, Erskine?
    So if you go over either one of those, then the discount system goes 
away. But the main reason for the difference--and I haven't looked at 
the health care package--is that she's on a 50-50 cost share. And the 
reason we went to an 80-20 is that that was the average cost share of 
employers and employees in the private sector insured now. But I'll bet 
you that the package will be better, too, as a result of that, because 
again of the bulk buying plan. So even she would benefit from that.
    But we've got to be up front about this. Not everybody pays less. 
Some people pay more, and that's part of the assessment you have to 
calculate. But I do think you can rely on the 7.9 percent. I do not 
believe the Congress would enact a program and I do not believe that I 
would support it unless we could do that.
    And let me also say, we had lots and lots of insurance actuaries and 
others look at this for a year and constantly labor over the costs. So 
we would not knowingly do anything that would run the cost up. And I 
will say that, as Erskine was reminding me earlier, our ability to 
predict these costs now is far better than it used to be. We've been 
pretty good about predicting what's going to happen to our medical costs 
for the last few years. And I think that ability is pretty well intact.
    Let's go on now to James Heiman, who's in, again, in a different 
situation. And I'd like for him to talk about his businesses and what he 
does about it and how he thinks he'd be affected by this.

[James Heiman stated that his cost to provide health insurance for all 
the employees in his agriculture-related companies increased by 2 to 3 
percent overnight due to an employee's health problems and his own. 
While he found a more affordable policy, he expressed concern that the 
President's plan would be able to hold administrative costs down.]

    The President. I think there's a lot of well-founded skepticism 
about the ability of the Government to fix anything; I understand that. 
And that's one of the reasons that I did not want us to get into a 
situation like the Canadian health care system, which a lot of people I 
respect favor, which is inexpensive administratively but has huge cost 
problems because it's all Government financed. If you save the private 
insurance system, and you keep the employers and the employees directly 
involved in trying to manage their costs, then our view is that we'll 
have much better luck in trying to control the costs in the future.
    But under your situation, you would plainly pay considerably less 
because you would not only have a maximum of 7.9 percent, but with about 
60 employees--I understand that's about how many you have--you would 
qualify for some kind of discount there, which I think would be 
important.
    And let me explain why the administrative costs would go down. 
Presently, if you have 1,500 separate companies writing thousands of 
different policies and you overlay on that the Government's program of 
Medicare and Medicaid, every doctor's office and hospital in America has 
to hire a huge number of people to figure out what is and isn't covered 
under every policy. Every insurance company in the country has to hire a 
huge number of people to figure out what is and isn't covered. So 
instead of facilitating the payment of health care bills for people who 
have paid their insurance, you literally have an untold number of people 
in the doctor's offices and the hospitals and the insurance company 
figuring out what is and isn't covered. And the burden of that is 
staggering.
    I visited the Children's Hospital in Washington the other day, and 
they estimated that they could have another 100,000 children's visits a 
year if the doctors and the nurses had a single form with a single 
benefit package as opposed to what they've got now. It was a staggering 
encounter. And I would urge any of you--I don't know if there are any 
doctors and nurses in the audience, but I've got a friend at home, I 
mean in Washington, who grew up with me, who just had to hire--there's 
two doctors in his office, and they have a lot of clerical workers. Now 
they've had to hire a third person--or a fourth person to do nothing but 
just telephone insurance companies all day trying to get payments as 
they struggle to find out what is and isn't covered. And that's why we 
can simplify this.
    And a lot of people say, well, if you put small businesses in these 
big alliances and buying pools, that's going to be a huge government 
bureaucracy. Let me just give you one concrete example, because in order 
to give you good rates, you have to be in a big buying pool; that's what 
we talked about for the florist shop

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or the architects or anybody else. The State of California just set up a 
small business buying pool, put 40,000 businesses and their employees in 
it. They hired only 13 people to operate it, and the insurance premiums 
for the people in the pool all went down this year instead of up. And 
Florida is starting it and having the same experience.
    So the question on these alliances is, how do you have enough 
cooperative buying power, just like the old-fashioned farmers co-ops 
which you have in Kansas and Arkansas, to give the small business people 
the same sort of break that those of us in government and big businesses 
have.
    Dan, were you going to say something? You look like you were about 
to.

[Representative Dan Glickman asked if Ms. Wohlford paid for self or 
family coverage, and she responded that she paid 50 percent of either 
plan. He then suggested that under the President's plan, a majority of 
small businesses would have lower premium rates, even combining self and 
family coverage.]

    The President. That's correct for a couple of reasons. One is--and I 
don't think it applies, though. We've got to be careful; I don't want to 
overclaim. I don't think it applies to Sheryl. If you're incorporated, 
it wouldn't apply.
    But, for example, we've got a lot of small business--and we're going 
to Regina in a minute; I think she'd be covered like this--we have a lot 
of small businesses where the small business, let's say, has four or 
five employees, and there's a family policy for the owner of the small 
business. And then they may or may not cover the individuals who work 
for them. The family policy alone is often so expensive and if it's 
under a self-employed provision, only 25 percent of it is deductible 
under the income tax code, that when you look at the 100 percent 
deductibility we would provide, plus the ability to buy more insurance 
at a lower cost, there are an awful lot of small businesses in this 
country who could insure their families and their employees and their 
families for less money than they're paying just for their family policy 
today. And a lot of farmers--there are a huge number of farmers that are 
in that situation just because their family policies are so high and 
because they don't have any access to these buying pools.

[Administrator Bowles stressed large buying pools and simplification of 
the insurance system as ways to lower the cost of health care for small 
businesses.]

    The President. You don't feel strongly about that, do you? 
[Laughter] That was great. Thank you.
    I'd like to now ask Gina Jaramillo to talk a little bit about a 
situation in her restaurant. And let me preface this by saying that one 
of the toughest issues that we face here is the restaurant business, 
because you have a lot of part-time employees; you have a lot of young, 
single employees who don't feel like they need health insurance and 
probably think they're going to live forever; you have a lot of 
businesses operating on relatively narrow profit margins. And it is an 
enormous part of our economy now; over 40 percent of the American food 
dollar is spent eating out. So this is a very big deal and probably in 
some ways the biggest sector of our economy with large numbers of 
workers without insurance. You also have lot of part-time employees and 
a lot of turnover. So I'd like to hear her talk a bit about that.

[Regina Jaramillo explained that while she and her husband bought 
insurance for their own family after they gave up their former jobs to 
run the family restaurant, they could not afford to provide health 
insurance for their 12 employees, at a cost of more than 10 percent of 
payroll. She expressed hope that the President's plan would lower that 
cost.]

    The President. Let me ask you something. What percentage of your 
total cost of doing business do you estimate is in labor costs, what you 
pay your employees?
    Ms. Jaramillo. My payroll? My payroll was at approximately--excuse 
me, I did write this down--$86,000 a year that I pay in payroll.
    The President. But of your total cost of operations, what would you 
say that is? Is that about half your total cost of operation, the rest 
is food and utilities and operation and maintenance----
    Ms. Jaramillo. No, I'd say it's at least a third.
    The President. About a third. So I just want to try to lay this out, 
because actually you are in--because your restaurant is small, we 
estimate that you would qualify for the maximum discount, and you could 
actually insure your employees for about what you're paying now for your 
family under our program, because you'd

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go into a big buying pool and because you'd be eligible for a discount 
because you're a very small business. But it's not fair to say that all 
food service workers would be like you, all food service, because there 
are a lot of restaurants that have 100 employees or 150 employees, so 
they don't qualify for discounts. They would have to pay the 7.9 
percent.
    So in your case, if our plan were to pass, we think that there would 
be no increase for you or just absolutely minimum, because you would 
qualify for the small business discount to the maximum degree. But let's 
say you had a restaurant of 100 employees or 200 employees, some of them 
have 200 employees, with a lot of part-timers. You would only pay for 
the part-timers now while they were actually working. You'd have no 
responsibility when they don't work for you. At 7.9 percent--then the 
real cost, additional cost of doing business would be one-third of that 
because the payroll is a third of total cost or something less than 3 
percent.
    And that's what we have to figure out, to what extent could all 
restaurants pass that on if they were all in the same boat, if they were 
all treated the same way? Would we change our habits, our eating habits, 
if our food prices went up that much? Would more of us eat at home? I 
mean, these are the kinds of questions that it's hard to answer. But my 
instinct is that if all the competitors in this business were treated 
the same way, that most of us have ingrained habits of eating out 
because we have more and more families where both the man and the woman 
are working and working longer hours, and I think it's doubtful that 
habits would change within that range, where the maximum increase--if 
100 percent of it were passed on to the customers, which it might not 
be--was still less than 3 percent. In Regina's case it wouldn't happen 
that way, but it would in a case of a cafeteria with 150 employees, if 
our plan passed just as it is, with the 80-20 match.
    But for the smaller businesses, again I would say, families still 
have to pay too much for their health insurance if they have to buy them 
as individual families. So you would get a 100 percent deduction instead 
of a 25 percent deduction for the premium you pay, plus a discount. So 
you'd be able to insure your employees for about what you're paying now.
    Let's go on to Alonzo Harrison, who runs a construction company, and 
let him talk about his situation, because this again is a, I think, a 
pretty typical small business situation where he'd get some discount but 
would still have to pay more.

[Alonzo Harrison explained that he could not afford to provide health 
insurance for his employees but tried to help them find it at a 
reasonable cost. He discussed his medical expenses for an illness that 
occurred during a trip to Washington, DC.]

    The President. You ought to try living there. [Laughter] Actually, 
it's not bad.

[Mr. Harrison then expressed his concern about costs as well as portable 
coverage for seasonal employees during the times they would not be 
working.]

    The President. Our program, as proposed, would make health care 
entirely portable, including for part-time employees. And essentially 
what would happen is the employers and the employees would have the 
responsibility for paying while the employee was working for the 
employer--or seasonal workers. And then when you weren't working, then 
the Government would help to make sure that the plan is portable and 
people kept it year-round. It would be the same plan.
    For part-time employees, as opposed to seasonal workers, the same 
thing would be true. It depends on how you define part-time, but if the 
worker worked more than 10 but less than 30 hours a week, the employer 
would have a responsibility to pay for some of the premium but not the 
full premium. You have to go over 30 hours a week before he'd have to 
pay for the full premium. And again, if there were differences, then the 
Government would help make up the difference there. So that the 
responsibility would be there, but it would be based on how much time 
the employee is actually working for the employer.
    In your case, because you have a smaller business--except when 
you're hiring your seasonal employees full-time--you would qualify for a 
small business discount. Could you afford this if it was between 4 and 5 
percent of payroll?
    Mr. Harrison. We think so. But again, since we're not paying it now, 
it would be an extra cost. And since our profit margin still isn't where 
we'd like for it to be, that means we're going to have to do something 
as it relates to raising our prices; meaning then that, yes, we could

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put that in a part of our budget, but then the cost is going to be in 
our bid.
    The President. Would it help knowing that everybody that competed 
with you had to do the same thing?
    Mr. Harrison. Absolutely.
    The President. I mean, since at least in the contracting work you 
do, presumably the work has to be done. Somebody's got to have it done 
by someone.

[Mr. Harrison explained that the cost of workman's compensation was one 
of his concerns because his business involved dangerous work.]

    The President. One of the things that we're working on doing--we 
haven't figured out how to solve it entirely yet, but I think would make 
a huge difference to small businesses, especially to people like you 
with big workers' comp bills, but a lot of businesses that aren't 
particularly dangerous have big workers' comp bills--is to try to figure 
out a way to take the health care portion of workers' comp and at least 
have some common administration of it so that you're not, in effect, 
paying twice for it. Because right now, as you know, workers' comp, it's 
a disability program, it's an unemployment program, and it's a health 
care program, all three. But if you have a health care system, we think 
we can figure out how to moderate a lot of the health care portion of 
workers' comp costs, which has accounted for approximately 50 percent of 
the rate increases in State after State in the last few years, in this 
health care thing. And that would also be a big boost to small business, 
because it's all part of the same cost of operations.
    Jim? Anybody else have anything they want to say?

[Representative Slattery stated that Congress would address the issues 
that the participants discussed including requiring everyone to 
contribute to the health care system so some businesses would not be 
paying more than others.]

    The President. I'd like to emphasize that for most of the last 20 
years, big businesses have paid way more than their fair share of the 
health care, and the rest of us have sort of ridden along with them. I 
mean, you've got some companies paying 15, 16 percent of payroll for 
health care. In other words, they've paid more than the percentage of 
our total wealth we spend on health care. And the rest of us have 
benefited from that.
    Now, big businesses and governments are finding that they can get 
competitive arrangements and buy health care for less money or at least 
they don't have to go up as much as inflation anymore, which is going to 
put more and more pressure on small business; which is why we've got to 
find a way, unless we want more and more people to be without insurance 
altogether, why we've got to find a way to get everybody insured and 
then get them in these larger pools.
    Let me just make one remark that I meant to say to our friend with 
the construction company. He said some of his best workers were over 60, 
including his father. Let me tell you, the fastest growing group of 
Americans are people over 65. More and more Americans are going to work 
well into their seventies. The average 18-year-old is going to change 
jobs eight times in a lifetime now. You have people in their late 
fifties and sixties losing their jobs because the defense business is 
cutting back. And there they are, 59 years old, some of them still with 
kids at home not even out of high school, having to find new jobs.
    This health care issue is a big issue. And one of the things that I 
think is very important about community rating is that we not 
discriminate against people in their sixties who are otherwise healthy 
and able to be good workers. Because if you do that, you're going to 
make it harder for people to change jobs. And one of the reasons that 
America--believe it or not, with all of our economic problems, we have a 
lower unemployment rate than all of our major competitors except Japan. 
We're now creating more jobs than all of them. And one of the reasons is 
that people can move freely in and out of the job market. But it's going 
to be harder and harder and harder for older people unless we remove 
this discrimination against age.
    So your company would be especially helped by that. In other words, 
you'd be able to buy insurance on much fairer rates if we said that 
vigorous working people in their sixties shouldn't be charged more than 
vigorous working people in their thirties. It would make a big 
difference. But again I will say, since the odds are still greater that 
a 60-year-old will get sick than that a 30-year-old will get sick, the 
only way the insurance industry can provide this health insurance and 
not go broke is if you have big pools

[[Page 614]]

of people where the risk can be broadly spread. That's the only fair way 
to do it.
    Dan, you want to say anything?

[Representative Glickman discussed the inclusion of workers' 
compensation in the health insurance plan and then questioned the 
average 80 percent employer share of the cost.]

    The President. That includes all businesses all the way to the top. 
I do not know what the average is for people with 50 employees or 60 
employees or less.

[Representative Glickman suggested that an 80 percent employer share 
might be too much for small businesses.]

    The President. You're at 50-50; you're at 80-20. What were you when 
you had insurance?
    Q. We were 50-50.
    The President. In part of his business, you're at 100.
    Representative Glickman.  So, it's just a thought.

[Administrator Bowles stated that without universal coverage and 
participation in large buying pools, small businesses would continue to 
pay high costs for health care. Mr. Hoffman then asked about the problem 
of professional liability.]

    The President. For doctors worried about being sued? You mean, 
physicians worried about being sued?
    Q. Physicians, hospitals, yes, the whole group.
    The President. We've proposed two things in our bill. First was 
limitation on the percentage of lawyers' fees in the contingency cases. 
The second is something that has actually worked to hold down medical 
costs where it's been tried, and that is to give different kinds of 
doctors the benefit of medical practice guidelines developed by their 
own professional associations nationally, that if the doctor can 
demonstrate that he or she followed these guidelines, that raises a 
presumption that the doctor was not negligent.
    Now, this is a big deal in rural areas. This could be a big deal in 
rural Kansas, for example, where you've got a lot of general 
practitioners who are out in the country and somebody shows up with a 
broken arm or someone needs a baby delivered and a lot of doctors just 
won't do it anymore. They just won't do it. They won't even set simple 
fractures in some of the country places in my State. They'll send them 
to the biggest medical center, where there's a specialist, where the 
cost is 5 times as great. And so what we've tried to do--the State of 
Maine had an experience with this, basically developing simple practice 
guidelines. It's funny, we do it with pilots all the time; every time 
one of us gets up in an airplane with somebody else, we expect the pilot 
to have the practice guidelines. That's what they are. And they are 
checked off.
    And if we could give that to doctors and just not say that there 
could be no negligence but just say that that raises a presumption that 
the doctor did the right thing, we believe that would drive down 
malpractice rates considerably and let doctors free to practice medicine 
with common sense instead of just bending over backwards to order a lot 
of tests, for example, in cases oftentimes when they know they shouldn't 
do it but they're just guarding against a lawsuit.

[Mr. Porterfield asked about employer responsibility for coverage of 
various part-time employees under the new plan.]

    The President. If the employee works less than 10 hours a week, the 
answer is no. Isn't that right, Erskine?
    Administrator Bowles. Also, you're not responsible for covering 
anybody who works less than 10 hours a week. You're not responsible for 
covering anyone who is under the age of 18, period. And you're also not 
required to cover anyone who is under the age of 24 who is also a full-
time student.
    The President. And I believe, in addition to that--you've asked me a 
question slightly different from the way it's ever been asked me before. 
But I believe that all retiree health plans are left intact and that 
therefore you would not have the responsibility to pay for someone who 
is a retired worker with a retiree health plan from another company. I 
believe that is right.
    If it's wrong, I'll get back to you and tell you. But I'm almost 
sure that's right because one of the things that we tried to do is to 
make sure that people like retired State employees and retired other 
people knew that they weren't going to have their benefits eroded if 
they happen to have a better plan than our minimum plan. So if they've 
got the kind of plan you say, my belief is that they would not be 
required to be covered.
    Let me just say one thing in closing in response to what Jim 
Slattery said. The toughest

[[Page 615]]

part of this is obviously the mandate, which is why we tried to work out 
a discount. The main thing I want you to know is I have no interest in 
the Government running the health care system of the country. I am 
trying to use the power of the Government to organize the market so that 
small business people and self-employed people can get access to good 
benefits and so that these kinds of discriminatory practices that 
insurance companies follow today will not have to be followed in order 
for people to make money in insurance.
    And I believe you have to require everyone to be covered in order to 
stop the boat from leaking because there's always going to be people who 
will be dropping their folks even if others pick them up if we adopt 
these new changes. So it seems to me that that is something we just have 
to work through. That is the whole concept that has led some of the 
small business groups to oppose what we're doing. But I think it's also 
important that you understand that I will not sign a bill that does not 
have discounts for very small businesses with low payrolls and low 
profit margins. I won't do that.
    I want a bill that preserves the private delivery system we have and 
that makes the competition that is working very well now for Federal 
employees and for large businesses available for people in the small 
business sector. But I think that none of it will get done unless we can 
provide the security that every American will know there will always be 
some health care coverage there. That will also stop a lot of the unfair 
cost-shifting and permit people to compete on a more even basis. So that 
is what we are trying to achieve.
    I hope that you will be supportive of all the Members of your 
congressional delegation without regard to party in trying to work 
through this with less rhetoric and more reality.
    You know, I've tried to just get around here and listen to people's 
real life stories and try to work through the real life stories in a way 
that solves the problem and permits America to take advantage of what we 
have, which is the best medical delivery system in the country, and fix 
what we have, which is the worst financing system in the world. We've 
got the best medical care in the world, the worst financing system; we 
ought to be able to figure out how to do that. I think we can. And we 
have to do it in a way that permits small business to flourish because 
small business is the main generator of new jobs for the American 
economy.
    Thank you very much.

Note: The President spoke at 2:03 p.m. at the Topeka Foundry and 
Ironworks Co.