[Weekly Compilation of Presidential Documents Volume 31, Number 46 (Monday, November 20, 1995)]
[Pages 2019-2024]
[Online from the Government Publishing Office, www.gpo.gov]

<R04>
Teleconference Remarks to the New England Regional Health Care 
Conference

November 13, 1995

    The President. I want to thank you for joining me on the conference 
call to talk about the proposed Medicare and Medicaid cuts in the 
congressional budget. And I want to apologize for not coming to Lawrence 
Memorial today, but I know you understand why I couldn't come.
    Let me just begin by emphasizing again, the answer is not--excuse 
me, the question here in Washington we're debating is not whether we 
will balance the budget but how. I've been working for 3 years to 
eliminate this deficit, and we've gone from having one of the largest 
deficits in the world to the point now where our budget deficit today is 
the smallest of any industrialized nation in the world as a percentage 
of our income, except for Norway. Every other country has a higher 
deficit.
    So I want to finish the job. But it seems to me clear that if you 
look at how the American economy is doing and if you look at how we're 
beginning to come to grips with some of our most serious social 
problems, under the system we're now operating under, it would be a 
great mistake to have a dramatic departure that would eliminate the 
deficit by undermining our values and our interests, including our 
obligations to our parents and our children in the area of health care.
    So I want to balance the budget. I want to strengthen the Medicare 
Trust Fund. But I don't want to destroy Medicare or Medicaid. And that's 
what I want to emphasize today. I believe that the proposed 
congressional budget, with $440 billion in reductions in Medicare and 
Medicaid over the next 7 years, would have quite harmful consequences. 
Eight million Americans could lose their Medicaid coverage. People on 
Medicare will be forced to pay more, whether they can afford it or not. 
And the people who choose to stay in the Medicare program may have a 
program that doesn't meet their fundamental needs.
    And of course, I'm very worried about what's going to happen to 
hospitals and nursing homes, teaching hospitals, children's hospitals. 
These are the concerns that I have. And what I wanted to do today in 
person with you we'll now have to do over the telephone, but I want to 
just give all of you the chance to just specifically talk about, from 
your personal experience, what do you think is likely to happen here. 
And we'll start with our host, Charles Johnson. And let me again 
apologize for not being there with you. But I appreciate you taking this 
call, and I'd like for you to go first and comment.
    Charles Johnson. Well, thank you very much, Mr. President. I 
appreciate that, and needless to say, we were very disappointed that you 
weren't coming, but we certainly understand.
    The President. Give me a raincheck.
[At this point, Mr. Johnson, president, Lawrence Memorial Hospital of 
Medford, thanked the President for his leadership on health care issues 
and explained how proposed Medicare and Medicaid cuts would affect the 
hospital and its patients.]
    The President. Well, thank you, sir. I just wanted to emphasize a 
couple of things, since you said what you did, that the medical 
community, the health care community in America has recognized that we 
can't go on for another 10 years with the costs of Medicare and Medicaid 
going up as much as they have in the previous 10 years.
    On the other hand, as you know better than anyone, there are changes 
now occurring every day which are bringing the inflation rate down. Last 
year, for the first time in a decade, private insurance premiums went up 
less than the rate of inflation. And if together we can continue to 
manage these changes in a responsible way, then the inflation in health 
care costs will come down, but they will come down as people in the 
health care sector of our economy learn to cope and to find other 
options for dealing with these

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problems so that we won't say, ``Well, we're going to cut an arbitrary 
amount of money, and we don't care about the consequences.''
    That's what our plan is focused on. It's focused on giving people 
more choices, more options, including giving hospitals and doctors the 
options to do some more participation in managed care options. But I 
also think we have to leave these seniors with a good, vital, vibrant 
Medicare program that operates in the way the present one does. After 
all, it has lower administrative costs than any private insurance plan, 
and the inflation per Medicare recipient has not gone up more than the 
general rate of inflation in health care.
    So I think we need to give you the chance to keep dealing with and 
implementing the changes that we've got. We need to give you some more 
options. But I think you've made it clear that, just to pick an 
arbitrary number like this without any knowledge that it can be reached 
is a hazardous undertaking.
    Mr. Hall?
    Philo Hall. Yes, Mr. President.
    The President. Perhaps you'd like to comment. I know that you live 
in a State like my home State that has an awful lot of people in small 
towns and rural areas. And I can tell you from 15 years of experience, I 
know what a hard time real hospitals had just staying open in the 
eighties and meeting all of the needs of their people, and I know what 
kinds of changes you must have already undertaken. But perhaps you could 
talk a little about the impact of Medicare and Medicaid on your 
hospital.
[Mr. Hall, president, Central Vermont Medical Center, Berlin, VT, 
explained that Medicare and Medicaid pay about 75 percent of the 
hospital's costs and the proposed cuts would force the hospital to make 
drastic changes, including increased cost-shifting, to avoid closing.]
    The President. Thank you very much. You've made a very important 
point that I want to emphasize because I think it's been lost in this 
debate a little bit over the understandable concentration of what's in 
the Federal budget, and that is that if we move too far too fast and we 
put a lot of these hospitals at risk, one of two things is going to 
happen. Since there are plainly limits to how much more money can be 
taken out of the Medicare and Medicaid population, either the hospitals 
won't have the money they need to stay open and they'll close, which 
will cause a lot of disruption and a cost to our society far greater 
than any benefit to these cuts, or you will have to cost-shift onto 
people with private insurance, which will aggravate a problem that 
already exists where a lot of private employers and their employees are 
paying more than they should today.
    And if that happens, in the end that's a defeating strategy, too, 
because as I'm sure you know, we have a million Americans a year in 
working families who are losing their health insurance because their 
employers can't afford to maintain it. Now that we have inflation coming 
down in private health insurance premiums and we've got--we're trying to 
steer more and more of the smaller employees into big buying pools so 
they can buy competitive insurance at competitive rates, it would be a 
terrible mistake to do something that we know will accelerate the number 
of Americans losing their health insurance.
    This is the only advanced country in the world where more people are 
losing their health insurance every year and there are a smaller 
percentage of people who are non-seniors--that is, who don't have 
Medicare--smaller percentage of people with health insurance today than 
there were 10 years ago. And I really appreciate your saying that 
because that's an important thing that we've lost too much. This is not 
just something that will affect the senior population or the poor. It 
will affect the middle class who have health insurance for the very 
reason you said. And I appreciate that.
    I'd like to go on now to Barbara Corey, who is a senior activist 
with the Quabbin Community Coalition in Petersham, Massachusetts. And 
Barbara, you're on the line----
    Barbara Corey. Yes, I am, Mr. President.
    The President. ----and I wish you would talk to us about what you 
think the impact

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of these cuts will be on the people you represent.
[Ms. Corey stated that most Medicare and Medicaid recipients are hard-
working people who need a helping hand but that tax breaks for the 
wealthy and cuts in these services would have a detrimental effect on 
hospitals and patients.]
    The President. Thank you very much. I'd like to just sort of 
emphasize one of the things you said there, and that is that I don't 
think many Americans yet, unless they have parents who relied on 
Medicare and Medicaid, have really grasped the fact that there are an 
enormous percentage of these seniors out here who have a decent life----
    Ms. Corey. That's right.
    The President. ----on a low income, only because of Social Security 
and Medicare----
    Ms. Corey. That's right.
    The President. ----and that we have to make sure that as we lower 
the rate of increase in Medicare that we're doing it in a fair way. And 
$400 a month is not a lot to live on, but there are--there are not just 
a few, there are millions and millions of seniors out there living on 
that.
    Ms. Corey. That's right. That's right. Good people. And real people.
    The President. And their children.
    Ms. Corey. Absolutely. And you're right when you talk about the fact 
that it's all the generations. It's the elderly population's children 
that are going to be devastated by this as well. It's a tough time.
    The President. It is a tough time. But the other thing I'd like to 
emphasize on this is that we don't have to do this. That's another thing 
I'd like to say.
    Ms. Corey. That's right.
    The President. We are succeeding in slowing the rate of medical 
inflation.
    Ms. Corey. Exactly.
    The President. Creative people, not the government but all these 
creative people out here working together, in the hospitals, in the 
nursing homes, are finding ways to lower costs. We can do this. But if 
we go too far too fast, we're going to hurt not just the elderly, but 
we're going to hurt their children and their children's children. You 
think about all the middle class children of these folks in the nursing 
homes, just for example, or the--[inaudible]--premiums double. All the 
money they then have to give to their parents is money they won't be 
able to invest in their children's education.
    So this is not just an elderly issue. This is an issue for all 
Americans, and it's not just a poor person's issue, it's a middle class 
issue.
    Ms. Corey. Exactly, exactly. And I'm grateful to you for the 
concerns that you're showing.
    The President. Thank you so much.
    I'd like to ask Alan Solomont, whom I've known for some years now 
and who does a very good job in running a significant number of nursing 
homes, to talk a little bit about the impact of these cuts on his 
employees and perhaps on the quality of service that the patients get.
    What do you think is going to happen with the Medicaid cuts? We've 
heard a lot about Medicare and not so much about Medicaid, perhaps 
because the program's not as familiar to the American people, so maybe 
you could talk a little about that, Alan.
[Mr. Solomont, president, ADS Group, Andover, MA, explained that 
proposed cuts would adversely affect middle class families who depend on 
Medicaid to help them take care of their elderly parents, as well as 
causing the quality of care in nursing homes to decline and many 
employees to lose their jobs.]
    The President. Thank you very much. And I want to thank you and your 
employees, through you, for the quality of care you are providing. You 
know, I'm old enough to remember now--and I've been involved in public 
life for about 20 years now--I remember what nursing homes were like 
when there was no Medicaid investment and no standards. And we've seen a 
combination of appropriate standards and better investment over the last 
20 years and a dramatic increase in the professionalization of the care 
in nursing homes. And that's something, I think--I'd just like to ask 
all of our countrymen and women who are old enough to remember this, to 
remember what it was like before this sort of thing happened.
    And we now have--we're a fortunate nation. We're getting older. 
We're living longer. We can look forward to longer lives. But the 
fastest growing group of Americans are peo- 

[[Page 2022]]

ple over 80. And there is no quick or easy way to avoid the fact that we 
need to be providing adequate, appropriate levels of care. And as you 
well know, a lot of people in nursing homes have done all kinds of 
things to be more efficient, forming partnerships with hospitals, having 
boarding homes, doing more--sometimes doing more home health care. But 
in the end, there are people who need to be in the homes, and they need 
to be properly cared for.
    I also appreciate what you said about the people you're hiring. The 
Republican Congress and I, we both say we want to move more people from 
welfare to work. If you look at the realistic options for moving people 
from welfare to work, among those are in the caring profession, 
particularly moving into nursing homes, or on the other end of the age 
spectrum, into child care, into helping our young children.
    When I was Governor, I sponsored a whole program to try to create 
more child care training slots and put child care centers in our 
training schools so that--our technical schools--so that welfare mothers 
could begin to get jobs there, and then the nursing homes were hiring 
them when they got out of the training program.
    These are the kinds of things that we have to do. So if we expect to 
have welfare reform, we have to have jobs for these people when they get 
out. And we need these jobs in the caring professions. And we will need 
more of them, not fewer of them, as time goes on.
    There again, I would say, that's why you don't want to cut too much 
too fast before you know what the consequences will be, because we do 
not know--these budget numbers were basically plucked out of thin air 
once they decided that they were going to have a 7 year balanced budget 
with unrealistic economic assumptions and a $250 billion tax cut. And 
we--that is not--we ought to put health first and say, how are we going 
to lower the rate of inflation? That's what I tried to do in the budget 
that I presented.
    So I thank you for what you said, because I think it's important 
that people focus on these employees as well as on the fact that, you 
know, this budget will not repeal demographic trends in the United 
States.
    Mr. Solomont. That's right.
    The President. People over 80 continue to be the fastest growing 
group of our population.
    Mr. Solomont. Absolutely.
    The President. Mr. McDowell?

[Donald McDowell, president, Maine Medical Center, Portland, ME, 
explained that cuts in Medicare and Medicaid would jeopardize community 
access to health care. He then stated that the health care industry must 
be given the freedom to restructure the health care system and that the 
State of Maine must receive financial assistance to attract medical 
students who would later practice in the State.]

    The President. Thank you. I'd just like to make two comments, one 
hopeful and one sort of on the lines we're talking about here. The 
hopeful comment is that I do believe this is one area where we can reach 
agreement with the Congress. I have long advocated changes in the 
present law which would permit doctors and hospitals to have the 
flexibility they need to establish their managed care networks and to 
provide the most cost-effective direct way to provide these kinds of 
services to patients. So I think that in the end, we might be able to 
get some very good legislation on that, and I am encouraged by that. I 
do think that we'll have broad agreement on that.
    But again, I go back to the point you made about doctors staying 
where they're trained. It's not just that. You know, in my rural State 
when I worked for years and years to get doctors out all across the 
State and we had all kinds of regional educational programs and outreach 
programs and rural training programs, we also found that doctors simply 
would not stay where they did not have adequate support.
    So if there is no hospital, if they don't have that clinical 
support, if they don't have the things that make it possible for them to 
know they can succeed in family practice, you may wind up with a serious 
doctor shortage no matter where you train them. And so, that's another 
argument for making sure that before we just kind of jump off a cliff 
here, we know exactly what we're doing and that we're going to have the 
necessary physician network out there in rural America.

[[Page 2023]]

    Mr. McDowell. I think those that say that we have too many doctors 
in America need to visit Aroostook County, Maine.
    The President. You've got it. No rural resident of the United States 
believes that we have too many family practitioners in this country and 
out there serving people, and I appreciate you saying that.
    Mr. MacLeod?

[Leslie MacLeod, president, Huggins Hospital, Wolfeboro, NH, explained 
that proposed Medicare and Medicaid cuts would have a great impact on 
New Hampshire hospitals and the surrounding communities. He then stated 
that senior citizens, who have worked hard to build the nation, should 
not bear the major burden of cutting costs.]

    The President. Thank you for making that point. You know, I just 
have two observations about what you just said. First of all, I have 
been impressed by the extent to which seniors all over the country are 
willing to do their part to try to help this country slow the rate of 
medical inflation and make sure that we have money to invest in 
education and technology and the future of the country. But they just 
don't want to be asked to jump off a cliff, to go into a forest with no 
path to the other side. And that's what I think we're all concerned 
about.
    When I went to Florida a few weeks ago, I was so impressed by the 
willingness of the seniors there to try to, based on their own personal 
experience, to suggest ways that we might reduce costs. But no one, no 
serious student of this subject believes that cuts of this magnitude can 
be absorbed without serious adverse consequences, both to the seniors 
and the health care system. And I think that's--you have articulately 
said why that's not fair.
    The other point I want to emphasize--because there will be people 
all across America who will read about this--is that these comments are 
coming in part from people who come from the three northeasternmost 
States in our country, Maine, Vermont, and New Hampshire, where Yankee 
frugality is still alive and well, where people don't want a big Federal 
Government, where they want the budget balanced, where they expect us to 
stop wasting money. But it's important that we recognize that Yankee 
frugality is something that is consistent with living by basic values.
    And I want to say again, we've reduced the size of this Federal 
Government by 200,000 people since I've been President. And as a 
percentage of the civilian work force, your Federal Government is now 
the smallest it's been since 1933, as a percentage of the work force. We 
are bringing down the Government. But we're doing it in a disciplined 
way that has--frankly, almost no one in America has noticed that we've 
downsized it this much because we've done it in a way that enabled us to 
maintain services with higher productivity and to treat the Federal 
employees who left our Federal service with dignity and honor.
    That's the way we ought to approach the health care issue. We ought 
to be able to slow the rate of inflation in ways that people won't 
notice because we will do it at a pace and in a way that will continue 
to enhance the quality of health care and meet the challenges that we 
face. And I think that's what you're all telling me. You think you could 
do it if people don't throw an arbitrary number at you that no serious 
student of health care believes can be absorbed.
    There's one serious issue we really haven't talked about yet, and I 
want Dr. Rabkin to rap up this conversation by dealing with that, the 
whole issue of medical education and how these programs have worked to 
further that.
[Mitchell Rabkin, M.D., president, Beth Israel Hospital, Boston, MA, 
stated that many Boston academic medical centers which have already 
reduced operating expenses and employment are concerned that future cuts 
would affect education, training, and research.]
    The President. Thank you very much. Let me say that I believe that 
this is the one aspect of this debate that most Americans don't know 
about, that the Medicare and Medicaid programs over time have been used 
by the Congress to funnel some extra money to our teaching hospitals, 
our children's hospitals in the form of the disproportionate share 
payments, among others, to support medical education and to make sure 
that the patients are there for the young doctors to treat. And

[[Page 2024]]

I think that it would be fair to say that not more than 5 or 10 percent 
of the people in the United States would be aware of that; there's no 
reason they should be.
    But when Congress decided to support medical education in this way, 
it served as a vital lifeline to keep our medical schools going and 
doing well and also meeting an important community need. And again, just 
to cut at this level in this way will really be a blow to the medical 
schools.
    As you well know, we've tightened up on those payments in the last 
several years anyway. We've tried to practice certain economies. But to 
put what is clearly the world's finest system of medical education at 
risk I think would be a grave error. And that's another reason that I 
don't want to see cuts of this magnitude, because every, every American, 
even Americans who may never spend a dollar of the Government's money 
through the Medicare program and certainly may never be eligible for 
Medicaid, every American has a clear interest in having the best trained 
doctors in the world. And Medicare and Medicaid have contributed to that 
and need to be able to continue to contribute to that in an appropriate 
way. And I thank you.
    Dr. Rabkin. Well, thank you, Mr. President.
    The President. I thank all of you. I've enjoyed this conversation 
very much. I wish it had happened face to face. And I thank you for your 
concern and your interest. Just keep speaking up, keep going forward, 
and we'll keep working here to make sure that we do the right thing.

Note: The President spoke at 12:50 p.m. from the Oval Office at the 
White House to the conference at Lawrence Memorial Hospital of Medford, 
MA.