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Discussion on Cost Containment at Bipartisan Meeting on Health Care Reform

Blair House

THE PRESIDENT: Well, thank you very much, Harry. Everybody went a little over time, which is not surprising with a room full of elected officials. I wanted to give people a little bit of a wide berth starting off, but we're going to need to be more disciplined moving forward if we're going to be able to cover every item. And I'll try to set the example here.

I just want to address very quickly, Lamar, the issue of process that you raised at the beginning and then we'll move on and start talking about the specifics. As I listened to your description of the House/Senate bill, as well as the proposal that I put on our Web site, obviously there were some disagreements about how you would characterize the legislation.

On the other hand, when I listened to some of the steps that you thought Republicans would be open to, I thought, well, a bunch of these things are things that we'd like to do, and in fact are in the legislative proposals.

So part of the goal here I think is to figure out what are the areas that we do agree on, what are the areas where we don't agree, and at the end of that process then make an honest assessment as to whether we can bridge these differences. I don't know yet whether we can. My hope is that we can and I'm going to be very eager to hear and explore how we might be able to do so.

So rather than start at the outset talking about legislative process and what's going to happen in the Senate and the House and this and that, what I'd suggest is let's talk about the substance, how we might help the American people deal with costs, coverage, insurance, these other issues, and we might surprise ourselves and find out that we agree more than we disagree. And that would then help to dictate how we move forward. It may turn out, on the other hand, there's just too big of a gulf. And then we'll have to figure out how we proceed from there. So that would be my proposal.

And what I'd like to do then is to start first with something I heard everybody agree on, every single speaker, and that was the issue of cost. It is absolutely true that if all we're doing is adding more people to a broken system, then costs will continue to skyrocket and eventually somebody is going to be bankrupt, whether it's the federal government, state governments, businesses, or individual families. So we have to deal with costs, and I haven't heard anybody disagree with that.

Now, I've already indicated some statistics, but I just want to reemphasize these. More than a quarter of small businesses have reported a premium increase of 20 percent or more just last year -- 20 percent. As a consequence, a lot of small businesses have dropped coverage altogether. Fewer than half of businesses with fewer than 10 workers now offer coverage.

By one estimate, without health care reform, by the end of the decade premiums for businesses would more than double in most states. And the total cost per employee is expected to rise to more than $28,000. So you can imagine what that does to hiring, what that means for incomes, and you can imagine how many families are going to be unable to afford insurance.

As I mentioned earlier, I hear stories from people all the time about how these costs have very concrete impacts on their lives. I spoke to a family, the Links (ph), from Nashville, Tennessee. They've always tried to do right by their workers with their family-run company, but they had to do the unthinkable and lay off employees because their health care costs were too high. I've talked to other businesspeople who say, we were going to hire but we decided not to when we got our monthly premiums.

And so one of the goals that I set out very early on in this process was how do we control costs? Now, what we have done, as I mentioned earlier, was to try to take an idea that is not just a Democratic idea but actually is a Republican idea, which is to set up exchanges. These are pools where people can come in and get the same purchasing power as members of Congress do as part of the federal employees health care plan, as people who are lucky enough to work with big businesses can do because there are a lot of employees in those big businesses. What we've said is that if you join one of these exchanges, you will have choice and you'll have competition. You will have a menu of private insurance options that you'll be able to purchase, but because you're not purchasing it on your own, you're purchasing it as part of a big group, you're going to be able to get lower costs.

For folks who even with those lower costs still can't afford coverage, we'd provide some subsidies. But here's what I want to emphasize is that even without the subsidies it's estimated by the Congressional Budget Office that the plan we put forward would lower the costs in the individual market for the average person who's just trying to buy health insurance and they don't -- they're not lucky enough to work for a big company, would lower their costs by between 14 and 20 percent.

So, Lamar, when you mentioned earlier that you said premiums go up -- that's just not the case, according to the Congressional Budget Office.

SENATOR ALEXANDER: Mr. President, if you're going to contradict me, I ought to have a chance to -- the Congressional Budget Office report says that premiums will rise in the individual market as a result of the Senate bill.

THE PRESIDENT: No, no, no, no -- let me -- and this is an example of where we've got to get our facts straight.

SENATOR ALEXANDER: That's my point.

THE PRESIDENT: Well, exactly. So let me respond to what you just said, Lamar, because it's not factually accurate. Here's what the Congressional Budget Office says. The costs for families for the same type of coverage as they're currently receiving would go down 14 to 20 percent. What the Congressional Budget Office says is, is that because now they've got a better deal because policies are cheaper, they may choose to buy better coverage than they have right now and that might be 10 to 13 percent more expensive than the bad insurance that they had previously. But they didn't say that the actual premiums would be going up. What they said was they'd be going down by 14 to 20 percent. And I promise you, I've gone through this carefully with the Congressional Budget Office. And I'll be happy to present this to the press and whoever is listening, because this is an important issue.

SENATOR ALEXANDER: Well, may I -- may I --

THE PRESIDENT: Let me just finish, Lamar. Now, the -- what we've done is we've tried to take every single cost containment idea that's out there. Every proposal that health care economists say will reduce health care costs, we've tried to adopt in the various proposals. There are some additional ideas that Republicans have presented that we think are interesting and we also tried to include. So, let me give you an example.

You mentioned the idea of buying across state lines, insurance. That's something that I've put in my proposal that's actually in the Senate proposal. I think that it shows some promise. You mentioned that as -- that Mike Enzi has previously said, that he's interested in small businesses being able to pool in the equivalent of some sort of exchange. So that's where there's some overlap.

But I just think it's very important to understand that what we've done is to try to take every single cost containment idea that's out there and try to adopt it in this bill. What I'd like to do is to see if we can proceed and have a very concrete conversation about what are the ideas that you guys have that you don't think are in our bill to contain costs. And what I want to do is to see if maybe we can adopt some of those or refine what we've already done in order to further reduce costs.

SENATOR ALEXANDER: Mr. President, I've had my time --

THE PRESIDENT: And what I'd like to do also is to make sure that you maybe suggest some of the ideas that are currently in the bill that you think are good, because, Lamar, in your opening introduction, what I saw was sort of a -- the usual critique of why you thought it was bad. But as I said, we've adopted a lot of the ideas that we've heard from your side of the aisle. So I hope maybe you could say, well, those are the ones that we think are good ideas; here are the things that we think are bad ideas, as opposed to just painting in broad brush. Go ahead.

SENATOR ALEXANDER: Mr. President, let me -- let me show some respect for my colleagues here. They're all here eager to speak, all sure they could do a better job than I could on any of these points. And what I would like to do is get back directly to you with why I believe -- with respect -- you're wrong about the bill. Your bill would increase premiums, I believe; you say it wouldn't. So rather than argue with you in public about it, I'd like to put my facts down, give them to you. Maybe other colleagues will say that. As far as Mike Enzi's proposal, he is ready to talk about it; others are.

THE PRESIDENT: Good.

SENATOR ALEXANDER: So I appreciate the opportunity that Mitch and John gave me to talk. You've made some interesting points, and why not let other members of Congress have a chance to talk.

THE PRESIDENT: I think it's a great idea. I'd like to get this issue settled about whether premiums are reduced before we leave today, because I'm pretty certain I'm not wrong. And you give us the information -- and we're going to be here all afternoon. I promise you we'll get this settled before the day is out. All right.

Mitch, who would you like to talk about cost?

SENATOR McCONNELL: Yes, Mr. President, since some liberties have been taken here, let me just make a quick observation. Then I'm going to call on Dr. Coburn to make our framing statement on the issue of cost containment.

One thing I think we need to be acutely aware of, ladies and gentlemen, we are here representing the American people. And Harry mentioned several polls. I think it is not irrelevant that the American people, if you average out all of the polls, are opposed to this bill by 55-37. And we know from a USA Today Gallup poll out this morning, they're opposed to using the reconciliation device, the short-circuit approach that Lamar referred to, that would end up with only bipartisan opposition by 52-39.

Now, I'd like to call on Dr. Tom Coburn -- he's been a practicing physician for many years -- to address the cost containment issue.

THE PRESIDENT: Tom.

SENATOR COBURN: Thank you. Well, Mr. President, thanks for having us do this. I think today is going to be enlightening. The first thing I would do is put out a caution to us, because what I see the Congress doing -- and what I saw this last year -- is us actually performing bad medicine. And that is that we get stuck in the idea of treating the symptom rather than treating the disease. And whether you go to Harvard or whether you go to Thomson Reuters, there are some facts we know about health care in America. And the facts we know is one out of every three dollars that gets spent doesn't help anybody get well and doesn't prevent anybody from getting sick.

The second thing we know is, from the Congressional Research Service, that most of the mal drivers today in health care come from government rules and regulations. The government now directs over 60 percent of the health care in this country. And if throwing money at it and creating new government programs could solve it, we wouldn't be sitting here today because we've done all that, it hasn't worked.

So what I thought we ought to do is maybe talk about why does it cost so much? Because the thing that keeps people from getting access to care in our country is cost. You mentioned Malia and Sasha. The fact is, is with young kids going to the ER, whether they have meningitis or asthma, they're going to get treated in this country. But they may get labeled with a preexisting illness after that, and that's another thing I'd be happy to talk about at a later time. But the fact is, is we know how to treat acute asthma. What we don't do a good job of is preventing children from getting acute asthma. We don't do the good job of prevention.

So when you break down the cost, what we know is 33 percent of the cost in health care shouldn't be there. And how do we go about doing that, and what are the components of that cost? And when you look at, when it's studied, and if you look at what Malcolm Sparrow from Harvard says -- he says 20 percent of the cost of federal government health care is fraud. That's his number.

If you look at Thomson Reuters -- when they look at all of this, they say at least 15 percent of government-run health care is fraud. Well, when you look at the total amount of health care that's government-run, you're talking $150 billion a year. So tomorrow, if we got together and fixed fraud, we could cut health care 7.5 percent tomorrow for people in this country. So what we ought to do is do the Willie Sutton thing; we ought to go for where the money is.

What's the other area? What we do know -- and I'm guilty of this; Dr. Barrasso is guilty of it; Dr. Boustany is guilty of it -- is a large portion of the tests we order every day aren't for patients, they're for doctors. And the reason they're there is because we are risk-averse to the tort system and extortion system that's out there today in health care. And there are a lot of ways to fix that, but I just went through last night -- if you add up what Thomson Reuters, which looked at all the studies that have been done and combined them in -- they say between $625 billion and $850 billion a year of health care dollars are wasted.

So it seems to me if cost is the number one thing that's keeping people from getting care, then the efforts of us as we go after cost ought to be to go to those areas where the cost is wasted. And there's a philosophical difference in how we do that. One wants more government-centered approach to that; I would personally prefer a more patient-centered, market-oriented approach to that. But nevertheless, there's where we can come together, just on those two areas, where we could cut costs 15 percent tomorrow. And that's for everybody in the country.

What would happen to access in this country if tomorrow everybody's health care costs went down 15 percent? Access would markedly increase.

So what I would hope we would do is that we would go back and concentrate on the areas that have the biggest pot of gold for us. And the biggest pot of gold is, is we don't incentivize prevention. We don't pay rewards for a great management of chronic disease. We have a system throughout the country where we're encouraging lawsuits that aren't productive for the country and what they actually do is cause the cost of health care to go through the roof.

We also know there's some other real things that we ought to address. There are conflict of interests within the medical field. There's nothing wrong with addressing those and taking those off. We know that we do not -- we absolutely do not incentivize prevention. And I'm not talking about creating walking paths -- I'm talking about paying people who actually do a good job to do prevention; talking about changing the school lunch programs where it meets the needs, nutritional needs, of Americans; changing the food stamp program where it incentivizes people to eat the right things, not the wrong things. We actually create more diabetes through the food stamp program and the school lunch program than probably any other thing because we're not feeding -- offering and incentivizing a great response.

So I think if -- I think it's great that we're coming together, but the goal is in, where's the cost excesses? And what I would hope we would do is we would look at that and say, how do we come together and actually achieve a reduction in the extortion that goes on in this country in terms of medical malpractice -- and there's lot of ways to do that without us mandating to the states. I know -- and some -- you have some of that in these new thoughts, in terms of incentivizing states to do that.

How do we do that in terms of creating an elimination of fraud? When you compare the private sector fraud rates, it's 1 percent, compared to Medicare and Medicaid. There's estimates that there's $15 billion worth of fraud in Medicaid a year in New York City alone. And we haven't attacked that. We haven't gone where the money is.

And my hope would be that we would look at where the money is, and if truly it's accurate -- and I don't know many people that will disagree that one in three dollars doesn't help somebody get well and doesn't prevent -- then we ought to be going for that one in three dollars. And we ought to do it not by creating a whole bunch of new government programs, but by creating an incentive to reward people.

In your new bill, you have good fraud programs, but you lack the biggest thing to do. The biggest thing on fraud is to have undercover patients so that people know we're checking on whether or not this is a legitimate bill. And you don't know who's an undercover patient and who's not, and all of a sudden you start changing your attitude of whether or not you're going to milk Medicare or you're going to milk Medicaid.

SENATOR REID: Mr. President, if I could just say, I'm not an expert on much but I am filibusters and we've got 40 members of Congress here.

THE PRESIDENT: Tom, you made some powerful points. You want to just wrap up real quick?

SENATOR COBURN: No, I'll just finish with that, is with one out of three dollars not helping everybody, we ought to go for where it is.

THE PRESIDENT: Well, Tom, I appreciate what you said. I think we're going to have Steny Hoyer go next. I just want to make this quick point. Every good idea that we've heard about reducing fraud and abuse in the Medicare and Medicaid system, we've adopted in our legislation. So that's an example of where we agree -- we want to eliminate fraud and abuse within the government systems.

Let's recognize, though, that those savings in the government systems, which will help taxpayers and allow us to do more, doesn't account for the rising costs in the private marketplace.

Now, the private marketplace, you mentioned the issue of medical malpractice and frivolous lawsuits, and as you indicated, these are areas where Secretary Sebelius has already begun to try to give states some incentives to do that.

On the prevention side, there's a whole host of provisions inside the legislation that's been passed by the House and the Senate, and I think Steny will talk about it.

So we've identified some areas we agree on and then the question just is, does that help the average family in the individual market who potentially can get cost? But, Steny, why don't you --

SENATOR COBURN: Well, let me just respond to one thing. You get cost-shifted every penny that gets wasted on Medicare, and that gets cost-shifted to the private sector. So if in fact we're wasting it in the public sector --

THE PRESIDENT: It would help.

SENATOR COBURN: -- we're shifting it to the private sector.

THE PRESIDENT: You and I agree on this. Steny.

CONGRESSMAN HOYER: Mr. President, thank you very much. A quote I will use is, we should have available and affordable health care to every American citizen, to every family. I suppose there are a whole lot of every Americans and American families listening to us today and watching us, and they're hoping that we're all sitting around here talking about them, not about us. That's the message they're sending to all of us, and they're absolutely correct. And we believe that we have been addressing them and trying to get some of these stories that all of us hear to a place where they won't be so tragic for individuals and for families.

Every one of us has a story. I had a message on my telephone answering machine just a little while ago, a couple of weeks ago. A woman that I know well called me up. She said, "Steny, I was just diagnosed with a tumor, and I've got to be operated on. I don't have insurance. My husband makes $28,000; I work part-time and make about $5,000." She says, "We're making too much money for Medicaid. And we're going to go to the University of Maryland Hospital. They want 50 percent down of a $25,000 bill." She doesn't have that. And we're working on that, trying to get her some additional help. Hopefully, we can.

I had a small business in my district, like all of you, who last year paid $1,100 -- a couple, healthy, paid $1,100. Their bill is going to go up to $1,830 -- $1,830 next year. That's a 67 percent increase. They called me up and said, "We don't know that we can afford to keep our small business going." So all of us -- John McCain, my good friend, that was your quote, as you probably recall, in the debate that you had with President Obama. And the good thing was that both of you in effect said the same thing, that we need to get to the objective of covering all Americans and having them have access to affordable health care. We agree with that. I think probably everyone around this table agrees to it. So what we're going to talk about is the how.

Cost containment is clearly one of those issues that we need to deal with -- cost containment for that small business that is having a 67 percent increase; cost containment for that woman who can't afford insurance but has a health care issue that she can't avoid -- it's not optional for her. So we have to deal with that.

Many in my caucus believe that one way of doing that is to increase competition, to have an open, free market that is transparent. I think all of us around this table agree that a free market does that -- an open market, a transparent market -- where people can compare prices and compare what they're going to get. And that's what we've tried to do in both these bills. We did it a little differently, but that's what we tried to do. We hope we can get agreement on doing that. An open, transparent market will bring down cost, we believe.

And in addition to that, Senator Coburn, we certainly agree with you that one in three dollars is not being spent as effectively as it should be. And we have a lot of provisions in both bills, as you well know, that try to get us to a place where administrative costs, health information technology, so many other things are done to wring the costs out. And in addition, you speak eloquently and correctly about wringing fraud, waste, and abuse out of this system. I know you're happy to have seen in our bill -- in the House bill and in the Senate bill -- very substantial investment in doing just what you suggest.

So I think we have agreement on conflict of interest in delivery of medicine as well. We've dealt that -- with that in our bill; we've dealt with it previously, as you well know. We've put incentives for prevention in here, which you mentioned. We absolutely agree on that. We think this bill does that. Now, you may have a better way of doing it. We need to talk about how that better way is. But we certainly have addressed the issue of making sure that we have wellness as a focus, not sickness. We have to deal with sickness, but what we really want is wellness. So we've worked very hard on that in this bill.

You mentioned the school lunch and food stamp programs. I'm sure we can get there, too, an agreement. We certainly agree with the premise you stated. We'll figure out a way and means to get there.

What have we done? We've stopped premium discrimination. That clearly ups cost. If you're in a small market, as the President pointed out, you're going to pay a higher price. We don't do that. Why? Because we're in a big market. We have a competitive edge. And the insurance company doesn't have preexisting conditions for us, they just take us as a group. That's what we're trying to get for every American; that they have access to a large group. Whether they're an individual -- this woman who has the tumor -- or whether they're a small business, they can get into a large group. We're trying to do that.

We want to go after fraud, waste, and abuse -- I'll reiterate that -- a transparent market; stop premium discrimination; and make sure that people with a preexisting condition -- as none of us have a problem with, but a lot of people do have -- because we're in a big group -- that are in a large group and would prohibit that. You agree with that rhetorically. Now, it's not in your legislation, but you certainly agree with capping out-of-pocket expenses on an annual basis or lifetime basis, that you don't think that's right that people ought to be -- continue to be covered.

We believe there needs to be better coordination of care. You're a doctor. You have a number of doctors in the room. We believe that there ought to be a way that we can incentivize the coordination of care. We also believe that there should be incentives to provide care based upon best practices, not based upon simply procedures being reimbursed. I think we all agree on that. You're shaking your head in agreement, and I know we all agree on that. And you're right, we have to get there.

But I would suggest to you that one of the things that many in my caucus felt very strongly about in terms of competition was having a public option. Now, there was real disagreement on that issue, but many in my caucus thought that would open up competition, would provide for access for every citizen if they didn't have access in some other way.

Now, Senator Baucus is going to speak more specifically in terms of our cost containment, but doughnut hole certainly is one of the issues that we need to deal with. The doughnut hole we deal with in our legislation in the House. We would hope that it is in legislation that we agree upon, because seniors are confronted with extraordinary out-of-pocket costs for a very significant portion of the cost of their prescription drugs. And seniors are concerned about that. We take care of that in our bill.

But I think what the American public that's listening and watching expects us to do, Mr. President, is what you're doing -- bringing us together, coming to agreement to make sure that we get to a place where we reach the objective that President Obama and candidate McCain expressed as the objective on behalf of the American people.

Thank you, Mr. President.

THE PRESIDENT: Before you go, Max, I just want to ask, whether it's you, Tom, or anybody else on the Republican side, and maybe some of the House members might be interested -- Senator Coburn mentioned some cost containment issues where it sounds like we agree: fraud and abuse. We agree. It sounds like you have maybe one other idea that you don't think is in our proposal, but the idea of undercover patients, but that's something that I'd be very interested in exploring. I don't think conceptually that would be a problem.

The issue of prevention, and that includes, by the way, things like how our kids are eating and getting exercise. And I'm proud of the First Lady for working to see what she can do on that front. And that's -- there are some provisions in the legislation that's already been passed through the Senate and the House that directly relate to this that I think you'd be supportive of.

The issue of defensive medicine, as I indicated, Secretary Sebelius is working on this, but I think that there are things that we could do at the state level to help foster innovation and eliminate some of the concerns that you've got.

I would be interested in hearing from any of our Republican colleagues what objections they have to what we consider one of the biggest ways of driving down costs, and that's what Steny just referred to, which is allowing individuals and small businesses who are currently trapped in a very expensive market -- essentially they're having to be out there fending for themselves -- to be able to buy into essentially a large group, to become part of a large group just like all of us as government employees are part of a large group, so that they have more negotiating power with the insurance companies -- which I think we all agree would drive down costs. If you've got some bigger purchasing power, insurance companies want more customers, they would drive down those costs.

I know some of you have agreed to this as a concept in the past. And so my question is, is there something in terms of the way the House and Senate bills have been structured that leads you to be concerned or want to not move forward on that approach?

John.

CONGRESSMAN BOEHNER: Well, Mr. President, I'd like to yield to Mr. Kline from Minnesota, who will talk about the small business health plans in terms of how we would propose to do this.

CONGRESSMAN KLINE: Thank you, Leader. Thank you, Mr. President. I think that Senator Alexander framed our overall position very well when he said that we're looking at thousands of pages of legislation and we believe a better approach is to go step by step to address these issues of cost. We certainly agree that you get better economies of scale if you can come together.

We have proposed in both the House and the Senate in fact for a number of years that small businesses be able to band together in small business health plans or association health plans.

We all know, and I've heard everybody say here, that small businesses are the engine that drives our economy. We also know that about half of the uninsured either work for small businesses or depend upon somebody who does. And so we believe that we ought to address that issue by allowing these small businesses to band together in the same way that I think, Mr. President, you mentioned, large companies do -- I mean, really the same way -- so that they get all the advantages of, if they self-insure, being able to avoid the 50 state mandates; being able to lower their administrative costs because they're not having to deal with that.

And it will lower the cost of premiums for these small businesses and allow them to insure more people, and to keep people that are already insured on the books, because we all know -- we all know stories like we've heard here of small businesses that are saying, I can no longer provide insurance for my employees. Small businesses have been asking for this for years. It's not a new idea. They've been asking for it for years. And we think it's a far better way to get these economies of scale than the exchange thing that's in the huge -- that's in the huge bill, that this will actually allow businesses to be able to lower their cost exactly the same way that large businesses do.

THE PRESIDENT: Okay. Max is going to go, and then I'll go to you, Rob.

Max, do you want to address this issue of how we can allow people to buy into large groups, how the Senate bill accomplishes it, and I don't know if you want to remark on what John just said.

SENATOR BAUCUS: Sure. Absolutely, though I'd first like to say something that just strikes me just in spades. Frankly, we all have studied this issue a lot -- health care reform. We basically know what the problems are, all of us. We basically know that the current system is unsustainable. We are actually quite close. There's not a lot of difference -- close in the sense that, without being corny or dramatic about this, if the American people want us to do something basically reasonable, it doesn't have to be one congressman, one senator's provision, but basically reasonable -- we are on the verge and the cusp with not too much effort to try to bridge a lot of gaps here because the gaps in my judgment are not that great.

Let's take the list, for example, that Lamar mentioned. As you've said, Mr. President, we are basically including most of those provisions, if not all, in our joint legislation. Selling insurance across state lines, for example -- we allow for that not exactly in the way that some would, but assure it with compacts and once state exchanges are up people will be able to buy and sell insurance across state lines and achieve that competition.

In addition, you mentioned lawsuits. Secretary Sebelius is working to try and find ways to encourage states to settle, resolve issues before they become big, bad lawsuits. After that, Lamar says we should find ways for states to be able to lower their costs, so we do that -- we let states opt out. They can do what they want to do -- and Senator Wyden also has a proposal; Senator Cantwell has a proposal. We give a lot of flexibility in that regard.

Expanding HSAs -- that's fine, there's nothing wrong with HSAs -- but we also have to have products for poorer people, lower-income people. HSAs work pretty well if you have middle or high income. Preexisting conditions -- clearly, we all agree on that. We have those provisions in our bill.

With respect to small business, we're not that far apart. Some suggest association health plans where small business people can band together in an association, pool, and get better insurance. That's fine. What we provide for in our legislation is something similar -- it's called the SHOP Act. Various senators, bipartisan, have worked on this, and basically it allows -- sets up a small business arrangement in exchanges. Small business participates in their own exchange and gets the advantage of all the pooling, and then they can do what federal employees do -- they can shop and compare and to get the best deal. And I would guess that most small businessmen would like to do that.

I might add that we're also providing tax incentives, tax credits, for businesses and small business that wants to purchase health insurance for its employees. And it's pretty good -- it's 35 percent tax credit first couple years, and then once the exchange is up it's 50 percent.

So the main point is we're not really that far apart. We're trying to find ways for small business to pool, small business to take advantage of competition, they shop and compare; and also some tax provisions that enable -- to encourage businesses to get health insurance.

So I might say, too, that if you look at all the provisions that Steny outlined, may help them, we agree. We agree on prevention. There are major prevention provisions in our legislation, as Senator Coburn mentioned. We also agree on trying to change the way we reimburse docs. I think the biggest game-changer here, frankly, is how we reimburse our doctors -- based more on quality rather than quantity. I know Tom Coburn really agrees with that as a doctor. Most doctors do.

It's another example -- we really are close. And I think that once we keep pushing on those areas that we're close, this will make a difference. Exchanges, as you mentioned, Mr. President, it's a Republican idea. It works. What I like about exchanges -- it's like Orbitz, it's like Expedia. You go to Orbitz or Expedia to buy a airline ticket, you compare it to get the best price -- that's basically what this is. It's an exchange, you go to the exchange and shop around, and you get your best price. That's going to help, in my judgment.

I also think that we should -- hospitals should publish the cost of their basic procedures, what's an appendectomy or a colonoscopy or whatnot, to enable consumers to shop around, where's the best price. We all know that there's a wide disparity in what hospitals charge for the same procedures. I think the disinfectant of sunshine helps -- it helps consumers, it helps our people.

And fraud and waste, we talked about that. We have major provisions in our bill to reduce fraud and waste. Mr. President, I compliment you because in your proposal you go even farther.

THE PRESIDENT: We took some additional ideas from folks like Congressman Roskam.

SENATOR BAUCUS: They're great ideas and we addressed unnecessary readmission rates in hospitals, et cetera. The main point is we basically agree. There's not a lot of difference here. And I'd just like us to kind of just -- there's opportunity for us to work out some of these differences.

THE PRESIDENT: Mitch, is there somebody --

SENATOR McCONNELL: Yes, Mr. President. I'm going to yield to John here.

THE PRESIDENT: John.

CONGRESSMAN BOEHNER: I'd like to yield to Dave Camp to continue this conversation about cost containment.

THE PRESIDENT: Dave.

CONGRESSMAN CAMP: Thank you, Leader Boehner, and thank you, Mr. President, for the invitation today. I think as we focus this part of the conversation on cost, a lot of Americans say to me, if you're really interested in controlling costs, well, maybe you shouldn't be spending a trillion dollars on health care as the Senate and House bills do. Also, cutting Medicare benefits by a half a trillion dollars to fund this new entitlement is I think a step in the wrong direction, and many Americans do as well.

The non-partisan actuaries at the Center for Medicare and Medicaid Services say on page four of their letter on the Senate-passed bill that it would bend the cost curve in the wrong direction by about a quarter of a trillion dollars. They specifically say the health expenditures under the Senate bill would increase by $222 billion.

A key way of reducing costs that's missing from the House and Senate bills is responsible lawsuit reform that guarantees injured parties, much like our two largest states have adopted -- Texas and California -- access to all economic damages, such as future medical care. If they need nursing care in the future, they'll get it; lost wages; reasonable awards for punitive damages and pain and suffering.

On page four of its letter to Senator Hatch, CBO found that this common-sense reform would reduce the federal deficit by more than $50 billion. Now, that's just on the government, because as we know CBO doesn't score the private side on this. And PricewaterhouseCoopers has done a study that said savings could be as high as $239 billion if this reform were adopted. There are two features in the House and Senate bills that move in the wrong direction. Both bills feature restrictions on health spending accounts where people can save tax-free for their health care, as well as FSAs, flexible-spending accounts.

These changes are such as they ban the use of over-the-counter medication out of both of these plans. There's a new cap on FSA contributions of $2,500. That text -- that language is found on page 1,959 of the Senate bill. And that will hinder the growth of those plans. And -- which encourage Americans to consider quality and price when they purchase health care. And let me just say, under HSA plans, premiums increased just 1.3 percent for individuals in 2007 to 2008, and declined 5.4 percent for families in that same period, and when people switch from a PPO -- a preferred provider organization -- to a health savings account, their premiums decline by an average of $3,800.

Now, another concern I have is the Senate bill, which on page 982 creates an unelected board charged with recommending even more Medicare reductions. And if Congress doesn't accept these recommendations, they have to find other Medicare spending to cut instead. And that gives, I think, too much authority to unelected bureaucrats rather than to elected representatives of the people and the power to decide whether to cut Medicare and by how much.

Now, holding down health care costs for the government is important. But I think it's also important to hold down costs for families and employees.

THE PRESIDENT: Dave, I don't mean to interrupt. But the -- we're going to have the whole section talking about deficits. And we can talk about the changes in Medicare. We were trying to focus on costs related to lowering families'. And the only concern I've got is -- look, if every speaker at least on one side is going through every provision and saying what they don't like, it's going to be hard for us to see if we can arrive at some agreements on things that we all agree on.

So I don't want to try to cut you off. Please finish up --

CONGRESSMAN CAMP: Well, I'm almost -- I'm almost done.

THE PRESIDENT: -- but I just want to kind of point out that --

CONGRESSMAN CAMP: I'm almost done. I do want to say on this issue on premiums, CBO, in their letter, on page four, does say that the estimated average premium per person for non-group policies would increase by 10 to 13 percent.

THE PRESIDENT: This is the discussion that I just had to -- about Lamar. And --

CONGRESSMAN CAMP: Yes, they do say that. And they do say that the value of the benefit is higher, and that is why it goes up.

THE PRESIDENT: Right.

CONGRESSMAN CAMP: But the reason the value of the benefit is higher is because of the mandates contained in the legislation. And this is one of our big concerns with a lot of the issues that have been raised. Yes, we have similarities. But when all of this is structured around a government-centered exchange that sets the standard for these policies, states can't get out of these requirements unless they seek a waiver from the Secretary. That kind of approach raises costs. And so both of your comments were correct that costs do go up and it's because they have a richer benefit, but the reason it's richer is because of the mandates contained in these very large bills.

THE PRESIDENT: Okay, I'm going to let -- Rob, feel free to respond to anything that Dave indicated or to any of the other issues that have been discussed.

CONGRESSMAN ANDREWS: Thank you, Mr. President. I want to thank my friend Tom Coburn, and John Kline, for the spirit of conversation which they offered and try to carry that forward a little bit. The President asked at the beginning of this what ideas do we share about cutting costs. And Tom, I think you had some very good ones. Fraud, that the President has a proposal that says we should have a database, if you've committed fraud against Medicare once, you can't make a contract again. Wellness, there's a lot of good ideas in the bills. Junk lawsuits, I think that there's -- what Secretary Sebelius is doing is very important in curtailing that.

And then the President asked the question about whether we can find agreement on pooling the purchasing power of small businesses and individuals so they can get the same deal that big companies and members of Congress get. And my friend John Kline talked about the association health plan proposal. Respectfully, John, I think that what you're talking about with association health plans and what we're talking about with exchanges is a semantic difference. It's a matter of pooling the purchasing power of small businesses and individuals to get a better deal.

But there is one substantive difference that I want to ask about, because we are concerned about it. If we can resolve this, I think we could agree. Let's take the case of a woman who has a baby by C-section, and she lives in one of the many states that say you can't be kicked out of the hospital after you've had a C-section until your doctor thinks it's time for you and the baby to go home.

Now, under the association health plan proposal, that rule wouldn't apply to that lady and her baby; that there would be no protection of her in that situation. We think, John, that there shouldn't be necessarily 51 different rules for each state, but there ought to be some minimum federal standards in these exchange to protect people in cases like that.

So I think the issue is, if we could find a way to agree, that in a case like this where a lady has a baby by C-section and has the ability to not have the insurance company get between her and her doctor, so the doctor makes the decision about when they go home, we could figure this out. And if you --

CONGRESSMAN KLINE: If I could just respond to that, my friend knows very well that there are large companies today who operate under what I'm proposing for association health plans. They get a waiver, they don't have to comply with the individual mandates of all 50 states, and I don't hear people complaining about the insurance policies that they're getting from their big companies. In fact --

CONGRESSMAN ANDREWS: We do.

CONGRESSMAN KLINE: -- many of those now would fall into what we've been calling Cadillac plans because they provide very excellent service. So I think that, frankly, is a red herring and I think that we can -- that you're not going to have adequate coverage if you have association health plan that's working under the same rules of a large company.

CONGRESSMAN ANDREWS: But, John, would you favor a standard that says they have to do something like that or would you just leave it up to the insurance company?

CONGRESSMAN KLINE: I would say that we put the association health plans in exactly the same position that large companies are today with exactly the same rules under --

CONGRESSMAN ANDREWS: See, we don't -- I mean, with all respect, we don't agree with that. We don't agree with the idea that the insurance company should get to make that kind of decision about whether the lady goes home Thursday or Sunday. Now, I don't think that's intrusive, I think that makes common sense, but if we could find a way to bridge that gap -- and I think we could -- then I think the AHPs that you support aren't all that different than the exchanges that we do and I would think that would be a common ground.

THE PRESIDENT: Good. This has been a useful conversation. Paul Ryan wants to make a comment but --

SENATOR McCONNELL: Mr. President, could I just interject one quick point here very quick, just in terms of trying to keep everything fair, which I know you want to do. To this point, the Republicans have used 24 minutes, the Democrats 52 minutes. Let's try to have as much balance as we can.

CONGRESSMAN RYAN: I think the Republican leaders are controlling the time for the Republicans, if I'm not mistaken -- is that right?

THE PRESIDENT: I don't think that's quite right, but I'm just going back and forth here, Mitch. I think we're just trying to go back and forth, but that's okay. Paul, I was about to call on you, if that's all right. Go ahead.

CONGRESSMAN RYAN: All right. Rob, here's basically what we're looking at. The difference is this: We don't think all the answers lie in Washington regulating all of this. So the problem with the approach we're seeing that you're offering, which I do believe, Senator, is very different than what we're saying, is we don't want to have -- sit in Washington and mandate all of these things. So what you're doing is you're defining exactly what kind of health insurance people can have; you're mandating them to buy this kind of health insurance.

And so we simply say, look, if the National Restaurant Association or the National Federation of Independent Business, on behalf of their members, wants to set up an association health plan, we think they'll probably do a good job on behalf of their members. Let them decide to do that instead of restricting insurance competition by federalizing the regulation of insurance, and by mandating exactly how it will work, you make it more expensive and you reduce the competition among insurers for people's business. We want to decentralize the system, give more power to small businesses, more power to individuals, and make insurers compete more. But if you federalize it and standardize it and mandate it, you do not achieve that. And that's the big difference we have.

CONGRESSMAN CAMP: Paul, would you yield -- Mr. President, can I ask him to yield?

THE PRESIDENT: We're not in a formal hearing here -- (laughter) -- so go ahead.

CONGRESSMAN CAMP: Paul, I read your -- and I thought one of the things that you said is that there should be some minimum consumer protections in the exchanges that you've proposed. Did I get that wrong?

CONGRESSMAN RYAN: And there are in every state. And so what we're simply saying is, look, lots of us have offered lots of different ideas. We've got dozens of Republican ideas offered in the House in bills, in the Senate, and many of us look at the point of the fact that the states -- do we distrust our governors, do we distrust our state legislatures, do we distrust all the state insurance -- okay, some of you may do that. (Laughter.)

CONGRESSMAN CAMP: Depends on who it is, Paul.

CONGRESSMAN RYAN: But should we regulate all this? Should people in Washington decide exactly how this works and what you can and cannot buy? It's just a difference in philosophy --

THE PRESIDENT: No, no, no, look -- this is an important point. We've got a couple other people who want to speak. We've gone about 55 minutes on this section. We're running over because we went long on the opening statements. And you're right, there was an imbalance on the opening statements because I'm the President and so I made -- (laughter) -- I didn't count my time in terms of dividing it evenly. In this section, Mitch, we've gone back and forth pretty well.

SENATOR REID: Senator Schumer for the Senate --

THE PRESIDENT: I know Senator Schumer wants to speak, and I know that Jim Clyburn wants to say something very quickly and --

SENATOR McCONNELL: And Jon Kyl would like to as well.

THE PRESIDENT: And Jon. What I want to do, though, is just focus in on this philosophical debate. This is a legitimate debate. And it actually speaks to the point that Congressman Camp was making earlier about what's happening in the exchanges.

When I was young, just got out of college, I had to buy auto insurance. I had a beat-up old car. And I won't name the name of the insurance company, but there was a company -- let's call it Acme Insurance in Illinois. And I was paying my premiums every month. After about six months I got rear-ended and I called up Acme and said, I'd like to see if I can get my car repaired, and they laughed at me over the phone because really this was set up not to actually provide insurance; what it was set up was to meet the legal requirements. But it really wasn't serious insurance.

Now, it's one thing if you've got an old beat-up car that you can't get fixed. It's another thing if your kid is sick, or you've got breast cancer.

So the general idea has been here that we should set up some minimum standards within the exchange, that a plan that people are buying into, whether it's a small business or an individual, should be at least solid enough that if your kid got sick, they're actually going to be treated; that if something happened that you weren't left with a huge bunch of out-of-pocket costs. It is true that you can always get cheaper insurance if it has really high deductibles or really high co-payments or doesn't cover as many things. And so there has to be a balance that's struck there.

I just want to point out, though, that the principle of pooling is at the center of both the Senate and the House bill. And the reason I'm pointing this out is because there was a lot of talk about government takeover of health care, and the implication, I think, was that everybody was going to have to sign up for a government health care plan. Now, that's not the issue. The issue here, which we've had an honest disagreement about, is how much should government set a baseline versus just letting people decide that, I can't really get decent insurance but maybe this is better than nothing.

And that's a legitimate argument. I don't disagree with that. But I just wanted to point out that when we start talking about how much government involvement is at issue here, it's not because the House or the Senate bills are a government takeover of health care; it is that the House and the Senate bills put in place some regulations that restrict how insurance companies operate, and if there's an exchange or a pool that's set up, that there's a baseline sort of minimum requirements that were expected. And I understand that there may be some philosophical differences on the other side of the aisle about that issue.

Chuck, go ahead.

SENATOR SCHUMER: Thank you, Mr. President. And I thank you. I think this has been a constructive dialogue.

I was glad to hear my friend Tom Coburn's remarks. I think we agree with most of them, and particularly the point that about a third of all of the spending that's done in Medicare, Medicaid -- I would imagine a lot of it is in the private sector as well -- doesn't go to really good health care, it goes to other things.

And the real nub of this is how do we wring that waste out, that fraud, abuse, duplication, without interfering with the good care that we want every person on Medicare, Medicaid, and private insurance to get. The average citizen knows this happens. How many times, when you look at your medical bill, you've undergone a minor procedure, and you see Dr. Smith, $4,000, and you sort of vaguely remember he just waved and poked his head in the door?

Or how about -- probably it's happening right now -- there's some salesman talking to some doctor and saying, hey, my company will finance a machine for you for a million dollars, so you don't have to pay for it, you can gradually pay it. We'll show you how to fill it up all the time and you'll increase your income by $200,000. And there's another machine three blocks away that's already working and available.

So these are the things we have to go after. And Tom, I thought your suggestion of undercover patients -- and I tried to check here, I don't think we do it now -- is a great idea, and it's one that we can come together on. I think there are other things that we can come together on.

Senator Cantwell put a provision in the Senate bill that said we ought to reward doctors for doing quality, not quantity, so that doctors -- and they're a small number of doctors that go on, these Gawande's study showed, -- thing in the New Yorker that I think we've all read -- that a small number of people who are just trying to maximize their income throw the whole system off. It threw the whole city of McAllen, Texas, off while El Paso had much lower rates.

Maria Cantwell has a provision in there which I would think you folks could agree on, that says that we ought to reward doctors for the quality, not the quantity -- not the number of times they've put someone through a machine, but how good the care is. There's a provision in there Senator Rockefeller authored, it comes in the insurance part, that says 80 to 85 percent of what insurance companies put forward should go to the -- get money in for -- should go to the patient.

So I think we can do all of these things. But it does -- but if we're going to eliminate the waste, fraud and abuse in Medicare, it does mean we're going to cut some of that out. And when I hear my friend Dave Camp say you cannot cut money out of Medicare, well, we don't want to cut the good stuff that you point out or not -- or to then add the prevention. But if we're going to -- if one-third -- if what Senator Coburn says, that one-third of Medicare doesn't go to patient care, you can't just get up there and say, we don't want to cut anything out of Medicare. We want to cut the bad stuff and keep the good stuff.

And I think that's where we can find common ground on some of the things you've mentioned, some of the things that are in our bill. And I hope, at least in this area, we can move forward that way, because, frankly, the Republican Party has always stood for getting rid of the waste, fraud, and abuse in the system. In '97, it was the centerpiece of your program, and all of a sudden this year we're hearing, don't do any of that. That's something that I think we can come together on. I thank you.

SENATOR McCONNELL: Mr. President, can we turn to Jon Kyl. I'm sorry --

THE PRESIDENT: Sure. I'm sorry, you had Jon. We're going to go to Jon. And then we're going to go to Jim Clyburn. And then I think we're going to take a break, because we've run out of time.

So, Jon.

SENATOR KYL: Thank you, Mr. President. I think you framed the issue very well just a moment ago, because there are some fundamental differences between us here that we cannot paper over. And, Mr. President, when you said that this is a philosophical debate and it's a legitimate debate, I agree with that. We do not agree about the fundamental question of who should be mostly in charge. And you identified this question as central: Do you trust the states, or do you trust Washington? Do you trust patients and doctors making the decision, or do you trust Washington?

Now, there is a mix of both, of course, in health care. But there is a big difference between our approaches. And there is so much in the bills that you've supported that puts control in Washington that we have a very difficult time supporting those provisions. And it's not a matter of just saying we all agree on the goal of reducing waste, fraud, and abuse. We all do, of course. It's how you do it.

Now, let me give you a couple of examples. Dave Camp, I think, pointed out the answer to the dispute that you and Lamar Alexander had a moment ago, and he was exactly right. Let me quote from the Congressional Budget Office letter -- this is from Doug Elmendorf to Evan Bayh, November 30th, 2009: "CBO and Joint Tax Committee estimate that the average premium per person covered, including dependentsm for new non-group policies, would be about 10 percent to 13 percent higher in 2016 than the average premium for non-group coverage in the same year under current law." Oliver Wyman, a very respected third-party group says it's even more -- about 54 percent; in my state of Arizona, 72 percent increase. Why is it so? For a variety of reasons, but one of which both you and Dave Camp agreed on. It is a richer benefit. How did it get that way? Because the federal government would mandate it under your legislation in the insurance exchanges. And as a result, there would be a higher cost. How does this happen?

There is an actuarial requirement of 60 percent actuarial value in the exchange for the least costly plan. But the average in the country today of a high deductible plan is 48 percent. The range today is 40 to 80 percent, and the average is between 55 and 60. So what the government is doing here is saying, we're going to mandate that the insurance cover more things than it does right now, and therefore the cost is going to go up.

Second example, you say, how can we help small businesses? Well, we know one way you don't help small businesses is by raising the payroll -- the Medicare payroll tax on them, which is what this legislation does. Besides that, it's a job killer. Look at the taxes on beneficiaries as well -- this is a third example. You don't cut costs when you raise taxes on medical devices that help us, when you raise taxes on pharmaceutical products, when you raise taxes on the insurance premiums themselves. "These fees on insurers, medical devices, and pharmaceuticals would increase costs for the affected firms, which would be passed on to purchasers and would ultimately raise insurance premiums by a corresponding amount" -- Congressional Budget Office.

So when you raise these taxes in all of the different fees that are in this legislation, it inevitably increases the costs on the consumer. And why do you have to raise all of this money? Because of the expenses of the legislation that underlie all of this. That's why Republicans would rather start not by having to raise a lot of money in order to pay the high cost of this bill, but to start a piece at a time, directing solutions to specific problems. That way, you don't incur all of the costs up front, which require you to raise the taxes.

The last quick point, one of the worst things about this is for people that have catastrophic medical expenses today after you've spent 7.5 percent of your adjusted gross income, you can deduct that. This bill would raise that to 10 percent. Who does that hurt? The very people you promised, Mr. President, that you wouldn't allow taxes to be raised on -- average age, 45; average income, $69,000. These are not wealthy people. It's just another example of why because the bill has to raise so much money, it ends up hurting the very people that we want to help.

THE PRESIDENT: Okay, Jon. I'm going to go to you, Jim, but I -- since as has tended to happen here, we end up talking about criticisms of the existing bill as opposed to where we might find agreement, I feel obliged just to go through a couple of the points that you raised.

Just to go back to the original argument that Lamar and I had and we've now chased around for quite some time. Look, if I'm a self-employed person who right now can't get coverage or can only buy the equivalent of Acme insurance that I had for my car -- so I have some sort of high-deductible plan. It's basically not health insurance; it's house insurance. I'm going to -- I'm buying that to protect me from some catastrophic situation; otherwise, I'm just paying out of pocket. I don't go to the doctor. I don't get preventive care. There are a whole bunch of things I just do without. But if I get hit by a truck, maybe I don't go bankrupt. All right, so that's what I'm purchasing right now.

What the Congressional Budget Office is saying is, is that if I now have the opportunity to actually buy a decent package inside the exchange that costs me about 10 to 13 percent more but is actually real insurance, then there are going to be a bunch of people who take advantage of that. So, yes, I'm paying 10 to 13 percent more, because instead of buying an apple, I'm getting an orange. They're two different things.

Now, you can still -- you still have an option of -- no, no, let me finish. The way that this bill is structured uses a high-cost pool, a catastrophic pool, for people who can't afford to buy that better insurance, but overall for a basic package -- which, by the way, is a lot less generous than we give ourselves in Congress. So I'm amused when people say, let people have this not-so-good plan, let them have a high-deductible. But there would be a riot in Congress if we suddenly said, let's have Congress have a high-deductible plan, because we all think it's pretty important to provide coverage for our families. And the federal health insurance program has a minimum benefit that all of us take advantage of. And I haven't seen any Republicans -- or Democrats -- in Congress suddenly say, "You know what, we should have more choices and not have to have this minimum benefit."

So what we're basically saying is we're going to do the same thing for these other folks that we do for ourselves -- on the taxpayers' dime, by the way.

Now, there is a legitimate philosophical difference around that, but I think it's just very important for us to remember that saying there's a baseline of coverage that people should be able to get if they're participating in this big pool is not some radical idea. And it's an idea that a lot of states -- we were talking earlier about what states do -- a lot of states already do it.

This, by the way, goes to the other difference that we have when it comes to interstate purchase of insurance. Actually, this is a Republican idea, been championed by the Republicans. We actually agree with the idea that maybe if you get more regional markets and national markets, as opposed to just state-by-state markets, you might get more choice and competition. People would be able to say, gosh, there's a great insurance company in Nevada and I live in New York and maybe I can purchase it. That's actually something that we find attractive.

So do you guys. But again, the one difference, as I understand it, and the reason you're not supporting the approach that we take, is what we say is there should be sort of a minimum baseline benefit, because if not, what ends up happening is you get a company set up in Nevada -- let's assume there were no rules there, there are no protections for the woman who's got breast cancer; they go into New York, they offer pretty cheap insurance to everybody who's healthy; they don't offer the same insurance to people who aren't so healthy or have preexisting conditions. They drain from New York all the healthy people who are getting cheaper rates, but now suddenly everybody left in New York who doesn't qualify for that cheaper plan is in a pool that's sicker, older, and their premiums go up.

So what we've said is, well, if we can set a baseline, then you can have interstate competition, but it's not a race to the bottom; rather everybody has got some basic care.

Now, these are legitimate arguments to have. But I just want to point out that this issue of government regulation, which we're going to also be talking about with respect to insurance, is very different than the way this has been framed during the course of the debate over the last year, which is government takeover of insurance. This is not a government takeover of insurance. What it is, is saying let's set up some baselines and then use market principles, the private sector and pooling in order to make sure that people get a better deal.

So, Jim. And then what we're going to do is we're just going to move on to the next topic. But anybody who wants to pick up on what we've just talked about obviously can return to that as well.

CONGRESSMAN CLYBURN: Thank you very much, Mr. President. And, Mr. President, leaders, and members of the Congress, there are two cost containment issues that I think have not been sufficiently vetted here today. Let me set this up by sharing with you a conversation I had on -- yesterday with the administrators of the Dillon -- or McCloud Health Care Center in Dillon, South Carolina, a little town, Mr. President, you've become quite familiar with.

They told me that their emergency room activities have doubled over the past several years. They were looking for some assistance to expand the size of that emergency room. When I began to question them as to why, in this small county, not in my district, they have had such a doubling, what it turns out is that they told me that 31 percent of the people that they treat in that emergency room are not there for emergencies; they are there for primary care.

Now, they said to me that some of these people do not have health insurance, but many of them do have health insurance but they cannot afford the $1,500 to $2,000 deductibles that they would have to pay if they were to go to a private primary care provider. So they're now treating people who have got employer-based health care that they cannot use -- they are holding out for some catastrophic event. But they need some assistance.

Now, I think that no matter what kind of plan you develop, there will be many people left uncovered, and we need a safety net for those people. I believe that the one way to provide that safety net and to take care of all of those people who may be uncovered and those people who have $2,000 deductibles with primary care is for a significant expansion of community health centers. And we have not spoken about that here today, but I know that your proposal, Mr. President, I know that both the House and Senate plans have that in them. And I do believe that that is very, very important. We have more than a 40-year experience with these health care centers, and I do believe that no matter what we do there ought to be a significant expansion of those health care centers.

Secondly, Mr. President, a lot of other things have been said about what I have on this paper, but one other thing I would like to mention, and it has to do with people who really cannot navigate the system, people who work very hard, they know what they need for themselves -- but I was reminded of that when we talked about putting together restaurant owners who will design plans for their members.

I would hope that when we start designing plans for the members of small businesses let's keep in mind that the employees of those small businesses are not negotiating these plans. They are at the mercy of the small business owners. And the question is whether or not the plans are sufficient that they will not fall into the same category that these people with $1,500 to $2,000 deductibles.

And finally, Mr. President, this morning I was doing one of these call-in shows on C-SPAN. A gentleman called in and he was very, very emotional. He said to me that he was getting ready to have transplant surgery, but he was told by the hospital that because he's on Medicare, that his post-operative treatment was going to be limited to three years. After that, he would have to find some way to pay. This man was very emotional today.

What we're doing here fixes that, and I do believe that we ought to really be honest with the American people when we talk about what we are doing with Medicare. We are trying to make sure that Medicare is there for that man and so many others who will find themselves in his position. With that, I yield back, Mr. President.

THE PRESIDENT: Okay. I think this has actually been a very useful conversation. What I'm going to do is move on to the next topic, but maybe after we break for lunch and come back, I want to go through some areas where we decided we agreed and I know that abuse is a good example; some areas where we still disagree.

One thing, Jon, you shook your head when I said that people would be able to choose the better plan because the notion was, well, people are mandated. Actually, any insurance that you currently have would be grandfathered in so you could keep. And so you could decide not to get in the exchange the better plan -- I could keep my Acme insurance, just a high-deductible catastrophic plan -- I would not be required to get the better one. If I chose to get the better one, it would be 14 to 20 percent cheaper than if I were going into the individual market. I just wanted to clarify that issue.

SENATOR KYL: Well, Mr. President, if I could clarify, that's for a very limited period of time, number one. Secondly, the incentives are set up so that employers would drop you from their coverage because it's cheaper for them to pay the fine than to continue to pay the insurance, so they wouldn't be able to keep what they have. And third, there are still mandates in the legislation as to what you can do with what you have such that it doesn't end up being the same coverage.

So with all due respect, I disagree. And it's just a fundamental disagreement between us. Does Washington know best about the coverage people should have or should people have that choice themselves? Pay a little less, get a little less coverage, or pay a little more and get more coverage.

THE PRESIDENT: Can I just say that, at this point, any time that a question is phrased as, "Does Washington know better," I think we're kind of tipping the scales a little bit there since we all know that everybody is angry at Washington right now. I think -- so it's a good way of framing -- it's a good talking point, but it doesn't actually answer the underlying question which is, do we want to make sure that people have a baseline of protection. And this insurance market reforms I think is a good additional example of what may be philosophical differences but what we may have in common.

Rather than go through the problem, because I think everybody understands out there the issue of people with preexisting conditions not being able to get insurance, people coming up with -- bumping up against lifetime caps and suddenly thinking, as a family I met in Colorado, they thought their child was covered. Suddenly they hit the lifetime cap and they started having to scramble to figure out how they'd pay the additional costs. We all are familiar with these examples.

I just want to go through areas where I think we agree on insurance reforms, or at least some Republicans and some Democrats agree. I think we agree on the notion that you can't just drop somebody if they've already purchased coverage. Looking at your bill, Jon, the idea that you ban rescissions. We agree on the idea of extending dependent coverage to a certain age. Some people say up to 25, some people say up to 26, but we basically agree on that concept. We agree on no annual or lifetime limits. We agree philosophically that we want to end the prohibition on preexisting conditions. I think the thing we're going to have to talk about is, how do you actually accomplish that? There may be a disagreement as to whether you can do that without making sure that everybody is covered, but that's something that we can talk about.

In addition, though, there are some other insurance reforms that have been proposed by the House and Senate in their legislation that I think we should explore. And maybe we can narrow the gaps there and come up with some -- even a longer list of areas that we agree on.

So what I'd do is, since I want to make sure that Mitch doesn't give me a time clock tally again, let me first go to Mitch and I don't know who wants to make the presentation with respect to insurance reform.


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