    [Weekly Compilation of Presidential Documents Volume 30, Number 12 (Monday, March 28, 1994)]
    [Pages 611-621]
    [Online from the Government Publishing Office, www.gpo.gov]

    <R04>
    Teleconference With the California Medical Association

    March 23, 1994

        The President. Thank you very much. Thank you, Dr. Holley for that
    kind introduction and for your good work and the good work of all the
    physicians whom you represent now in dealing with these very difficult
    and complex and profoundly important issues. I regret not being able to
    join you in person today, but I am glad that Ira Magaziner is able to be
    there with you. I'm glad I had a chance to visit with you, Dr. Holley,
    and your past president, Dr. Richard Corlin, in Washington recently,
    following another health care forum. And I'm grateful for many reasons
    for your continued good counsel and for this invitation to address you.
        Each of you has, in the most personal way, been part of the
    excellence in American medicine simply by caring for the families in
    your communities. And I'm grateful that you understand that our health
    care system needs dramatic reform. You know costs are rising too fast,
    that paperwork is mounting too much, that every day more constraints are
    placed on your patients and your ability to practice medicine the way
    you know it should be practiced.
        But unlike so many others in the debate who will only tell us what
    they don't want to change, long ago you left the sidelines and became
    advocates for responsible, comprehensive reforms. I appreciate the early
    and continued support you have shown for the objectives we are trying to
    achieve: providing Americans guaranteed private insurance, preserving
    the right of everyone to choose his or her own doctor and their own
    health care plans, outlawing unfair insurance practices, protecting and
    strengthening Medicare, and linking these health benefits to the
    workplace, where most people get their insurance today.
        These reforms are entirely consistent with many of the things that
    you have tried to do in California. Your health care providers have been
    innovators in improving quality and controlling costs and, judging from
    today's headlines, the new California purchasing pool is certainly a
    step in the right direction, offering consumers a wide choice of plans,
    a comprehensive benefit package, and lower rates. That kind of
    competition between insurers, combined with more choices for consumers,
    is what my plan is all about.
        At a national level, I think the first step we must take is clear.
    The best way to preserve what's right about our health care system is to
    guarantee private insurance to every American. That's the foundation of
    our health reform plan. We'll provide every American with a health
    security card that will guarantee them a comprehensive package of
    benefits that can never be taken away. The benefits will include for the
    first time for many Americans prescription drugs and preventive care.
    All of you know that the best

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    way to keep people healthy is to promote wellness in addition to
    treating sickness. Retaining choice of doctors and health plans is also
    critically important to Americans and to American medicine. And this,
    too, is central to our approach.
        Today, only about half of American employers offer their employees
    more than two choices of insurance plans; 90 percent of the businesses
    that have 25 workers or less offer no choice at all. And even for those
    who have some choice today, there's no guarantee they'll have it
    tomorrow if they change jobs or lose their job or if their employer has
    difficulty meeting the costs. This is a tremendous restraint on most
    Americans.
        My proposal will guarantee the great majority of Americans far more
    choice of both doctors and insurance plans than they have now. Under
    this approach, people will be able to join a traditional fee-for-service
    plan, a network plan, or a plan sponsored by a health maintenance
    organization. But in all cases it will be families, not employers or
    insurance companies, that make the health care choices.
        The people who are telling you we don't offer enough choice, which
    is clearly not so on its face, are the same who for decades have been
    pushing you out of the way and limiting your choices. You don't believe
    their arguments and neither do we.
        That's why, among other things, we're going to insist upon different
    insurance practices: no more preexisting conditions, no more lifetime
    limits, no more higher rates for those who have had someone in their
    family sick or those who are older, no more overcharging of small
    employers or dropping them because one person in the workplace has a
    medical problem, no more avoiding people that might cost some money.
        The fact is, increasingly insurance companies set your fees. They
    second-guess your clinical decisions. More and more they make you get
    prior approval from someone who's thousands of miles away who's never
    seen your patient and doesn't have a clue about what really ought to be
    done. They all pay according to their own fee schedules, requiring
    different forms for different people under different circumstances. The
    forms are drowning the health care system in paper.
        I have a doctor friend who calls me about every 3 months to tell me
    another horror story. Recently he told me, ``We've got all these people
    doing paperwork. Now we've hired somebody who doesn't even fill out
    forms, just spends all day on the telephone beating up on the insurance
    companies about the forms we've already sent in.'' He's told me, he
    said, ``I went to medical school to practice medicine, but I'm getting
    lost in the fun house instead.'' Well, he's right, and I know a lot of
    you agree with him and identify with that story. But this year we can
    escape that fun house.

        The fourth element of our approach is to preserve and protect
    Medicare. Older Americans will continue to choose their doctor and their
    plan. And in addition, we want to cover prescription drugs under
    Medicare and provide new options for long-term care in the home and
    community, which most people prefer and which will become increasingly
    important as our population continues to age rapidly.

        Finally, let me say again, we should guarantee these health benefits
    at work; that's how most people are insured now. And 8 of 10 uninsured
    Americans have a family member who works. This is the fairest and most
    efficient approach to covering everyone. And so no one gets hurt by the
    needed reforms, we'll provide discounts for small businesses and breaks
    for self-employed people and their families.

        This is the proposal; it's pretty straightforward. All Americans
    will get a card that guarantees with it the security of private
    insurance and comprehensive benefits, then they can pick the doctor they
    want. They'll know that they're always covered by what is said to be
    covered, and it won't be subject to change by anyone.

        Before taking your questions now, let me again just express my deep
    thanks for your continued support and encouragement. After 60 years, I
    think this is the year we're going to provide every American health
    security that can't be taken away. I'm optimistic because of what's
    already been done. This Congress has been willing to act and to work
    with me to pass an economic plan that's helped

    [[Page 613]]

    to produce low interest rates and high [low]\1\ inflation and more than
    2 million new jobs. After 7 years, this Congress passed and I signed the
    Brady bill and the family and medical leave bill, things that people had
    given up on getting done.
        \1\White House correction.
        The point is not that we have been able to do so much but that is
    evidence that we can still do what we have to do. The American people
    have demanded that we make a great deal happen. They want their dreams
    back, and they want this problem fixed. A big part of the American dream
    has always been knowing that you can care for your children or your
    family if they become sick; that's what you do. You're a part of every
    American family's dream. I've seen the magic you perform all over the
    country. You care, and the American people know it. And our challenge
    now is to do everything possible to keep and protect the bond that
    you've worked a lifetime to establish. Our challenge is to provide every
    American health care that's always there. With your help, we can do that
    and we can make history.
        I thank you for the leadership you've already shown. And if you have
    questions, I'll be glad to try to answer them. Thank you very much.
        Q. Thank you, Mr. President. I wonder if you have a contract with
    Coca-Cola. [Laughter]
        The President. I forgot to put it in a cup. There goes my Pepsi
    voters. [Laughter]
        Q. Well, Mr. President, as you acknowledged, the California Medical
    Association has been deeply involved working for health system reform.
    You know, I think you have to realize that we had Harry and Louise
    opposing us when they were only engaged. [Laughter]
        The members of this house, representing 40,000 practicing California
    physicians, are vitally concerned about what is contained in any
    proposal for health system reform. We will, after all, be caring for our
    patients within whatever structure is created by those changes. We want
    to be as certain as possible that it's going to work. We have some
    questions for you that will address some of those physician concerns.
    And I'm going to take the opportunity to ask the first one.
        Mr. President, in your State of the Union Address, you said that you
    would sign a health reform bill if it met the test of universal
    coverage. In addition to universal coverage, what other elements do you
    believe critical to a reform package, and what must be included to
    secure your signature?
        The President. Well, I want to be very careful about how I answer
    that because I don't want to be throwing down gauntlets that may mean
    more than I wish to say. But let me say, to have a system that works,
    you not only have to have universal coverage, but it seems to me that
    the benefits ought to include primary and preventive care. There ought
    to be a comprehensive set of benefits.
        Then there ought to be a clear outlawing of insurance practices
    which have caused so much misery and caused so many Americans to fall
    between the cracks. I think there should be an end to lifetime limits. I
    think there should be an end to preexisting conditions. I think there
    ought to be an end to discriminatory rate-setting based on age.
        In order to do this, I think we have to find some way of not only
    legislating community rating but actually having community rating. And
    we need a device that guarantees that small businesses and self-employed
    people will have access to insurance at competitive rates with people
    who are insured through big business and Government. I think that's
    very, very important. So these are the things that I think are critical.
        Now, if you're going to cover everybody, you have to either do it
    through a tax or through some device by which people pay into an
    insurance pool. I think the employer mandate, so-called, is the best way
    to do it by providing guaranteed private insurance at the workplace
    because that's the way most Americans get their insurance today.
        I know there are some small businesses for whom this would create
    difficulties, so we developed a system of small business discounts paid
    for from tax proceeds. And the taxpayers would pay to cover those who
    are unemployed and uninsured. That's basically the way I think the
    system would have to work.

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        There are lots of other things I think ought to be in it, but I
    think it's very important for the President, in the middle of a
    congressional process that is just not getting its sea legs and getting
    underway, not to be too specific in talking about vetoes.
        If we can begin with a good comprehensive system of universal
    coverage, we can go a long way to dealing with a lot of the other
    problems. As you know, my plan does deal with a number of your concerns,
    and I know you have more questions on that, so maybe we should get to
    the other questions.
        Q. Well, thank you very much, Mr. President. You're now going to
    have an opportunity to field questions from a group of pretty nervous
    California physicians.
        Q. Thank you. Good morning, Mr. President. I'm a family physician in
    San Bernardino. I have a unique opportunity here to ask you a question,
    particularly because I was a graduate from the University of Arkansas
    for medical sciences.
        The President. Good for you.
        Q. Thank you very much. And I had an opportunity to campaign for you
    in 1982 when you made your comeback election for the Governorship. So
    what I would like to ask you, Mr. President, is that physicians are
    concerned that in the current marketplace and under your proposed model,
    insurers and businesses are encouraged to collectively purchase health
    care services. However, antitrust laws prohibit physicians from
    collectively selling their services. It's like requiring individual
    autoworkers to negotiate their salaries separately with General Motors.
        In light of the strong opposition of the Federal Trade Commission to
    any changes in antitrust laws, what would you propose to provide a more
    balanced and fair environment in which these negotiations can occur
    between physicians and insurers?
        The President. I think we have to change the antitrust laws to allow
    you to organize to provide your services and more comprehensive
    professional groups. And let me say that one of the things that has
    concerned me most about this is that there is a development in American
    health care which I like, which has a consequence that I don't like.
    What I like: the fact that people are getting together in competitive
    buying groups and trying to get a better deal and trying to squeeze some
    of the excess cost out of our system. I think we all agree there are
    some there. I don't like the fact that an inevitable consequence of that
    has been that so many Americans have lost the right to choose their own
    doctor. We try to address this in two ways, one of which directly
    addresses your question. But let me try to put the two ways together so
    they'll fit.
        Under our plan, each American consumer, once a year, would have the
    right to choose from at least three plans, including a fee-for-service
    plan, an HMO, and hopefully some sort of provider plan that will be
    provided by providers who get together and who may allow all doctors in
    a State, for example, to participate if they agree to observe the fee
    schedule that the plan bargains for. So, I think you ought to be able to
    do that. We also think that the HMO's should have to have a fee-for-
    service option that would allow people who are covered under the HMO the
    option to choose another doctor if it seemed appropriate. And if the
    fee-for-service option were elected at the beginning of the year, the
    HMO would have to contribute to that.
        So I think that this will help. But I agree that there must be some
    changes in the antitrust laws so that you can clearly get together
    without fear of legal repercussions. Otherwise, you are consigned to
    dealing with a middleman that will only add to the cost of your
    providing your services and undermine the choice that the consumer gets.
        Q. Thank you, Mr. President.
        Q. Good morning, Mr. President. I'm an oncologist practicing in
    Redwood City in northern California. My question is about budgets and
    living within our means for health care. We recognize the need for
    controlling health care costs, there's no debate about that. However, we
    are concerned that your proposal and others may limit the rise of the
    health care budget to the cost of living or other artificial indexes
    that may have little to do with actual health care costs. Rising health
    care costs may be more related to human factors such as our aging
    population, tobacco consumption, new technologies, new diseases such as
    AIDS. How can these factors be taken into account when arriving at or
    when developing a health care budget?

    [[Page 615]]

        The President. Well, first let me say that I basically agree with
    you on that. I have tried not without complete success--or not with
    complete success--but I've really tried hard since I started thinking
    about this issue seriously 4 or 5 years ago, when I was still a
    Governor, to identify the elements of disparity between, let's say, the
    14.5 percent of their GDP that Americans spend on health care, the 10
    percent that Canadians spend, the 9 percent or less that the Germans and
    the Japanese spend. There's no question that a lot of it is due to good
    factors like we invest more in medical research and technology, and
    that's good. And there's no question that some of it is due to bad
    factors that you can't do anything about, at least in your role as a
    doctor, which is higher AIDS rates, higher rates of violence which lead
    to enormous medical costs.
        What we believe is that in the beginning, at least, there are many,
    many savings which can accrue from a rational system, far, far lower
    administrative and bureaucratic paperwork costs, significant reductions
    in unnecessary costs that are in the system and that after that, in the
    years ahead, when we measure how much costs can increase, we're not
    only--consider population growth and inflation, we will also have to
    consider the burdens of the American system if the rate of AIDS, for
    example, continues to go up instead of going down, if the rate of
    violence goes up instead of going down, if the aging population imposes
    greater burdens rather than fewer because we don't succeed in doing a
    lot of the preventive things that we're going to do.
        Those things will all have to be calculated in the rate at which
    medical costs go up. We can't ignore real-world factors that make the
    CPI and health care different from the overall rate of inflation. And I
    think those things should be taken into account.
        Q. Thank you, Mr. President.
        Q. Good morning, Mr. President.
        The President. Good morning, sir.
        Q. I'm a pediatrician from San Luis Obispo. My question to you this
    morning relates to the power of insurance companies. Yourself, Mrs.
    Clinton, and Mr. Magaziner have repeatedly stated that one of your goals
    is to return the control of medical practice back to physicians and
    hospitals. We obviously agree with that. Unfortunately, however, many of
    the current managed care plans in California are moving away from that
    goal. Mr. President, does your plan contain features which would achieve
    that goal?
        The President. It does. I think there are some that would help
    indirectly and one or two that would help directly. Let me just mention
    them.
        First, giving every consumer three choices will make a big
    difference, saying that every consumer has to have at least three
    choices and that one of those choices must always be fee-for-service.
    We'll put all these plans in competition with one another, and that will
    make a difference.
        Secondly, making it easier for physicians to provide these services
    directly will dramatically minimize the ability of the insurance
    companies to add to the cost and delay and undermine the quality of
    health care by second-guessing everything the doctors want to do in the
    HMO's that they're promoting--[inaudible]--in our plan that the
    insurance companies disclose what's in their utilization review protocol
    in advance so people can evaluate that and know what's going on and
    argue against it. And competing plans, including competing physicians
    groups can say, here's why this is a bad deal for you and why you
    shouldn't take it and why it is going to add to the cost and undermine
    the quality of health care.
        Now, all these are things, I think, that will really make a
    difference. Most doctors I know recognize that from time to time, there
    are certain things that ought to be subject to some kind of review. But
    basically, it's gone crazy now. It's become an instrument of denying
    service when it's needed. So what we've tried to do is strike the right
    balance here, and I hope we have.
        Q. Thank you, Mr. President.
        The President. I must say that Bravo is a wonderful name for a
    pediatrician to have. A lot of times you can just say that to your kids
    and they'll get better. [Laughter]
        Q. Mr. President, I think the medical profession really believes
    that that issue is so important that if we win everything else but lose
    on that one, none of the other matters.

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        The President. It's absolutely clear to me that the whole HMO
    movement has taken the utilization review to an extreme and that it has
    to be backed off of. Forget about the HMO, just the whole insurance--
    it's the insurance companies that are driving this. And I think the more
    we can put doctors into the management decisions of the HMO and the more
    choice we can give to the people who themselves will be patients, who
    have personal contact with their doctors--keep in mind, this is a huge
    deal, letting the employees themselves make this choice instead of their
    employers, means that somebody will be choosing, every plan will be
    chosen by someone who has had a personal relationship with a physician
    who has doubtless discussed this with him or her. I mean, that's going
    to make a big difference in this. And I agree with you, it's a very
    important issue.
        Q. Good morning, Mr. President. I am a trauma surgeon in San
    Bernardino, California. Medical malpractice concerns and the practice of
    defensive medicine are serious issues associated with the--[inaudible]--
    of care to the trauma patient. Mr. President, we are very pleased that
    you believe that the tort reform should be an essential part of the
    health care reform and have adopted some of--[inaudible]--provisions in
    your plan. But sir, would you be willing to add to your plan the most
    essential part of the--[inaudible]--that is, a $250,000 cap on
    noneconomic damages? And sir, if you just say yes, I would be happy.
        The President. As you might imagine, we debated that thing for a
    long time before we presented our plan to the Congress, because we
    didn't want the whole health care plan to come a cropper on a debate
    over tort reform. We thought there had to be some. We knew that the
    States were taking up this issue to some extent, but we thought we ought
    to do something nationally, even though tort law historically has been
    completely within the purview of State government, not the National
    Government. So we agreed that there ought to be a limitation on lawyer
    fees, contingency fees. And we did some other things that were
    recommended by you and were in the model work that was done in
    California.
        Something else we did that I think has been insufficiently noticed
    is we agreed to include medical practice guidelines developed by
    professional groups as raising a presumption that there was no
    negligence on the part of doctors. This offers an enormous opportunity
    to dramatically reduce the number of medical malpractice suits, the
    number of recoveries, and therefore the malpractice rates.
        My own view is that based on the research I've seen in a couple of
    places where this has been tried on a limited basis, is it may offer the
    best hope of all of protecting doctors from frivolous lawsuits by simply
    raising a presumption that the doctor was not negligent if the practice
    guidelines developed by the professional groups themselves were in fact
    followed. So I think that that has been not sufficiently noticed. That
    is a very, very big step, in addition to the other things I mentioned.
        My own judgment is that we will not include the national cap because
    there will be so much difference among the various congressional
    delegations from different States about what the caps should be and
    whether it should change with inflation over time. And in fact you might
    wind up in California with a situation different from the one you have
    now if it were to be done. For example, if there were a debate on the
    national cap, then the immediate thing would be, what should the cap be,
    and if States have a lower one, should it be required to be raised?
    Because all those things were involved, we decided that we would leave
    the cap issue itself to State law and deal with these other matters.
        I urge you to look at what we have done, because I think we've taken
    a long step toward trying to relieve doctors of the burden of frivolous
    lawsuits and trying to control the cost of malpractice insurance.
        Q. Thank you, sir.
        Q. Good morning, Mr. President. I'm a practicing family physician in
    Modesto, California. I'm also the current California Academy of Family
    Physicians president and past president of the Stanislaus County Medical
    Society.
        Mr. President, when I entered medical school, I was led to believe
    that I would spend my career practicing health care. I find that an
    enormous part of my day is spent

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    battling with health insurance clerks to get authorization for my
    patients to have some of the even most basic of health care. Obviously,
    it would be better for me to spend that time seeing patients. What will
    your plan do to prevent or to limit the use of these managed health care
    organizations from providing these, or throwing up these artificial
    barriers in the name of managed care, but in reality these things
    prevent us from providing that care?
        The President. Let me try to restate what I said before. I believe
    that the micromanagement of medicine by insurance companies has reached
    an excessive point. And what we have tried to do to reduce it, since we
    can't--you don't want the Federal Government exactly passing laws saying
    what decisions can or cannot be made by physicians and others working
    with them. What we've tried to do is to change the whole system so that
    it would be much less likely.
        And I will mention two things again. Number one, we make it easier
    for people like you to join with like-minded physicians in providing
    services directly or to join together and to tell people if you're going
    to work with them, you don't want those kinds of utilization reviews.
    And we require the insurance companies to disclose their utilization
    review protocols in advance. And they will be under much more pressure
    than they are now because now they won't have the same shot at business
    XYZ's employees because the employees themselves will be deciding
    whether they want an HMO, do they want a PPO, do they want some other
    kind of organization, or do they want to have fee-for-service medicine.
    Under each case the employer's liability is the same--responsibility is
    the same. So I think that we are changing the environment in ways that
    will really permit you, working with your fellow physicians and your
    patients, to cut down dramatically on the number of these abuses.
        I also want to point out that if there is a single card which we
    envision which entitles a person to health care and which enables them
    to hook into a computer which says that they are covered and all of
    that, and if there is a single form related to the comprehensive benefit
    package which can be filled out in every doctor's office and hospital in
    the country and then processed by every insurance company in the
    country, then that is going to dramatically reduce the paperwork burden,
    too. I have many, many doctors complain to me that the time they have to
    spend and the money they have to spend in their clinics on post facto
    paperwork has exploded in recent years. And I think that is also very
    important, cutting down on that burden, not only the time, but the money
    is critically important. So I believe that we will make it better.
        If you have further suggestions, I'd be glad to hear them. But this
    is an area in which it is difficult to legislate directly and in which
    many physicians are reluctant to have us legislate directly. It seems to
    me if you change the economics and change the distribution of the power
    of decisionmaking in this whole process, giving more to the doctors and
    to patients through the workplace and less to the insurance companies,
    that the practices will inevitably change because the shift of
    decisionmaking has occurred.
        Q. Thank you very much. Mr. President, we know that your time is
    very tight. If you could spare us a few minutes, we have some other
    questions that we would hope to be able to put before you.
        The President. Please do, because I know we've got one or two other
    issues that I think should be dealt with.
        Q. Thank you, sir.
        Q. Mr. President, I practice anesthesiology in San Diego. And I want
    to thank you for the opportunity to ask you a question today. Two years
    ago, right here in California, in this State, with the support of this
    organization, we passed a law that created voluntary health insurance
    purchasing cooperatives. In fact, you just alluded to them a few moments
    ago. And as you said, they so far have been enormously successful, both
    in extending access and in eliminating costs.
        My concern is that there are some reform proposals that would cause
    these purchasing pools or alliances to become so large and thus so
    inflexible that they would in fact limit rather than enhance the
    competition that you yourself state, and I agree with you, that we want
    to see in the marketplace. So to make these entities work the way I
    think we both wish them to, the alliances and the purchas-

    [[Page 618]]

    ing pools, I believe that we need to limit their size. So my question
    for you this morning is what would you propose to control the size of
    the purchasing pools and alliances so that they would fulfill their
    primary purpose of providing affordable, accessible care and not become
    a large, inflexible bureaucracy?
        The President. Well, let me first say that I agree that we shouldn't
    have them become large, inflexible bureaucracies. Under our plan, the
    alliances would be much larger and the membership would be mandatory.
    But that's because we're trying to achieve something with our plan that
    is beyond what the alliances do. I think it will all be debated in the
    Congress, and I'm certainly flexible on it.
        But let me explain why we recommended larger alliances and offer
    you, not just you individually, sir, but your group there the
    opportunity to suggest to me--either to Ira Magaziner who's there or to
    us through a letter later--how we could achieve the same objective.
    Because I know a lot of people say, ``Well these alliances are too big
    or the work units--you don't--people with several thousand employees in
    them.'' And at one level, I think that's right, but at another level,
    I'm not sure, and let me explain why.
        The purchasing co-op that you have in California, which has worked
    real well, is designed primarily to give small businesses bargaining
    power so that they can, in effect, have the same access to health care
    at the same cost that people in large units like big corporations and
    Government do. You can do that with smaller alliances, let's say with
    people with a few hundred employees or 100 or whatever it is in
    California, 50 and down, you can do that. The same thing is now
    happening in Florida where they're seeing these results.
        What we wanted to do with the alliances were three other things that
    it still seems have to be done somehow under the plan. First of all,
    through the alliances, we were going to distribute the small business
    discounts. We can find another way to do that, but that was going to be
    done.
        Secondly, we were going to provide certain handling services
    basically to bring together and reduce the paperwork burdens of the
    physicians, the employers, and the insurance companies. We were going to
    do a lot of the paperwork there. That can probably be done some other
    place.
        The other thing, though, which I think is very important, and which
    all of you clapped when I mentioned earlier, is the alliances as large
    units were going to be used to make it financially possible for the
    insurance companies to observe community ratings. And I'd like to talk
    about that a minute.
        There are two issues here on discriminatory rates. One is, how do
    you get small businesses and self-employed people access to the same
    rate structure presently available to big business and Government? The
    other is, how do you, as a practical matter, eliminate unfair billing
    practices without bankrupting the insurance companies that are still in
    the market? That is, how do you eliminate preexisting conditions? How
    can you afford to do away with lifetime limits? How can you eliminate
    rate discrimination against people with preexisting conditions in their
    families or against workers who are older at a time when older workers
    are having to change jobs a lot in their life, too?
        Now, you can pass a law and say, we'll have community rating. But
    New York did that, and yet they still don't have it. And the reason is,
    they don't have any mechanism within which community rating can be
    practically made to work in a State where you have a lot of different
    insurance companies. And the insurance companies simply cannot
    solvently--can't stay solvent and do that unless people are insured in
    very large pools where insurance companies can make money the way
    grocery stores do, a little bit of money on a lot of people.
        So the fundamental difference in what California has done, which is
    very good, and what we are seeking to achieve is that I'm not sure that,
    unless we have everybody below a certain substantial size in one of
    these alliances, we can achieve community rating. We can get better
    breaks within the present system for small businesses, but I am not sure
    we can get community rating. That's the rub. If we can solve that, I'm
    very flexible on the rest of this. I mean, I'm just trying to achieve an
    objective that we all agree is necessary.

    [[Page 619]]

        Q. Mr. President, I practice emergency medicine in inner-city Los
    Angeles. Every day I see the impact of undocumented immigrants on our
    health care system. Mr. President, I'm grateful to you for making health
    system reform a top national priority. Your proposal provides health
    security for all citizens and $1 billion to cover noncitizens.
        However, in some of California's largest counties, up to 25 percent
    of the population are noncitizens, both legal and undocumented.
    Currently, Federal law and our own ethics as physicians require that we
    provide care. But the reality is that these costs are putting an
    enormous strain on our State's health care delivery system and the
    entire California economy. We are spending close to $1 billion in Los
    Angeles County alone to deliver health care to undocumented immigrants.
    How do you feel we can better address this problem?
        The President. It's a difficult one, as you know. Let me make a
    couple of observations, and then say where I think we are practically.
        Obviously, no State or local government should be required to
    shoulder the cost of immigration or the lack of an immigration policy or
    the inability to enforce the policy we have now at the national levels.
    But as a practical matter, as we all know, it happens all the time. Now,
    in my last two budgets, I have tried to provide more funds to
    California, especially in the areas of health and education, for dealing
    with the extra costs of immigration because I think it's not your fault.
        Now, in this health care plan, we provide a billion dollars in extra
    money. Is it enough? Of course it's not but it's a good step in the
    right direction. Let me say that if you look at the States with the big
    immigrant health care burden, California, Florida, Texas, New York,
    although there are five or six others with substantial burdens as well,
    our plan will save the States enormous amounts of money that they would
    have paid otherwise in out-of-pocket Medicaid match costs, long-term
    care costs, and other health-related costs related to running public
    health facilities, for example. In other words, our plan--we estimate
    that California will save, if our plan goes into effect in 1996 or we
    begin to put it into effect in 1996, phasing it in, we estimate
    California will save about $6 billion or more between that year and the
    end of the decade, new money that would not have been there otherwise in
    this budget. That will also allow the State to divert some of those
    resources to health care as well as to dealing with some of your long-
    deferred education and other problems out there.
        So I believe that, between the savings that will occur from the
    State of California and the funds that we can put into immigrant health
    care--migrant health care--directly, I think that will make a big
    difference. Now, let me say, this fund will start at a billion dollars,
    but obviously, based on the evidence and based on our ability to secure
    savings in other aspects of the system, Congress will be free to
    supplement this fund every year from now on. That's where we're going to
    start.
        I realize it doesn't solve the whole problem. I think it's frankly
    all we can afford to do at the moment. And I think the savings which
    will flow to the State from passing this plan will be so great that they
    in turn will be able to do more and still have money left over to
    address other needs of Californians. So I hope they'll stick with it,
    because I think it's the best we can do right now.
        Q. Mr. President, you really need to know that over half the
    hospitals in California are currently operating in the red. It is an
    urgent problem, and I hope that the solution to the problem would not be
    tied to the whole health system reform.
        Thank you.
        The President. I certainly agree with that. Let me just say one
    other thing. I agree that we cannot hold this problem hostage to health
    care. We're just trying to use the health care reform which will free up
    billions of dollars to put more into medical research, more into
    undocumented alien health care, and other things. But I agree that we
    have to deal with it.
        Q. Thank you, Mr. President. Do you have time for one last question?
        The President. Sure.
        Q. Thank you very much, Mr. President. I practice internal medicine
    in Los Angeles. I also drink Diet Coke. And I'm delighted to be here
    this morning as president of the California Hispanic-American Medical
    Association. Mr. President, in California, our

    [[Page 620]]

    managed care system has evolved from what started as a not-for-profit
    market into one which today is dominated by large for-profit publicly
    traded HMO's. This evolution has also caused the profits and
    administrative costs of these HMO's to soar, while health care services
    to patients has plummeted. While the CEO's of these corporations make
    millions, I have to argue with these same companies who insure my
    patients to approve immunizations, pap smears, and mammograms. The CMA
    is sponsoring legislation in California to limit the administrative
    costs and profits of these companies. How do you feel about this
    situation, and how would your plan protect other States from this trend?
        The President. In two or three ways. First of all, under our plan
    those plans will have to offer pap smears, mammograms, and other
    preventive and primary services. They won't be able to cut them out.
    Secondly, these companies will be under much more pressure to provide
    quality service and to siphon less money off to bureaucracy and profits
    than they are now because they won't be able to make a deal with
    employers which can then be enforced on employees. Every employee--that
    is, every patient you see will be able to make a new choice of plan
    every year. So if they get abused in year one, then in year two, the
    next year, they'll be able to make the same choice they made last year
    all over again and choose a different plan or fee-for-service medicine
    or a group of physicians who are providing health care.
        So this will fundamentally change the whole incentives of the
    system. They simply will not be able to use the fact that they have a
    preexisting relationship with an employer to undermine the delivery of
    quality of care between the doctor and the patient, because the patient
    will be making a decision and every year can make another decision. And
    that will have a profound impact on it. And they will not be able to
    eliminate primary and preventive services from their package. That has
    to be involved. So that's going to change it.
        Then we will make--when we make some of the changes in the antitrust
    laws, which will make it even easier for physicians to get together and
    deliver health care directly. So these HMO's are going to be under a
    whole different kind of competition. It won't be competition from
    somebody else providing less service at lower costs, it will be
    competition from somebody else providing more services and higher
    quality with more choices for the same costs or sometimes less.
        So I think this will really change things and put you and your
    patients much more in the driver's seat than you are now. That's perhaps
    the most critical element of my plan that has not been really noted. We
    are not restricting choice, we're expanding it. And we're putting the
    decision--we're moving the decision from the employer to the employee
    about who makes the choice, which means you're moving it to the patient.
    And that should be, I think, something that will make a profound
    difference, particularly after you all get through talking to all of
    them.
        Q. Mr. President, everyone in this room and all the people we
    represent would like to thank you for taking the time from your busy
    schedule to meet with us today. We want you to know that we're with you
    in this fight and we'll join with you in working with Congress in a
    joint effort to guarantee all Americans private health insurance that
    can never be taken away.
        The President. Thank you. And let me just say in closing, if I could
    ask you one thing, it would be to impress upon the Congress the
    importance of acting and acting this year. This is a very complex issue.
    No one has all the answers. We'll be improving on what we do from now
    until kingdom come. But you know, more uniquely than most people do,
    what the consequences of not doing anything are, and that's more
    restricted managed care, more people without any insurance at all, more
    of the headaches that you have already complained about today. So you
    are in a unique position to embrace the fundamental principles here,
    work with me on the details, and impress upon your very large
    congressional delegation that the time to act is now, not next year, not
    5 years from now, but now.
        Thank you very much.

    Note: The teleconference began at 11:47 a.m. The President spoke from
    Room 459 of the Old Executive Office Building. In his remarks, he
    referred to Dr. David Holley, president, California

    [[Page 621]]

    Medical Association. A tape was not available for verification of the
    content of these remarks.