[Weekly Compilation of Presidential Documents Volume 30, Number 5 (Monday, February 7, 1994)]
[Pages 180-186]
[Online from the Government Publishing Office, www.gpo.gov]

<R04>
Remarks to the National Governors' Association

February 1, 1994

    Thank you very much. If anyone ever asks you what do Carroll 
Campbell and Bill Clinton have in common, you could say they have the 
same throat disease. [Laughter] He's doing better today than he was 
yesterday. I'm doing slightly worse. The good news is, you get a shorter 
speech.
    I want to thank you all for being here and for your common concerns. 
Yesterday we had a good meeting and especially, I thought, a very good 
discussion about the problem of crime in our country and the crime bill, 
the necessity to put more well-trained police officers on our streets 
and to take repeat violent criminals off the streets forever but also 
the necessity to be smart about the crime bill, to do things that make 
sense to you and to your law enforcement officials.
    Today, I want to talk a little bit about two other fundamental 
challenges that we face: health care reform and welfare reform. They are 
linked inextricably to each other. And in order to meet these 
challenges, we will have to have an open and honest partnership both in 
passing the laws and, perhaps even more important, in implementing them.
    We began our partnership, at least with me in this new job, about a 
year ago today when we had a very long and fruitful meeting at the White 
House. I think it ran in excess of 3 hours. That meeting resulted, among 
other things, in the approval of every major waiver for State health 
care reform that you have requested. There have been 5 of them and about 
90 smaller waivers to enable different changes to be made at the State 
level. In addition to that, we've now granted waivers to nine States in 
the area of welfare reform.
    I do believe the States are the laboratories of democracy. I do 
believe that where people are charged with solving the real problems of 
real people, reality and truth in politics

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often is more likely to give way to making progress.
    Last August you all said, Democrats and Republicans alike, that our 
health care system is in crisis. In the last several days we've had a 
big linguistic battle in Washington about whether we have a crisis or a 
serious problem. I think it's better, since we're at the Governors' 
meeting, to focus on the facts. We do have a system, unlike any other in 
the advanced countries in the world, in which insurance companies decide 
who's covered and who isn't, what the cost of insurance is, and what's 
covered in specific policies. We do have a system in which the number of 
uninsured people is going up significantly. We do have a system in which 
more and more Americans, therefore, who have insurance are at risk of 
losing it if they get sick or if their job goes away.
    We clearly have a system, as our SBA Director Erskine Bowles, from 
North Carolina, never tires of telling me, where small businesses have 
premiums that, on average, are 35 percent higher than large businesses 
or Government. We have a system in which State budgets have been 
extraordinarily burdened by the exploding costs of their Medicaid match, 
so that last year, for the first time ever, States spent more money on 
health care than on State-funded higher education.
    We have a system in which the lowest estimate of uncompensated care 
burdens on hospitals is $25 billion a year; in which 58 million 
Americans, according to the Medical Association, are without coverage at 
some time during the year; in which 81 million Americans have a 
preexisting condition, which means either that their premiums are higher 
or that they can't get insurance or that they can't ever change jobs, 
which is an enormous burden in a system in which labor mobility is, I am 
convinced, the key to personal and family prosperity as we move toward 
the 21st century.
    Finally, we have a system in which three out of four insurance 
policies have lifetime limits, which means if you get really sick you 
might run out of insurance in the middle of the time when you need it 
most.
    Now, those are facts. They can be seen in the million letters, 
almost, that the First Lady has received since we started this whole 
effort to deal with health care. On the way in, I was describing briefly 
to Governor Campbell a letter I got from--or she got from Jo Anne Osteen 
of Sumter, South Carolina, who owns a small business, works 6 days a 
week, raised three children by herself with diabetes and arthritis. 
Although she had diabetes and arthritis, when she wrote us she hadn't 
been in the hospital one time in the 12 years that she'd been with her 
insurers. But her insurance rates went up to $306 a month, even though 
she was only taking home $205 a week from her business. Her doctors told 
her that the answer was to quit and go on disability. So she wrote, 
``Those high premiums are going to force people like me to the welfare 
and food stamp lines with no insurance. I am a proud American, and I 
don't want this to happen to me. I have thought about nothing but this 
problem, and I don't know where to turn.''
    Well, I think we ought to heed her call for help. A lot of you do, 
too, and that's why you've tried to reform your health care systems. 
After all, this woman has values that keep this country together. 
They're the ones that built our Nation. And we shouldn't force people 
like that to consider seriously whether they should go on to public 
assistance in order to take care of their children.
    There's a flip side to this, too, this connection between welfare 
and health care, which I want to mention. I talked about it a little in 
the State of the Union Address. But we often say to people they should 
leave welfare and go to work. And we know that welfare benefits 
themselves in real dollar terms are lower today than they were 20 years 
ago in most States. So that the welfare check has almost nothing to do 
with why people stay on welfare. They stay because of the medical care 
and because of child care and because they have low skills. But we have 
this incredible situation in our country where if someone on welfare 
leaves welfare to take an entry-level job that doesn't have health 
insurance, as soon as the coverage of the Family Support Act runs out, 
you have people making low wages paying taxes to pay for health care for 
people who stayed on welfare and didn't make the same decision they did.
    So these two issues are clearly tied together, and we need to see 
them together

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as a part of what it would take to make America a place where people who 
work hard, play by the rules, and believe in the kind of values that 
permeate the efforts that all the Governors around this table are making 
are rewarded for that.
    Now, we've made a beginning. Last year, the Congress passed in the 
context of the budget act a huge increase in the earned-income tax 
credit which lifts families with children on modest wages out of 
poverty. When tax bills come due this April, 15 million families with a 
total of about, we estimate, 50 million Americans, will be lifted beyond 
the poverty line by getting tax reduction under the earned-income tax 
credit. That means that there will no longer be an income incentive for 
people to choose welfare over work.
    But the welfare system has a lot of other problems as well. Too 
often it still rewards values other than family and personal 
responsibility. Instead of encouraging those to stay together as we 
should, it often encourages families to break apart. Instead of 
encouraging children who have children to live with their parents or 
grandparents, it often encourages them to leave home. Instead of 
enforcing child support and asking those who bring children into the 
world to take responsibility for them, it too often ignores--it's too 
difficult to collect the $34 billion absent parents should be paying to 
their children.
    Perhaps most important--we were talking about this on the way in--an 
enormous part of this problem is the explosion of births to people who 
have never been married at all. And there is nothing in the present 
system, except where the States have taken the initiative to do it, to 
stop teen pregnancy from occurring in the first place. Even in the 
Family Support Act of '88, and I want to say more about that because I'm 
really proud of what we did on it, there was nothing to stop the 
condition from occurring in the first place.
    And we need to devote, as this debate takes place, an enormous 
amount of attention to some of the decisions that we ought to make, some 
of them quite politically courageous. Governor Campbell was talking 
about some of the things they're doing in South Carolina which mirror 
some of the things we tried to do at home to try to stop these things 
from occurring in the first place.
    This year I have committed, and Senator Moynihan, I think, and 
Senator Dole probably both talked about this--to offer in the springtime 
a comprehensive welfare reform bill to restore these values of 
responsibility and family. We want to help those who are on welfare to 
get on their feet. We want to help them for up to 2 years with training 
and child care and other supports. But after that, we need to have a 
system that says anybody who can work and support themselves and their 
families must do so, in the private sector where possible, with a 
community service job if that's the only work available, to make welfare 
a second chance, not a way of life.
    Now, those of us in this room have worked on this issue for years. I 
was privileged, along with the then-Governor of Delaware, Mike Castle, 
to be the representatives of the Governors who work with Senator 
Moynihan and with Congressman Ford and others on the welfare reform 
effort that became the Family Support Act of 1988. Mike Castle is now in 
the Congress, having changed jobs with Tom Carpenter. Guess who thinks 
he got the better deal out of that?
    We never fully implemented that act. You know it, and I know it. So 
we ought to begin asking ourselves: Did we do a good job then? What 
progress has been made in the States? There's a lot of evidence that 
significant progress has been made in the States that have been most 
aggressive.
    Why was it never fully implemented? Partly because Congress never 
fully funded it, partly because--as you will never hear the end of it, 
they'll say, ``Well, but the States never fully used all the money we 
came up with. States must not have really cared about this because they 
never provided the State match to use all the funds.'' You know why the 
States never provided the State match, don't you? You had to spend all 
your money making the Medicaid match, which was not optional, it was 
mandatory, and building prison cells. That's where we spent all of our 
new money in the 1980's and the early nineties.
    So I point this out not to do any finger-pointing but just to say 
one of the things we need to do is to go back and look at that

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bill, see what's good about it, figure out what will be necessary to 
change so that the States can take full advantage of that bill, because 
it had incentives to work, it had supports for families. It was never 
fully implemented because you had to spend all your money on mandatory 
explosions and medical costs and building prison cells, many of which 
were also mandated by the Federal courts, not the Congress. So we need 
to begin there.
    We also need to know that--to recognize again--though I will say 
that we estimate that about one in five, just under one in five people 
who get back on welfare after they get off do so for a health-related 
reason. Because so many people on welfare, virtually everyone has 
younger children, the loss of the health care coverage for the younger 
children for people who leave welfare is an enormous disincentive to get 
off of it.
    That's why I think that a year ago in the winter meeting, the 
Governors hit the nail on the head when they said the kinds of 
structural changes that must occur in the health care system can't be 
effective until every legal resident of America has health insurance. I 
believe that the health care solution and the welfare solution are 
inextricably linked.
    Let me say just a few words about health care. I'm encouraged by 
what I understand was said by the speakers before I got here today. And 
again, I wish I could keep you in constant session here. You seem to 
have a leveling effect on the political rhetoric of the Nation's 
Capital. Guaranteed private insurance for every American is the only way 
we'll ever be able to control the cost of this system, simplify it, and 
provide the American people with security of health benefits that can 
never be taken away. Unless we do that, too many will continue to get 
their care in emergency rooms, which will add billions of dollars to the 
health care bill. Too many will continue to not have certain things 
covered. Too many, for example, will be part of the Americans who add an 
estimated $21 billion to our health care bills every year because they 
can't afford medicine that would keep them out of hospitals, so they 
wind up going to the hospitals and costing the American people much 
more. We certainly won't be able to simplify the system and reduce the 
unnecessary bureaucracy.
    One of the things that I challenge all the folks to do who believe 
that the beginning of health care reform is to tax the benefits of 
middle class workers who have generous health care packages, is to say: 
How can we do that? How can we start with that when we know we have a 
system where we spend 10 percent more on paperwork, bureaucracy, and 
insurance premiums than any other nation in the world? And these things 
have nothing to do with health care. We just have a system that is 
organized so that we spend a dime on the dollar more on paperwork than 
any other country in the world, paperwork in the insurance office, 
paperwork in the hospitals, paperwork in the doctor's office.
    I just left the American Hospital Association, and they have said, 
clearly, the only way you'll ever fix this is to have a system that 
provides basic coverage to everybody, so that you can have a single 
claims form which will be imposed on the patients, single claims form 
for the hospitals, single claims form for the doctors. It is imperative 
that we do that.
    There was a study in the New England Journal of Medicine a year or 
so ago: two hospitals, one in the United States, one in Canada, same 
number of beds, same rate of occupancy, same general mix of treatment, 
one of them had 200 people in their clerical department, the other had 
6. Now, I don't advocate going to the single-payer system for other 
reasons; there are other problems in the Canadian system. And it is the 
second most expensive in the world. I think managed competition will 
work better. But it is clear that we cannot justify, in my view, taking 
something away from the working people of this country before we clean 
up the administrative costs of the present system.
    I also will say without full coverage, I don't see any way to avoid 
the conclusion that States will continue to bear a disproportionate 
burden of skyrocketing health care costs. The Lewin study showed that 
States would pay less under our approach than if we just left things the 
way they are and that health care would improve.
    I still believe in the requirement for employers to cover their 
employees. First of all, that's the way most people get their health

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insurance today. Under our approach people would have a choice in their 
health care program. There's been a lot of discussion about this. Let's 
go beyond the rhetoric to the reality today.
    Today, fifty-five percent of all employers and 40 percent of all 
employees who are covered with health insurance through the workplace 
have no choice in the health care plan or the doctors they get, they are 
selected by the employer, today. Under our plan, every employee would 
have to get at least three choices once a year, one of which would be 
just picking your doctor and having fee-for-service medicine.
    So I'm all for choice, but we need to recognize that if we want the 
benefits of competition and the benefits of choice, we have to move away 
from the trend that we are setting now. We are moving in the direction 
of getting the benefits of competition and market power for big business 
and Government. And some of you have asked for reforms, Governor 
McWherter, among others, to put Medicaid into a managed competition 
environment to get the benefits of that. But the problem is some people 
will get the benefits of that, other people on the other end will lose 
choice. So if you want to pursue both values at once, we plainly have to 
change the direction in which we are going. And we have to have a 
different framework if you wish to have both.
    Now, in spite of some of the interesting art work that you've seen 
in the last couple of weeks, the Washington Post said that our approach 
would create, and I quote, ``a surprisingly simple world for 
consumers.'' You make a decision once a year, among at least three 
plans, based on what you want. I wish we could even have more choice. We 
haven't figured out how to do that yet. But Federal employees have a 
great deal, for example, and many of you in States have given your State 
employees more and more choices. And because you have market power, you 
can do that, which is why you have to give some framework for the small 
businesses to have the same market power that big business and 
Government does.
    Now, a lot of this approach builds on what I have seen a lot of you 
do in the States. Hawaii proved a long time ago that if you did it 
right, you can have an employer requirement to cover employees without 
bankrupting small business but providing better coverage, stronger work 
force, and lowering health care costs because of the way the market can 
be organized. The Governor of Hawaii has spoken eloquently about this. 
You can say, ``Well, Hawaii is geographically isolated and, besides 
that, we all like to go there and surf and play golf or whatever.'' 
Well, that's why we want to do it for the whole country instead of just 
impose it on one State or another.
    We learned from Minnesota that health care cost targets can be set 
and met through strong leadership, market-forces competition, and high 
quality. And I might say, Governor Carlson, that the Mayo Clinic 
stands--if there were no other example in this country, and there are--
but if you just take that one example, it is a sterling and a stunning 
rebuke to those who say you cannot provide the world's highest class 
health care and control costs.
    We learned from the example of Washington State and of Florida and 
most recently of Maryland that you can pool businesses and families 
together to change the David-and-Goliath equation, and then small 
businesses and families can get affordable health insurance that covers 
the things which need to be covered. We learn from Pennsylvania--we 
learn two things from Pennsylvania. The first thing is that the Governor 
of Pennsylvania proves that you can do anything in the health care 
system. We also learn that better tracking of costs and outcomes 
improves the quality and lowers the cost. This is an amazing thing they 
did, and our approach encompasses this. Whatever the Congress does, this 
should be a part of it. Pennsylvania actually took the time to study and 
report on the cost of different procedures in different hospitals in 
different parts of the State and then measured the cost against the 
results, proving that there was not a necessary connection in many areas 
between cost and quality and changing the whole environment in terms of 
what consumers then could ask for and get. This sounds like a simple 
thing, but in a system this complicated this information, available in a 
way that people can act on it, is a rarity, not the rule, in American 
health care.

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    So I believe that if we at the Federal level can learn from these 
things and finally solve this problem in a comprehensive way, we will go 
a long way toward dealing with the welfare reform issue, and we will lay 
to rest one of the biggest problems for American families and for the 
long-term stability of our society.
    Now, what normally happens around here is that everybody gives their 
speeches, and then we have Washington-style reform where we tinker at 
the edges, expand the Medicaid program a little more. That's what we've 
been doing for years, you know, just kind of backing toward universal 
coverage by expanding Medicaid mandates. And then at the same time, we 
try to ratchet down the Federal spending a little more and pass some 
other incremental reforms. You know what's going to happen? We do that, 
more mandates on you and less money for you to pay. That's what's going 
to happen. More State money put into a system that is fundamentally 
broken, without enough security, where someone else is making the 
fundamental policy decisions.
    I talked to you a few moments ago about Jo Anne Osteen from Sumter, 
South Carolina. She wrote us last June, struggling to hang on to both 
her small business and her insurance. She had to make a choice, and she 
chose her business and lost her coverage. After decades and decades, 
it's time to solve that woman's problem, because her problem is our 
problem. And her problem is now the State government's problem.
    We really can do things around here when we put our minds to it. 
We've got the deficit going down instead of up. We all got together, 
some of you mentioned it yesterday, in a bipartisan and Federal, State 
way and passed NAFTA when it was given up for dead. That enabled us to 
get a GATT agreement which was stalled for 7 years. Congress passed the 
Brady bill after a 7-year stall. We actually can do things around here 
when people work at it and they keep pushing us to make a decision and 
they keep us all in the right frame of mind and they keep us thinking 
about real things. You cannot escape the real world and the rhetoric. 
You can't do it because you're too close to your folks.
    Here, we communicate most often with the American people through an 
array of intermediaries. And most times, too many times people can't get 
to us with their real problems. So there is always a danger here that 
the policy apparatus will just slip the tracks and that we'll forget 
what this is about.
    Yesterday, Families USA issued this report, which I urge you all to 
get and read. It just takes 10 typical health care situations that 
actually happen to real Americans and identifies how those things would 
be dealt with under the major bills pending before Congress. In other 
words, it's not about politics and rhetoric and theory, it's about real 
lives.
    So I ask you to help us do this. You all differ among yourselves; we 
have some differences with you. That's fine, that's good, that's what 
this is all about. But I remember in 1987 and 1988, we were struggling 
to deal with welfare reform. And every Governor in the country wanted to 
do something about it. And the political rhetoric--the Governors were 
converging around an issue, but the political rhetoric in Washington was 
diverging right and left. And we sat around here and talked; we tried to 
get agreement on a policy position. And Governor Campbell had just left 
the Congress where he had been the minority leader of the subcommittee 
that dealt with welfare. And he said to the Democrats and Republicans 
alike, ``Look, I had to go talk to a bunch of people on welfare, and 
here is the way this works. Here is the intersection of welfare, health 
care, food stamps, the whole thing.''
    It was an incredible moment where all of us had to say, this is not 
about rhetoric, this is about real people. And we went on and passed the 
Family Support Act, which Senator Moynihan said was the most significant 
piece of social reform in the welfare area in three decades.
    Now, we can do this on health care. I don't believe we can do it 
unless everybody gets coverage. But we can do it, and you can help us do 
it if you push the thing together around real problems, real facts, and 
real issues, and don't let Washington rhetoric pull the country apart. 
The country needs you, and I hope you'll stay with us until the job is 
done.
    Thank you very much.

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Note: The President spoke at 11:46 a.m. at the J.W. Marriott. In his 
remarks, he referred to Gov. Carroll Campbell of South Carolina, Gov. 
Ned Ray McWherter of Tennessee, and Gov. Arne Carlson of Minnesota.