[Weekly Compilation of Presidential Documents Volume 29, Number 40 (Monday, October 11, 1993)]
[Pages 2002-2009]
[Online from the Government Publishing Office, www.gpo.gov]
<R04>
Remarks and a Question-and-Answer Session With the AARP on Health Care
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 we're getting about
10,000 more every week at the White House from people describing their
personal experience 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, from 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
[[Page 2003]]
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 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 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 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
[[Page 2004]]
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 being
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 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.
[[Page 2005]]
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 the chair
of the Health Care Committee of AARP's National Legislative Council,
Anne Jackson. Ms. Jackson then discussed the health care proposal that
AARP submitted to the President for review 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. The issue of prescription drugs will be led by Jo
Barbano, who is the national chair of the AARP Legislative Council.
[[Page 2006]]
[Ms. Barbano asked what the rate of inflation on prescription drug
prices would be without health care reform.]
The President. Without it?
Ms. Barbano. Without it. Are there any questions out in the
audience?
The President. On the drug issue. We want specifically questions
on----
Ms. Barbano. On prescription drugs.
[A participant 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. 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 co-pay, 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. Thank you very much. Now we're going to talk about long-
term care, which is something that is near and dear to our heart, Mr.
President. We've asked Mildred McCauley, a member of our national board
of directors, to discuss that with you.
[Ms. McCauley discussed the high cost of care in nursing homes. A
participant then asked the President about his commitment to increase
funding for the prevention and treatment of Alzheimer's disease and if
home and community-based long-term care will be covered in the new
plan.]
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
[[Page 2007]]
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 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 because 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 as
they did per month 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 will 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
[[Page 2008]]
of Congress who want to see this as a critical element of the ultimate
resolution of our health care crisis.
Ms. Brown. You can be sure that we will do that, every opportunity
we get.
I've now asked Marie Smith, who is the chair of the economics
committee of the national legislative council to lead the discussion on
cost containment.
[Ms. Smith addressed the issue of cost containment. A participant then
asked the President which provisions were being put into the health care
plan to prevent the cost of health care from rising.]
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 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
[[Page 2009]]
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 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. A tape was not available for verification of the content of these
remarks.