[Weekly Compilation of Presidential Documents Volume 30, Number 12 (Monday, March 28, 1994)]
[Pages 601-609]
[Online from the Government Publishing Office, www.gpo.gov]
<R04>
Remarks in a Health Care Roundtable With Small Business Leaders
March 22, 1994
The President. Ladies and gentlemen, first let me thank all of you
for coming here. We have several Members of the United States Congress
up here in the front. We're very glad to see all of them, and we thank
them for their presence. And we have small business people here from all
over America, and we thank you for your presence. We're here primarily
to hear from the small business people who are here on the panel, and
perhaps some others if time permits.
I just want to make a couple of comments. First of all, I very much
appreciate the work that Erskine Bowles has done as Director of the
Small Business Administration. I am proud of the fact that I was able to
appoint someone to this job who was not just someone who had run
unsuccessfully for office or was otherwise looking for a patronage
appointment. This man has spent 20 years helping to finance small
business creations and expansions. And therefore, he has a clearer
understanding and grasp of what small businesses are really up against
and the difference between the rhetoric of supporting small business and
the reality of it than perhaps anyone who has held this job in a very
long time. Secondly, I want to thank my good friend Congressman LaFalce
for his leadership on small business issues.
Finally, let me say that everybody, I think, understands that one of
the reasons that the United States has not succeeded in providing health
security for all its people while every other advanced economy has done
so is the
[[Page 602]]
difficulty posed by the greatest strength of our economy, which is that
an inordinate percentage of our workers work for small business people,
very small business, and increasingly, more and more of the new jobs are
created by small businesses.
So that presents us with a dilemma. However, we also know if we look
at the real facts that almost all the job creators among small business
are making some effort to provide health insurance, and that those which
do tend to have more stable work forces and higher productivity and
greater success.
Just this week I had a good friend of mine up here with his family.
He's a car dealer in my home State, and he was talking about how he'd
always insured all of his employees and none of his competitors had. And
in the last 20 years, three of them had come and gone, and he was still
there. And one reason was, he never had any employee turnover because he
always took care of his employees and their health care problems, but
the struggle to get a bigger pool of insured people so that he could get
his insurance cost down was a continuing one for him.
Anyway, that just brings me to this point: This administration could
not in good conscience have advocated, and I could not support a plan
that I thought would be, on balance, bad for small business. I believe
this plan is, on balance, good for small business. If I didn't I
wouldn't be supporting it. And I will not sign any bill passed by the
Congress that I do not believe is good for the small business economy,
because we have to create more jobs in this country.
Our plan builds on the system we have now, guaranteed private
insurance. It provides more choices to employees than they now have
under most health care plans, at least three a year, every year. It
contains real insurance reforms that are very important to small
businesses--no discrimination for preexisting conditions, or based on
the age of the work force. It protects Medicare. It does provide both
for Medicare people and for the work force and their families,
prescription medicine benefit and a phased-in, long-term care benefit
for service at home, for example, for disabled people or elderly people,
as well as in institutional settings. And it does have an employer
mandate, but with strong discounts for small businesses with modest
payrolls and modest profit margins.
Now, there will be countless discussions about what the proper
details of that should be, but it seems to me that that is the only
approach that has a reasonable chance of being successful in this
environment. And as I said, there are people who will propose variations
on it, but that, it seems to me, is what we ought to be doing.
My purpose today is to show that there is a great difference in the
rhetorical pronouncements of some organized groups and the real life
experiences of a lot of business people. And we have here people who
have been affected by the present health conditions. And I am frank to
say that while most of the people who are on this panel who are
providing health insurance today would actually pay less under our plan,
some would pay more, and they know it. But they also know that for the
first time their competitors would as well, putting them on a more even
footing.
So let's get in to the panelists, hear their stories, and give them
a chance to comment.
I'd like to start with Mona Castillo who founded Monarch Graphics, a
trophy and plaque manufacturer in Chicago and who was the Chamber of
Commerce national minority entrepreneur of the year award winner in
1993. And I'd like to ask Mona to talk a little bit about her
difficulties in providing coverage for her employees and finding an
insurance company who will do it.
Mona.
[At this point, Mona Castillo, chief executive officer, Monarch
Graphics, Chicago, IL, discussed difficulties presented by having
uninsurable employees; Betty Hall, owner, Hall Manufacturing Co., Inc.,
Brookline, NH, discussed loss of coverage by Blue Cross/Blue Shield,
limiting her company's options for health care coverage; and Spence
Putnam, chief operating officer, Vermont Teddy Bear Co., Shelburne, VT,
discussed difficulties providing coverage for employees.]
The President. Thank you very much.
Let me just try to emphasize a couple of the points that were made
here, because they are different issues. Mr. Putnam wants to insure all
of his employees; today can only insure about two-thirds of them. So he
would
[[Page 603]]
actually pay more if our plan passed, but he'd get to insure all of his
employees and they would also have more primary and preventive care than
they have now and lower deductibles. But he would be, again, on an even
scale with his competitors.
Betty Hall talked about--I wanted to make sure you understand what
she meant when she talked about her situation in New Hampshire, because
she doesn't have Blue Cross options for her business but does have the
matching Thornton option. She has an HMO option. And the HMO has a very
good reputation in New Hampshire and throughout New England; I think
everybody would admit that. But the individuals who work for her now
don't have the choice that, if our plan passed, every year her employees
would get to choose either the HMO or one of two other options. And
under our plan, she would pay the same no matter what. But if the
employee wanted to pay a little more for fee-for-service medicine, the
employee would have that right. So that's how that would work.
If you go back to what Mona said about two of her employees being
uninsurable, it's important here, I think, to recognize a certain truth
about the insurance business itself. While certainly I have been
critical of insurance practices of which I do not approve, I think it is
also important for us to understand that given the organization of the
insurance business today, it is economically impossible for a lot of
these health insurance companies to do other than they do because they
are dealing with a very small pool of people.
So if you insure, let's say, an employee unit the size of her
company and two of them are really sick or they have two kids who have
been really sick, then that can double the cost of whatever your annual
premiums are in a year which is why we have worked so hard to find a
mechanism--and I'll say more about this in a minute--to let insurance
companies insure people the way grocery stores make money, a little bit
of money on a lot of people. And that's what all this--and I'm going to
say more about this toward the end of the hour because I don't want to
interrupt the flow of the people talking, but that's the dilemma we face
about whether there should or should not be a health alliance, a buyer's
co-op or something.
You've got to have these folks able to go into big enough pools so
that the insurance companies themselves do not go broke. They're in
business, too. And the economics have to work out. And the only way the
economics can work out is if the risks which all small businesses are
subject to can be widely spread over a bigger pool. So we'll come back
to that.
I want to introduce now Murray Horowitz who currently covers his
employees today but has had to take some pretty strong steps to keep
covering them. Murray would you like to speak about that?
Murray Horowitz. As a pawnbroker, I represent one of the most
misunderstood industries in the country.
The President. Want to come to work up here? [Laughter]
[Murray Horowitz, owner, City Pawn Shop, Baton Rouge, LA, discussed
increasing costs, increasing deductibles, and employees who are
uninsurable because of preexisting conditions.]
The President. Same thing--81 million Americans have preexisting
conditions of some kind or other. This is not a small problem; this is a
big problem. Those who are in families that are insured through
government or larger employers are okay now except that most of them
couldn't change jobs and go to work for any of you or couldn't start
their own business. You know, a lot of people, that's a lifetime dream
to start their own business. It takes enough courage, as all of you
know, to do that if you don't have to worry about this.
So you've got 81 million Americans, some in the situation of your
employee who can't get insurance, others who pay very much higher rates,
and millions and millions--no one knows exactly how many, but literally
tens of millions--who are locked in the jobs they are now in because
they can't afford to give them up and lose in coverage. So it's a
significant issue. Congressman, would you like to say something about
any of this? I haven't heard from you since the beginning.
[Representative John J. LaFalce, discussed town hall meetings in which
constituents de-
[[Page 604]]
scribed dramatic cost increases, increasingly limited choice, and
increases in deductibles and copayments.]
The President. We have someone here from your home State, Elaine
Stone, of American Aviation in New York, who has gone to extraordinary
efforts to cover her employees at very high cost. I'd like to ask her to
explain her situation and what the consequences have been.
[Elaine Stone, owner, American Aviation International Corp., New York,
NY, discussed her desire to provide coverage for all employees and
described her current self-insured plan which splits funding between the
corporation and the insurance company.]
The President. Thank you very much.
Let me say because of the unique, sort of, semi-self-insured system
that Elaine has, and because she's had some significant illnesses in her
work force, she would actually, at least based on the last year or two's
experience, pay considerably less than she is paying because of the self
insurance schemes kicked in. It works, again, like everything else--it
may work very well for large employers, but for someone with a couple of
dozen employees, it is a very high-risk strategy that can work real well
until it doesn't anymore.
I'd like to now talk about people who are kind of the other side of
that equation, people who would like to cover all their employees but
can't, and therefore, only cover a portion of them, or have had to give
up coverage. And I'd like to begin with Judith Wicks who owns the White
Dog Cafe in Philadelphia. Because, as I'm sure all of you know, the
people in the restaurant business have been among those most concerned
about this health care plan because there are so many people who work
for restaurants and delis and other eating establishments who are young,
who are single, who don't have health insurance, and who are still
willing workers there. But there are an awful lot of people who very
much want to cover folks.
And the press will remember, we were in an establishment in
Columbus, Ohio, just a couple of weeks ago, where by accident--we didn't
plan to go there for health care, but where we had a whole health care
seminar because only half the employees were covered, and the person
covering them wanted to cover them all.
So Judith, why don't you talk a little bit about your situation?
[Judith Ann Wicks, owner, White Dog Cafe, Philadelphia, PA, discussed
her ability to provide insurance coverage for only a small percentage of
her employees and indicated that the health care plan would provide full
coverage for only a small increase in cost and place all restaurants on
an equal competitive footing. Representative LaFalce discussed sources
of opposition to the health care plan indicating that instituting the
plan would place all restaurants in the same competitive positions.]
The President. Do you think he feels strongly about that? [Laughter]
Thank you.
Erskine Bowles. Mr. President, we also have another restauranteur
here, who runs the Burrito Brothers chain here. They're three Mexican
fast food restaurants. Eric's also experienced some of these same
problems that small businesses face in trying to provide health care
coverage. And Eric, you might want to comment on how you would react if
it was a level playing field and you could provide reasonable coverage
at reasonable cost.
Eric Sklar. First let me say that, what Judy said notwithstanding, I
hope jobs are lost to Mexican food. [Laughter]
The President. Well, if I'm setting the pace, you've got a good
chance of achieving that objective. [Laughter]
[Mr. Sklar, owner, Burrito Brothers, Washington, DC, discussed how the
health care plan would be good for the restaurant business, citing the
advantage to businesses of having employees with health care coverage,
and indicated a willingness to pay more to secure health care for
employees.]
The President. Thank you. I just want to say that Eric and Judy
represent an interesting thing that we have seen basically around the
country with people who really are trying to do the right thing by their
employees. If you are in the restaurant business and you insure part of
your employees, you are in the worst of all worlds. You're still at a
competi-
[[Page 605]]
tive disadvantage to people who don't insure anybody, and you feel
terrible that you can't insure everybody. That's basically what they
face.
Administrator Bowles. Mr. President, unfortunately some of the small
businesses in this country have experienced such absolutely skyrocketing
costs and the cost of health care, experiencing these 20 to 50 percent
annual rises in health care, that they simply just no longer can afford
it. Garth Sheriff is here from Los Angeles. I know Garth has had to drop
his coverage a couple of years ago when the cost just went so high you
couldn't afford it.
[Garth Sheriff, owner, Sheriff Associates, Los Angeles, CA, discussed
the dilemma he confronted of having to choose between keeping an
employee or keeping health insurance for his firm, the difficulties
presented by an aging group of workers in terms of insurance costs, and
concluded with a strong endorsement of the health care plan.]
The President. Thank you. Thank you very much.
I'd like to, first of all, thank you and thank your group and thank
you for sharing your painful experience with us. I'd like to go on and
sort of pursue this theme a little more and call on Brian McCarthy, who
owns the McCarthy Flowers, a large florist in Scranton, and ask him to
tell us a little about his situation.
Brian.
[Brian McCarthy, owner, McCarthy Flowers, Scranton, PA, discussed the
problem of attracting unskilled workers from welfare when the workers
would lose health care coverage from Medicaid for their families and
also attracting skilled managers who would not take positions without
adequate health care coverage.]
The President. Thank you very much. I just want to emphasize one
comment Brian made, and if I might go back to what our restauranteurs
also said there. One of the arguments that the Restaurant Association
makes against our doing this is they say, ``Well, you know we have a lot
of young single workers that are healthy. They're strapping. They don't
want insurance, or if they do have it, they ought to be able to get it
much more cheaply than older workers,'' because young single workers
will pay higher per person premiums under our plan. That's what
community rating is all about. If you put people in large pools with
older people and with families with a lot of kids and the kids have been
sick, you average it out. So they will pay a modestly greater amount,
and therefore, the employer contribution for them will be modestly
greater.
I'd like to make two arguments in response to that. One is one Brian
made. A lot of the young single people we want to be workers in this
country are on welfare. They all have health insurance for themselves or
their children through the Medicaid program which is as generous as most
health insurance programs. And yet, we want them to move from welfare to
work and take jobs in our small businesses and give up health insurance
for their children so they can then start paying taxes to pay for the
health care of people who made the other decision to stay on welfare.
I mean, it's just a--we cannot reform this welfare system unless we
fix this problem. So there are a lot of young single potential workers
out there we cannot even get in the workplace unless we deal with this.
The second point that I'd like to make is that the fastest growing
group of people in America are older Americans. And people are going to
be working later and later and later in their lives. Indeed, the gradual
phase-up of the Social Security retirement age starts in a couple of
years as a result of the Social Security Reform Act of 1983, raising
retirement age by a month a year over several years to go up to 67. And
if you don't want discrimination, if we need older people, if we know
they're very good employees and they're very reliable and you don't want
discrimination against them in the workplace, one sure way to avoid it
is to make sure that their health insurance premiums are not
discriminatory.
I see a lot of older people who work in eating establishments, too,
So this thing, I think, will balance out and is ultimately fair. I
especially thank Brian for his statement because he does cover all his
employees today.
[[Page 606]]
And it shows you, I think he really is thinking towards the future.
Administrator Bowles. Mr. President, we also have here Chris Maas,
who has experienced some of these same problems of trying to compete for
labor with absolutely skyrocketing costs in health care.
Chris, do you want to talk about it a second?
Chris Maas. We're a small computer consulting firm here in
Washington. We do most of our work with Washington area lawyers, and we
need professional help. And the one competitive advantage that we have
as a little firm--[laughter].
The President. Every one of you has a one-liner for that, don't you?
[Laughter]
[Mr. Maas, owner, Potomac Consulting Group, Arlington, VA, discussed the
problems he confronted in hiring older employees because of the health
insurance issues that arise. He concluded by stating that his associates
see the health care issue as a business issue rather than a political
issue.]
The President. Good for you. Believe you me, nothing would make me
happier than to do exactly what you've said. It should not be a partisan
political issue. And if you get beyond the fog of rhetoric to the hard
facts of what people's actual individual circumstances are, it's very
much easier for it not to be a political issue.
Thank you very much. That was very impressive.
I want to talk a little bit--by giving these folks a chance to talk
about how we give small business people the ability to have competitive
prices in the insurance market.
And I'd like to start with Stephen Hightower of the Hi-Mark
Corporation in Franklin, Ohio, and talk about how the absence of that
has affected his business and his family.
Stephen.
[Stephen Hightower, president, Hi-Mark Corp., discussed the difficulty
keeping employees with the corporation without offering health care
benefits and emphasized the link between welfare reform and health care
reform.]
The President. I'd like to now to go to a small family business.
Kathleen Piper who owns the Pied Piper Flower Shop in Yankton, South
Dakota.
I first met her a little over a year ago when she represented small
business at the economic conference we held in Little Rock shortly
before I assumed the Presidency. I'd never met her before, and I didn't
know anything about her, but I was deeply impressed by the comments she
had to make, and we asked her to come back here today because of her own
experience on health care.
Kathleen.
[Ms. Piper discussed how she was no longer able to provide health care
insurance for her employees. She thanked the Small Business
Administration for its work in educating small business owners on the
health care plan.]
The President. Yesterday when I was in Miami, I met, as I often do
when I'm traveling around the country, with some children and their
families from these Make-A-Wish programs, where the kids are desperately
ill and one of the things they want to do is meet the President. And I
met with a family, a very impressive family of three children, two sons
and a daughter, where both sons had a very rare and apparently
genetically transmitted propensity to have a very rare form of cancer.
And this family has a lifetime limit on their policy, as three out of
four Americans do. Three out of four Americans have lifetime limits. And
they're in a real pickle, because they are going to run up against the
limit long before the second child--assuming that both the boys survive,
and they've done pretty well so far, but if they do both survive their
illness and they're plugging along--then they'll run up against their
limit long before the second child is out of the house. And then they
have a third, youngest child and, thank goodness, the young child so far
has not contracted the disease, and of course, they hope she won't. But
if she does, then you can just double whatever their problem is.
Again, I would say--I want to emphasize, though, the only way this
works with the private health insurance business is that you have to
find a way not to bankrupt private
[[Page 607]]
health insurance. And a lot of these things--I've had a lot of
employers--I had a restaurant owner I mentioned in Columbus, Ohio, who
was very complimentary of her personal health insurers. She said,
``These people are doing the best they can for me under the
circumstances given the way their business is organized and the way the
market is organized.'' That's why you have to reorganize the market and
put people into larger units and insure people on a community basis.
One of the most controversial things--I just want to mention this--
one of the most controversial aspects of our plan has been the provision
for small and medium sized businesses to be in these big buying
alliances. People have treated it as if it were some big new Government
bureaucracy.
I have seen it, quite the contrary, as a way of enforcing community
rating. That is, there are some States--New York State has a law
mandating community rating. But if you don't have the system within
which the little guys can buy together, the law itself won't guarantee
community rating.
And yesterday--I just want to read you something--yesterday in the
Los Angeles Times, there is this article, ``State Alliance Gives Workers
Health Clout. Forty thousand workers at small California businesses will
get an extraordinary piece of good news on Tuesday.'' That's today. ``At
a time when health insurance costs in the country are climbing at 6 to 8
percent a year, their premiums will actually be reduced, starting July
1st. These fortunate few are members of the State's unheralded health
alliance, a purchasing agency that gives companies with between 5 and 50
workers an opportunity to band together and achieve the same buying
clout the health care market gives to giant corporations. Even as
President Clinton's proposal for alliances is being denounced in
Washington as a blueprint for a menacing new bureaucracy, a staff of
just 13 State workers in Sacramento has put together a working alliance,
the first in the Nation, and the customers seem delighted.''
And in Florida they've got now buying pools of small businesses--
Congressman Gibbons is here. And the Governor told me last night that
most small businesses that joined these alliances had experienced
declines in premium costs of between 5 and 40 percent.
So I say this not to be combative, but just to ask this question: As
this bill moves through the Congress, if they don't like the way we
structured the alliances, you've got to find some ways to give the
little guys big buying power.
Administrator Bowles. Mr. President, all these buying groups do--and
I wish to goodness we'd called them buying groups instead of alliances,
but all these buying groups do----
The President. I do, too. They liked it when we called NATO an
alliance. [Laughter]
Administrator Bowles. ----is, truly, they shift the power of the
marketplace. They change that supply and demand equation from favoring
the supplier of health care to favoring us, the consumer and the small
business owner. It's just identical to what Mr. McCarthy was here saying
about what happens in the flower business. It gives us, the small
business owner, some market muscle so that we can cut a good deal for
our employees. That's what it does.
Q. Could I ask a question? One of the big arguments that I have
heard in talking to other businesses is that everybody is concerned
about the quality of health care, what's going to happen. They're
afraid. Right now they may have choices; they have certain choices, and
that's sort of the unknown out there. How is the quality of health care
going to change?
The President. I think there are two concerns about the quality of
health care that I've heard. One is, are you going to cut down on how
much you spend on health care so much that there won't be enough for
medical research, for technology, for things to progress? The other is,
if you deprive people of choices, isn't that a backdoor way of
undermining quality?
I mean, in America I think people equate--we all like to make our
own decisions. So people equate choice with quality. To that I would
respond in two ways: Number one, if you don't do anything, if we just
let this alone, if we walk away from here and don't do anything, you
will see dramatic re-
[[Page 608]]
ductions in choice. And many of you in this room will contribute to that
because you will have no choice.
That's what happened to our friend from New Hampshire here. She
wished to give her employees the choice between being in the HMO or
insuring with fee-for-service medicine through Blue Cross. Now she has
only the HMO option. She is now in the majority of employers in America
who cover their employees. Now, a slight majority does not provide any
choice for the employee but, in fact, makes the choice for the employee
because they have no choice. You know, Mr. Sheriff here, if he were able
to get back into the health insurance market, probably would have to
just make the best deal he could, and the employees would have to take
it or leave it.
So on the question of quality in terms of choice, under our plan,
again because of marketing power, we would give-- your obligation as an
employer would be constant. You would pay the same no matter what. But
your employees every year, because of the cooperative buying power,
would be able to choose from among at least three programs.
And we estimate that in most places they would always have access to
an HMO. And as I said, many of them are very good, but they'll be better
if they have competitive pressure. Then, probably there would be a PPO--
that is a professional group where doctors get together and they
organize health care delivery, and normally those have many more doctors
and sometimes let people in who are willing to provide the service for
an approved price, so you get even more choice--and the fee-for-service
medicine. And that would come up every year. So that's my answer.
And the second thing is, if you do nothing, you will continue to see
a squeeze on the quality of medicine in terms of what goes into the
teaching hospitals and medical research. Why do I say that? I was in
Boston last week, and I met with the heads of all the teaching hospitals
after which they came out and endorsed our plan. And they said--every
one of them said, ``If we don't do anything, we're going to get less and
less money because the people who come into our hospitals are
increasingly in managed care plans where they put the squeeze on us, and
they cut down on the money we get for patient care.'' So under our plan,
we increase medical research; we increase support for teaching
hospitals, and that's what we have to do.
So my argument is quality will suffer if we do nothing. Choice will
be restricted if we do nothing. If we move, we can increase quality and
choice in a fair and balanced way.
I know we've got to wrap up. We have one more person to hear from,
and the Congressman wants to make a comment.
[Representative LaFalce indicated that the health care plan offered
better quality care with its emphasis on preventive medicine and pointed
to the Hawaii system as a model of success.]
The President. I'd like to hammer that home because a lot of people
say, ``Well, Bill, everybody goes to Hawaii on vacation. It's a rich
State.'' Hawaii has a very, very large percentage of people in its
health care system who are low income people, native islanders, people
come in from surrounding islands, about a 20 percent load there, quite a
high load. So the health outcomes for Hawaii include a very large number
of people who have to be paid for in traditional ways who aren't even in
the employment system. So you just can't make that argument. I'm just
trying to reinforce what he said.
Our last speaker is John Sorenson, from the WECO Supply Company, in
Fresno, California. He wrote to me about one of his employees. And I
thought it would be good to kind of let him close because of the concern
that this employer had for his employee and how it affected his
business.
[John Sorenson, owner, WECO Supply Co., Fresno, CA, told the story of an
employee who, because of job changes and changes in the WECO company
insurance plan, was not covered for the birth of two premature children,
incurred the full cost of their treatment, and ultimately suffered
bankruptcy, loss of credit rating, loss of his job, and separation from
his wife. He concluded that the preexisting conditions caused the
problem.]
The President. It was.
Q. And if you can accomplish that, you've got my vote for the next
20 times.
[[Page 609]]
The President. Well, let me tell you, the votes that really matter
here--first of all, let's give him a hand. I think that was quite a
moving thing. [Applause]
I wanted to end with that because I was so moved by the letter that
he wrote to Hillary. And it seemed to sort of capture so many of these
things that we talk about in kind of esoteric terms: preexisting
conditions; people falling in between the gaps; why you can't change
jobs; all that kind of stuff. And you hear a story and you realize that
this is the business of America.
But the votes that really matter here are the votes of the Members
of Congress. So before we leave, I'd like to ask the Members of Congress
who sat through this entire panel to please stand and be recognized. I
see Congresswoman DeLauro there and Congresswoman Eshoo there, who are
standing, so they can't stand; and Congressman Serrano's in the back.
Would all the Members of Congress who are here please stand so you can
see them?
Thank you, Mr. Bowles. Thank you, Congressman. And thank you most of
all to these fine members of our small business family in America.
Thank you. We're adjourned.
Note: The President spoke at 10:46 a.m. in Room 450 of the Old Executive
Office Building.