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The White House
Office of the Press Secretary
For Immediate Release

Remarks by the President in Discussion on Insurance Reform at Bipartisan Meeting on Health Care Reform

12:12 P.M. EST

REPRESENTATIVE BOEHNER:  Mr. President, I'd like to yield to Dr. Boustany to continue this conversation about insurance reform.

REPRESENTATIVE BOUSTANY:  Thank you, Leader Boehner, and thank you, Mr. President.  I come at this as a physician, a cardiovascular surgeon with over 20 years of practice doing open-heart surgery, dealing with patients who have come to me with very challenging cases at very difficult times in their lives.  And along with my colleagues, Dr. Coburn and Dr. Barrasso, we bring a wealth of experience in dealing with insurance companies and all these everyday problems that so many American families face.  We all agree -- we all agree -- that we need insurance reform.  There's no question about it.  The question is how do we do it.

Now, we've all been through a long year -- town hall meetings, telephone calls, e-mails -- it goes on and on.  And one thing that has become very clear, the American people have spoken out very loudly and very clearly.  They want us to take a step back, and go step by step with a common-sense plan that really brings the costs down for American families and small business owners.  They want insurance companies to treat them just like they treat big labor unions and large companies.  It's been a resounding message we've heard over and over.

So how can we achieve all this?  Well, we've talked about some of it.  I think one of the things we ought to really look at is how do you simplify, streamline, and standardize all the paperwork that's involved -- because I can tell you as a doctor, and my two colleagues who are physicians will know, that it takes you away from patient care.  It interferes with the doctor-patient relationship.  It runs up cost in medical practices.  And it's a real issue.  So I believe -- I think we can all agree on that.  We need to address that issue.

A second area is how do you really promote choice and competition.  We've all talked about it and I think we've had a lot of discussion already on those issues.  We put forth a plan earlier in the year during debate that actually the Congressional Budget Office showed that it brings down the cost of premiums up to about 10 percent.  And actually for individuals seeking and families seeking insurance in the individual market, those cost savings could even be higher, as opposed to the bill we have here where we've had some discussion already and Mr. Camp has already outlined, as well as Mr. Kyl, that this bill would actually raise premium costs.

We've talked about small business health plans.  Again, I ran a small business; it was a medical practice.  And when I wanted insurance when those premiums were going up in double digits every year, I'd call an insurance agent, they would come in, and we had very limited choice -- very limited.  And the costs kept going up.

Small business health plans is one way to really deal with this and allow for pooling.  And where our big disagreement is, frankly, it's with how you do it.  And if you create a plan with exchanges that are overly restrictive, it really doesn't -- it defeats the purpose.  And I believe we can have faith in the American public to figure out, if it's transparent enough, what's their best deal -- what's the best deal for a small business owner or a family in this sort of arrangement?

The same goes for purchasing insurance across state lines.  I'm glad to hear our Democratic colleagues agree that this is an approach that needs to be taken to promote choice and competition.  But again, we feel that this bill restricts those options too much.  And we think we can do it in a responsible way.  I believe we probably could come together on this, but I think the existing proposals restrict it far too much.

Health savings accounts -- these are very, very popular among small business owners and families.  And I think the one impediment today is the inability to save enough in these.  And I think there are ways that we could promote these health savings accounts and promote real savings that will actually make a difference.  It won't solve all the problems, but it's an important insurance reform that I think small businesses will really, really jump on if we could expand those savings opportunities.  The current bill, as has been stated, adds some restrictions and some additional tax provisions on these, which make them less palatable.

We all agree on prohibiting insurance companies from arbitrarily cancelling insurance policies.  That's a no-brainer; there's strong agreement on both sides of the aisle there.

Now, with regard to preexisting conditions, this is an issue that is very difficult and many of us and our families may have been faced with.  I can tell you I faced it when I closed my medical practice, because I had a health condition, an arthritis condition.  And I went through the same insurance carrier that covered my small medical practice for 14 years and got a big red no -- "can't insure you or your family."  And that's frankly unacceptable.

Now, what we propose is using risk pools, expanding these risk pools, and reinsurance.  It's an affordable way to do it.  It creates certainty for a family that's faced with this very difficult set of circumstances.  Certainty is important.  And our plan would not raise premium costs extravagantly, whereas the proposal here would raise those costs and it doesn't really create the kind of certainty a family needs because there are waiting lists and that proposal is only temporary to something else and we don't know what it's going to be.

The other thing we do is we create a way for small business owners to actually shop and compare apples to apples -- transparency -- and this is critical.  Our plan does this without creating the kinds of restrictions that we see with the exchange process.  And we agree that we have to eliminate annual and lifetime caps, so we have broad agreement there.

So, again, I think it's clear that the American people have rejected the bills that have gone through so far because they see increases in premiums for families, they see that it raises taxes significantly on families, and raids Medicare to create a new entitlement.  This doesn't really bring down the cost; this is really not the answer.

What American families want is a common step -- a common-sense step-by-step approach that will really lower the costs for families and small businesses.  I believe we have a duty to reform health care, but we have an obligation to get it right.

THE PRESIDENT:  Okay.  Thanks, Charles.  We're going to go to George Miller -- and if you want to respond to some specific things that Charles raised or make some more general points.  We'll then go back to a Republican.  At some point in this discussion -- and we're going to have to be a little more disciplined in our time in order to stay on schedule on this section -- at some point I'd like Secretary Sebelius, who is not only a former governor but also an insurance commissioner, to address some of the issues that have been coming up around insurance and minimum payment.

SENATOR BAUCUS:  Mr. President, I don't know if anybody -- we weren't told of what the time limits are.

THE PRESIDENT:  Well, I'm trying to be flexible.

SENATOR BAUCUS:  I know, I'm just curious if you've got a certain amount of time in mind.

THE PRESIDENT:  We've got about half an hour remaining for this section.  So if people can keep their points brief.

SENATOR REID:  Mr. President, from the Senate we have Senator Harkin and Rockefeller to respond for the Democrats.

THE PRESIDENT:  Right.  And I've got a list.  George.

REPRESENTATIVE MILLER:  Thank you very much.  This issue of insurance reform is I think where most families intersect with their insurance companies, with the health security of their families.  And let's start out with our commonalities in the bill that REPRESENTATIVE Boehner -- Leader Boehner, offered on the floor.  He agreed that lifetime caps should be abolished, that annual caps should be abolished, that young people should be able to stay on their parents' plan -- I think it was 25, I think, and your suggestion, Mr. President, it's 26.  So there's that kind of commonality there.

But we think -- and our bill goes further than some of the suggestions you've made in the interim since the House and Senate have passed these bills -- is that clearly we think that preventative care should not carry a co-pay with it; that we ought to encourage people to get that kind of preventative care for themselves, certainly for their children.  We allow the health savings accounts to continue.  That's a variation, as my colleague talked about, what they think insurance reforms should reflect.

Clearly now when we see the request in California for a 38 percent increase and in Michigan for a 56 percent increase, I think in Maine it's 27 percent increase, you've suggested stronger language than we have in either the House or Senate bill -- I think along the lines with what Senator Feinstein has been talking about in terms of rate review.  People are trapped in these systems.

But the one area where there still seems to be disagreement -- it was not in the substitute offered by the Republicans when we were on the floor -- and that is this question of preexisting conditions because this is a real trap for families, either because you find out that you need to go to get care for a disease or an illness and you may get a check-up and they may discover that you have arthritis, but you didn't disclose you had arthritis so now that's a preexisting condition and you may lose that policy; you may have to provide more.

And the fact of the matter is -- you hate to admit this at my age, but I sit here with two artificial hips, a little bit of arthritis, and I have a kidney stone.  (Laughter.)  I'm dead in that insurance market if I have to switch policies or switch companies or look for another chance.  Now, why should that be?  Those hip replacements have been with me for 15 years and I have no trouble.  But it's a way of denying me care.

And if you have acne, it's a way of denying you care.  In fact, as you see from one of the Blue Cross companies here -- there's three pages of things that will keep you out of care, will keep you from changing your jobs, and it goes on and on and on with those -- back pain will keep you, a preexisting condition; acne, that I mentioned; a cleft palate that we talked about earlier here.

So what does that mean when you want to change jobs; what does that mean when you want to start your own company?  It means you go without insurance or you pay some policy that has a $5,000 deductible or $7,000 deductible.

This is a real issue to American families.  Fifty-six million people right now have insurance policies where preexisting conditions can knock them out at any given time.  We know that 13 million people were denied coverage over the last three years because of preexisting conditions.

And so now you're trapped, you have a preexisting condition, you can continue maybe -- maybe -- with that insurance company if you pay more, but you can't go -- you can't shop in the marketplace for another insurance company, you can't go from Blue Shield to Kaiser because you have a preexisting condition.  You start to see the economic trap and uncertainty that families are confronted with.

Now, the interesting thing was, during these negotiations Senator Dodd and I worked very hard on these issues.  Most of the business community signed off on getting rid of these preexisting conditions.  And I think that that's important for us to understand, that that is what real insurance reform is about.  Should you still be able to charge women more than men?  Should you rate based upon gender?  To what extent can you rate based upon ages?  Where do you -- what's the essential benefit that we're providing?  We can all describe that plan that's really inexpensive but just doesn't have many benefits that go with it for families.

And so I think that this is a very important part of this discussion.  I know when I go home to my district I hear about this from the people I represent.  I hear about this from my wife and she's talking about our kids and her friends and people she spends time with, how they struggle with these.  And what we're really talking about is the manipulation to move people around within the insurance company.

And yes, you can go to a high-risk pool; so yes, because you have a preexisting condition, because I have two artificial hips, I can go to the most expensive insurance system in the country.  I'm now in a high-risk pool and I'm trapped in that high-risk pool forever.  You can make it a high-risk pool among states, you can make it a high-risk pool among small businesses, you can make it a high-risk pool among large businesses -- I'm still trapped in the most expensive insurance because of something that happened to me that I had no control over:  I have a child with a cleft palate.  I have a child with acne.  How can this possibly be?

Now, fortunately, in our discussions, as I said, a lot of the business organizations have agreed that these things should be phased out over time.  Some can be put in right away -- it's not terribly expensive to cover people 18 to 26, and that can be done right away and we have that commonality.

So I would just hope that we would focus on this issue of what real insurance reform looks like with respect to the impacts on families and individuals as they try to navigate this insurance market.

THE PRESIDENT:  Thank you, George.

SENATOR McCAIN:  Well, thank, Mr. President, and thank you for doing this.  And I understand the four categories, but there's a big category that the people in my state and across this country, are deeply concerned about, and that's not just the product that we are examining today, the 2,400 pages, but the process we've gone through to reach that.

Now, both of us during the campaign promised change in Washington.  In fact, eight times you said that negotiations on health care reform would be conducted with the C-SPAN cameras.  I'm glad more than a year later that they are here.  Unfortunately, this product was not produced in that fashion.  It was produced behind closed doors.  It was produced with unsavory -- I say that with respect -- deal-making:  the Louisiana Purchase, fining them $300 million for one state; the "Cornhusker Kickback," which has, I understand now, been done away with.

One of the things that -- as provisions of this legislation that was particularly offensive was the carveout for 800,000 Florida seniors exempt from cuts in Medicare Advantage program.  There’s 330,000 seniors under Medicare Advantage in my home state of Arizona.  They’re deeply concerned about that.  They’re deeply concerned about the carveouts for Vermont, Massachusetts, Hawaii, Michigan, Connecticut -- $100 million for a hospital in Connecticut.  Why should that happen?  They don't understand it.

And at the town hall meetings that I conduct all over my state, people are angry.  We promised them change in Washington and what we got was a process that you and I both said we would change in Washington.

So then we got into the special interests, whether it be the Hospital Association or the AMA or others.  And one of them that was particularly egregious -- and I won't go through the whole list -- was PhRMA.  PhRMA got an $80 billion deal and in return for which they ran $150 million worth of ads in favor of “health reform.”

Their over $2-million-a-year lobbyist was here at the White House and was reported to say in the media “a deal is a deal.”  And part of that deal was that there would not be competition amongst pharmaceutical companies for Medicare patients.  The other, among others, was that the administration would oppose drug reimportation from Canada, a proposal that you supported in the United States Senate.  And the Christmas --

THE PRESIDENT:  John, can I just say --

SENATOR McCAIN:  Can I just finish, please?  And then at Christmas Day -- I believe it was Christmas, the Majority Leader said, “A number of states are treated differently than other states.  That's what legislation is all about.  That's compromise.”  “Compromise” is not the word for that.

So when my constituents and Americans now who overwhelmingly reject this proposal, say, go, back to the beginning -- they want us to go back to the beginning.  They want us not to do this kind of legislating.  They want us to sit down together and do what’s best for all Americans, not just for some people that live in Florida or happen to live in other favored states.  They want a uniform treatment of all Americans.

So I hope that that would be an argument for us to go through this 2,400-page document, remove all the special deals for the special interests and favored few, and treat all Americans the same under provisions of the law so that they will know that geography does not dictate what kind of health care they would receive.

I thank you, Mr. President.

THE PRESIDENT:  Let me just make this point, John, because we're not campaigning anymore.  The election is over.

SENATOR McCAIN:  I'm reminded of that every day.  (Laughter.)

THE PRESIDENT:  Yes.  So we can spend the remainder of the time with our respective talking points going back and forth.  We were supposed to be talking about insurance.  Obviously I'm sure that Harry Reid and Chris Dodd and others who went through an exhaustive process through both the House and the Senate, with the most hearings, the most debates on the floor, the longest markup in 22 years on each and every one of these bills, would have a response for you.

My concern is, is that if we do that, then we're essentially back on FOX News or MSNBC on the split screen just arguing back and forth.  So my hope would be that we can just focus on the issues of how we actually get a bill done.

And this would probably be a good time to turn it over to Secretary Sebelius, who --

SENATOR McCAIN:  Could I just say, Mr. President, the American people care about what we did and how we did it.  And I think it’s a subject that we should discuss.  And I thank you.

THE PRESIDENT:  They absolutely do care about it, John.  And I think that the way you characterized it obviously would get some strong objections from the other side.  We can have a debate about process, or we can have a debate about how we're actually going to help the American people at this point.  And I think that’s -- the latter debate is the one that they care about a little bit more.

So, Kathleen, why don't you just address some of the issues related to insurance reform.  There’s some agreement here, but I know that on the Republican side there are a couple of concerns about the issue of rate review.  The issue of setting up some benchmark standards that insurance companies have to abide by -- some people may think that those have been a little bit too aggressive.

You’ve been both a governor as well as an insurance commissioner.  Maybe you can talk a little bit about what you’ve seen at all those different levels and how you think we can best move forward to protect American families.

SECRETARY SEBELIUS:  Well, thank you, Mr. President.  And I know there are lots of people who want to comment on these topics, but I don't think there’s any question and I think there’s a lot of agreement that the current insurance market really fails way too many people.  It is a system that is not a market for about 40 million Americans who are either in an individual policy or in a small group policy, have no choice, there is no competition.

According to the American Medical Association, in their study yesterday, 99 percent of the market in metropolitan areas, 75 percent of the markets across the country are very concentrated, which means they’re monopolies, they’re not markets.  So we've got a trap.

And I think the rules allow people to be locked out from the front end if you’ve got preexisting conditions; allow people to be thrown out with a stop on benefits during the course of a treatment, or when your policy expires and you're supposed to renew, you're dumped out of the market; or to be priced out, which is going on across this country.  There’s been highlight of a couple of rates, but double-digit rates across the country on top of double-digit rates on top of double-digit rates.  And people have no choices.

So the common areas I think of agreement -- high-risk pools.  There are lots of states across the country running high-risk pools.  As an insurance commissioner we ran a high-risk pool in Kansas.  It is a strategy that's been in place for almost 30 years in many states; 200,000 people total in the entire United States are in high-risk pools because they’re so expensive that they really don't offer -- because when you put all the sick people together and you say, okay, you get to buy a policy and you get no help with that policy, it is a death spiral.  You will always have the highest costs and, on top of that, the highest costs, and you’ve got the sickest people who are already paying the highest costs for treatment.

They don't work very well.  They are a stopgap measure that the House and Senate have proposed to get people from here to a new market.  I think what the exchanges have a lot in similarity with the health plans that have been talked about by the House and Senate -- there’s a big difference.  And it’s not a Washington difference, it’s a state difference.  The state insurance commissioners across this country have unanimously opposed health plans for decades, and they feel that it takes people -- it isn’t the pooling that’s objectionable, it’s the fact that there is no consumer protection; that there is no ability to apply common-sense rules.

And we had the drive-by deliveries in Kansas, where people were being kicked out of the hospital 18 hours after having a baby, to save money, only to be readmitted with jaundice and to be readmitted with dehydration.  It’s not a particularly good idea.

So getting rid of preexisting conditions, getting rid of caps on yearly benefits and longtime benefits, allowing kids to stay on plans are ideas that have been accepted by both -- setting up a new marketplace, giving small business owners and individuals choice and competition in the private sector, but making the private sector operate on a different set of rules, including having some loss-benefit analysis.  How many of those dollars -- you heard Senator Coburn eloquently talk about the 30 cents of every dollar that goes to pay for expenses other than medical costs.  A loss-benefit analysis, a medical ratio, would do just that.

How many of your dollars are you actually spending on provider care, on prescriptions, on treatments; and how much is going to overhead and CEO salaries and advertising to try and get a handle on rates?  Having some rate review, having some transparency and some opportunity to have people make choices and make companies compete with one another and not separate the marketplace.  I think the most dangerous part of the system right now, is having people -- having insurance companies pick and choose who gets coverage and who doesn’t based on your health condition.

It's a lot cheaper to insure people who promise never to get sick.  I watched it as insurance commissioner.  But segregating that market is not insurance, it's not pooling a risk.  And I think your proposal, Mr. President, gets back to the notion that there'd be a pool; there'd be an opportunity to pool that risk and have people have the kind of negotiating power as a governor.  And like Senator Alexander, I am a former governor.  We both ran our state employee health pools.  I don't know about Tennessee, but in Kansas that was the largest pool in the state -- 90,000 covered lives.  We had a lot of negotiating power.  We could get a pretty good deal on a couple of companies competing on hospital rates, on doctor rates.  That's what this kind of pooling mechanism and a new exchange would give everybody and it's around a set of standards that made sense.

THE PRESIDENT:  Okay.  Eric.

REPRESENTATIVE CANTOR:  Mr. President, thank you again very much for having us and for staying with us for the six hours.  I appreciate that.  I don't know if you will after the six hours or not.  But I want to --

THE PRESIDENT:  Let me just guess -- that that's the 2,400-page health care bill.  Is that right?

REPRESENTATIVE CANTOR:  Well, actually, Mr. President, this is the Senate bill along with the 11-page proposal that you put up online that really I think is the basis for the discussion here.

But I do want to go back to your suggestion as to why we're here.  And you suggested that maybe we are here to find some points of agreement to bridge the gap in our differences.  And I do like to go back to basics.  We're here because we Republicans care about health care just as the Democrats in this room.  And when the Speaker cites her letters from the folks in Michigan and the Leader talks about the letters he has received, Mr. Andrews, his -- all of us share the concerns when people are allegedly wronged in our health care system.  I mean, I think that is sort of a given.

We don't care for this bill.  I think you know that.  The American people don't care for the bill.  I think that we've demonstrated in polling that they don't.  But there is a reason why we all voted no.  And it does have to do with the philosophical difference that you point out.  It does have to do with our fear that if you say that Washington can be the one to define essential health benefits, there may be a problem with that.  And that's the language that's in the Section 1302 of this bill, that it says that the Secretary shall define for people what essential health benefits are.

But let's -- in the spirit of trying to come together, let's try and say, maybe if -- if we assume that Washington could do that, could really take the place of every American and decide what is most essential, what would be the consequences?  And that's also where we have a big difference in this bill and what would happen.

First of all, the cost, and Jon Kyl laid out the tremendous cost in the nearly trillion dollars of this bill.  And I don't quite know, because CBO said it couldn't assess how much your additions would cost to it, but we do know that there are plenty of taxes on income.  Now, you suggest investment income should be taxed.  We have additional taxes on medical devices and the rest.  What is a consequence of that?  We know there are consequences that small businesses will feel because of the impact on job creation.

But also, Mr. President, when we were here abut a year ago across the street, you started the health care summit by saying one of the promises you want to make is that people ought to be able to keep the health insurance that they have.  Because as we also know, most people in this country do have insurance and an overwhelming majority of people do like that coverage; it's just too expensive.

Well, the CBO sent a letter -- I think it was to Leader Reid -- about the Senate bill.  And in that letter, it suggested that between 8 million and 9 million people may very well lose the coverage that they have because of this, because of the construct of this bill.  That's our concern.  And so, as we are in -- as we are in the market -- in the section of this discussion about health insurance reform, I note, Mr. President, that you have suggested strengthening oversight of insurance premium increases.  Because we want to make sure that there aren't excessive insurance premium increases that take place.

The problem is when you start to mandate all of the essential benefits, there are going to be some insurance premium increases.  None of us really want to see them.  But if you stop them, who is going to pay for it?  Well, then we get back to the fact that businesses won't be able to pay for it and people are going to lose their coverage.

So I guess my question to you is, in the construct of this bill, if we want to find agreement, we really do need to set this aside.  And we really do need to say, okay, the fundamental structure is something we can't agree on, but there are certainly plenty of areas of agreement.  And because I don't think that you can answer the question in the positive to say that people will be able to maintain their coverage, people will be able to see the doctors they want in the kind of bill that you're proposing.

THE PRESIDENT:  Well, let me -- since you asked me a question, let me respond.  The 8 to 9 million people that you refer to that might have to change their coverage -- keep in mind out of the 300 million Americans that we're talking about -- would be folks who the CBO, the Congressional Budget Office, estimates would find the deal in the exchange better.  It would be a better deal.  So, yes, they would change coverage, because they've got more choice and competition.  So let's just be clear about that, point number one.

Point number two, when we do props like this -- stack it up and you repeat 2,400 pages, et cetera -- you know, the truth of the matter is that health care is very complicated.  And we can try to pretend that it's not, but it is.  Every single item that we've talked about on the Republican side, if we wanted to exhaustively deal with fraud and abuse, would generate a bunch of pages.  So I point that out, just because these are the kind of political things we do that prevent us from actually having a conversation.

Now, let me respond to your question.  We could set up a system where food was probably cheaper than it is right now if we just eliminated meat inspectors and we eliminated any regulations in terms of how food is distributed and how it's stored.  I'll bet in terms of drug prices, we would definitely reduce prescription drug prices if we didn't have a drug administration that makes sure that we test the drugs so that they don't kill us.

But we don't do that.  We make some decisions to protect consumers in every aspect of our lives.  And we have bipartisan support for doing it, because what we don't want is a situation in which suddenly people think they're getting one thing and they're getting something else -- they're harmed by a product.  What Secretary Sebelius just referred to -- which is not a Washington thing; in fact, state insurance standards in many states are higher than anything that's done in Washington -- is as a consequence of seeing consistent abuses by the insurance companies and people finding themselves helpless to deal with.

Now, we can have a philosophical disagreement about how much insurance regulation is appropriate.  What you've indicated to me, just based on the bills that I've seen, is you guys believe in some regulations.  You've already said you did.  You believe in making sure that you can't just drop somebody with coverage.  Now, if you don't have a law there, let me tell you that happens all the time.  I've got a bunch of stories in here of folks who thought they had insurance, got sick -- the insurance company goes back and figures out a way to drop them.  I'm not making this up.  I'm not trying to just add to the pages of that bill.  It's in response to an actual problem, and you guys have agreed to it.  So philosophically at least, on a whole range of issues, you agree that we should have some insurance regulation.  My suggestion had been that we try to focus on what are the specific regulations -- since we agree that there have to be some, what are the specific ones that you object to.

Now, let me just close by saying this.  Preexisting conditions is one that theoretically we all say we agree on.  Theoretically, everybody thinks it's a bad deal if my wife had breast cancer, I lose my job.  I now try to buy insurance, and they say, well, you know what, we can't cover you because your wife has a history of cancer.  We all think that's a bad deal.  There are two options -- two ways of dealing with that.  One is what Kathleen raised, which is a high-risk pool.  You could say you know what, you can go in there and buy it in a big high-risk pool.  And, by the way, you could probably set up a high-risk pool without having as many pages in the bill.  And it's an option that's been around for 30 years.

Here is the problem.  What happens is the reason that all our rates -- as members of Congress or as elected officials -- are pretty low -- is we've got such a big pool, there are millions of federal workers, and as a consequence any single one of us has cancer, any single one of us has a child with a disability, our costs are spread out over millions of people.  And so, all of us are able to keep our rates relatively low, even though if any individual in that situation was trying to buy insurance it would skyrocket.

That's the concept of pooling, is you get the healthy and the young people alongside the not-so-healthy and the older people.  But we're all kind of spreading our risk, because each of us don't know at any given time what might happen.  Maybe our kid is the one who gets diagnosed, heaven forbid, for something.  And as a consequence, we insure ourselves by making sure that we're also insuring somebody else.

When you get into something like a high-risk pool what happens is all the sicker, older people are in that pool; all the younger people, they end up getting really cheap rates.  And overall you could say, well, that's how the market works, it's a good thing, there's more choice.  There's more choice for the young, healthy person, but not for the person who, heaven forbid, got sick.

Now, on preexisting conditions we've got a similar situation.  The challenge we have -- I'd love to just pass a law that said, insurance companies, you can't exclude people based on preexisting conditions.  The problem is what they'll say to you is, well, what prevents somebody from not preventing insurance until they get sick and then going in and just buying it and just gaming the system?

So we've tried to respond to a difficult problem by saying, well, let's make sure everybody has some coverage.  Without that it's hard to do.  So I just wanted to respond to -- yes, we've got a philosophical objection, but let's not pretend that any form of regulation of the insurance market is somehow some onerous burden that's going to result in terrible things happening to consumers.  That's a good thing.

REPRESENTATIVE CANTOR:  Mr. President, if I could respond.


REPRESENTATIVE CANTOR:  We, again, have a very difficult bridge to gap here, because I know that this is something that we don't want to look at, but these are, as you say, the complexities of what this is about.  But when you start to mandate that everyone in this country have insurance and you lay on top of that now the mandates that we all would like to see in a perfect world, there are consequences to that.

We just can't afford this.  I mean, that's the ultimate -- that's the ultimate problem here, is in a perfect world everyone would have everything they want.  This government can't afford it.  Businesses can't afford it.  That's why we continue to say go step by step trying to address the cost and we could ultimately get there.  But we're asking that you set aside this mandated form of insurance -- this mandated form of health care regulation and let's go back to things we can agree on without this trillion-dollar attempt here, that's all.

THE PRESIDENT:  I think the cost issue is legitimate, and whether we can afford it or not, we'll be discussing that.  I think that's an entirely legitimate discussion.

THE VICE PRESIDENT:  Mr. President, can I have 10 second?  Literally, 10 seconds.


THE VICE PRESIDENT:  We don't have a philosophic disagreement.  If you agree that you can't be dropped, there has to be dependent coverage, if there's no annual lifetime cap, then in fact you've acknowledged that it is the government's role.  The question is how far to go.

So this idea we have a fundamental, philosophic difference -- you're either in or you're out.  You either say your government can't do it, none of it, or, they can do some of it -- we argue how much.

THE PRESIDENT:  The cost issue is legitimate; we're going to address it.  I want to --

REPRESENTATIVE CANTOR:  Mr. President, if I could, it's not the -- it's the cost issue, but it's being driven by the fact that you've got in the bill -- which I assume that your proposal supports -- that the Secretary define what a health benefit package should be.

THE PRESIDENT:  Only in the exchange.  Only as part of the pool that people who don't have health insurance would buy into.  If you were working at a big company that already has a big pool, then -- but you know what, I want to make sure -- because, Eric, we're going to end up in a back-and-forth that cuts everybody else out.

I've got, on the Democratic side, a couple of people that want to speak, and there are probably a couple of Republicans.  We're already over time.  I've burned some of it; I apologize.  I'm going to go to Louise, then Mike Enzi, I'll go to Tom Harkin and then go back to Dave.  So I've got five speakers and I don't have a lot of time.  Go ahead.

REPRESENTATIVE SLAUGHTER:  Thank you, Mr. President, and thanks to all of my colleagues for being here.  I am pretty succinct and pretty timely.  I will not take up a lot of time, but I sure do have to say some things.

The first one is the preexisting conditions absolutely has to go.  It is cruel, it is capricious, and it is done only to enhance the bottom line.  This was not even anything we talked about 10 or 15 years ago.  But it was mentioned that all Americans should be treated the same.  Let me give you a little history on that.

Eight states in this country right now have declared that domestic violence is a preexisting condition on the grounds, I assume, that if you've been unlucky to get yourself beaten up once you might go around and do it again.  Forty-eight percent is the higher cost for women, in many cases, to buy their own insurance.  Believe you me, that is really discriminatory.

In 1991, women were not included in any of the trials at the NIH because we had hormones.  It wasn’t until we had a critical mass of women here that said this will not do for more than half the population of the United States who pay taxes; that we made certain that diseases like osteoporosis, mainly a women's disease, cervical cancer, only a woman's disease, uterine cancer and others were really looked at.  Up to that point, 1991, all research at the Institutes of Health was done on white males.

Now, think about that for a minute, if you will.  We couldn't do that because we said kindly would you stop doing that.  It took legislation.  Doing this will take legislation.  I've been through this before.  I was here when we had the Clinton debate.  It was started, some of you will remember, by Lee Iacocca, who said we cannot export our automobiles, there is a thousand-dollar cost for health care in every one of them; my competitors are way ahead of me, they are eating my lunch.  That was one of the main reasons, Mr. President, if you recall, that we decided we had to do something about that.

In the 13, 15 years since that has happened we have done nothing about health care; we don't export so much anymore; the automobile business is basically gone; we have done nothing to encourage entrepreneurs.  The Speaker spoke to this, this morning.  We need to think more about the economic benefits of doing this.  Those of us who are trying to redo some trade policies and maybe let us make something else again in the United States really want to make sure that it succeeds.  And this would be a great part of that.  I think it's terribly important that we do that.

Also since the Clinton health care plan we've seen some pretty awful things.  We saw hospitals abandoned to the streets; critically ill, elderly, mentally ill persons, and there was no great hew and cry out there.  And now I understand there is actually a proposal -- which God knows I hope never sees the light of day -- that shuts down Medicare and turn that into a voucher system, where obviously we would not pay the cost of health care as these poor people have to go to the public market and try to find some.

So what are we going to be doing then?  We're going to be once again abandoning our elderly, abandoning our mentally ill and our seriously ill to the streets.  We're better people than that.  I think it would be really a good thing for us today while we're here in this room together to really think about what's absolutely important here -- not nitpick over little pieces of this and that, but think about all the people out there every single day, the number of people with excess deaths because they have no health insurance.

I even had one constituent -- you will not believe this, and I know you won't, but it's true -- her sister died.  This poor woman had no dentures -- she wore her dead sister's teeth, which of course were uncomfortable, did not fit.  Did you ever believe that in America that that's where we would be?
This is the last chance as far as I'm concerned, particularly on the export business.  We have fallen behind, we're no longer the biggest manufacturer in the world, we've lost our technological edge.  We have an opportunity to do that, but a major part of the success of that is getting this health care passed.

Thank you very much.

THE PRESIDENT:  Louise, thank you.  I was just informed -- and by the way, this has been a terrific conversation so far -- the House had to schedule a vote on an item, and my understanding is it has already started.  So what I'd like to do is this, we've got four remaining speakers, Mike Enzi, Dave Camp, I guess again, as well as Tom Harkin -- four remaining speakers -- and Jay Rockefeller.

What I'd like to do is to break so that the House can take the vote.  When we come back we will start with Mike and we will return to finish up the issue of insurance reform.  And then we will move on to the questions of coverage.  All right?  So we are scheduled to be back here at 1:45 p.m.

* * * * *

THE PRESIDENT:  Okay, all right.  There were several people who were still in the queue who didn’t have a chance to speak prior to us breaking.  The topic was still insurance reform, although obviously these things interrelate and I suspect that people may have some other issues that they want to raise.

After this, we're going to go to the issue of deficit, which touches on some of the issues related to Medicare that have been raised already.  And I'm going to actually have Joe Biden open that up.

REPRESENTATIVE RANGEL:  Mr. President, before we leave health care reform, could I get on the list?  I didn’t know --

THE PRESIDENT:  Well, no, no, I mean, we will be talking about health reform, Charlie.  I guarantee you, you will be called on before -- you’ll have a chance to talk about all these issues.  All right.

A PARTICIPANT:  Mr. President, what time do you expect to end the meeting?

THE PRESIDENT:  My hope is that we get out of here -- we're running a little bit late, but for having a lot of elected officials sitting around a table, we're not too late.  (Laughter.)  My hope is, is that we can adjourn by 4:15 p.m.  Okay -- 4:15 p.m.  Originally it was scheduled to go to 4:00 p.m.  We're starting a little bit late on this front, you know, so we'll see if we can get out of here by 4:15 p.m., all right?  That will require probably a little more discipline on all our parts, including myself, than was shown in the morning session -- although let me just say that I thought the tone of the discussion was helpful and I appreciate everybody’s participation so far.

With that, I'm going to go Mike Enzi.  Then I'm going to go to --

A PARTICIPANT:  Mr. President, as long as I hear you talking about leaving, Mr. President, please put me on the list.

THE PRESIDENT:  Well, I guarantee you, you guys are all going to have a chance to speak.  But we're going to go to Mike Enzi, and then we're going to go to Tom Harkin.  I know that we had -- Jay Rockefeller was still on the list.  Was there another Republican that wanted to speak just on the insurance reform issues, or -- do you want to go to John Barrasso?  All right, we'll let you guys split time on this one.

All right.  Mike.

SENATOR ENZI:  Thank you, Mr. President, colleagues.  When we're talking about insurance reform we haven’t really talked about -- but Representative Slaughter kind of opened the door on it, and that’s Medicare.  Seniors out there are really nervous.  Seniors are the ones objecting the most to the program, and it’s because they see half a trillion dollars coming out of their program.

If Medicare were separate and any savings that we did in Medicare reform went back into Medicare, it would do a lot to relieve the tension that's out there.  It would even be a way to pay for the doc fix.  So I'm hoping that that can be a piece of what we're doing.

I really appreciate this exchange.  It would have been helpful had we had this nine months or a year earlier and had it in even more detail and for more days.  What we were presented with in the HELP Committee, of course, was a bill that was already half-drafted.  And we started the markup on it and then we got the other half later.  And since we have not had any input to the drafting -- we're credited with 150 amendments.  Well, 17 of those amendments were Senator Murkowski. where she was inserting Native Americans and tribal in 17 different places.  I had 11 of them where we put in a thing that required agencies to cooperate.

So the ideas that we had -- when Senator Kennedy and I were working bills, we’d set down some principles and then put some detail in, and then draft the bills together.  And I hope that that's something that we go to on future bills.  It works.  In a three-year period he and I got 38 bills signed by the President; in the last year I've gotten two that I've gotten pens from this President.  And the way that we've done those has been through that kind of a process.  And unless we go through that kind of a process I don't think we're going to -- I don't think we can get to the bipartisan thing.

And that's what the purpose of this meeting is, is to kind of get all these ideas together and see how they gel.  In insurance reforms, small business health plans -- that’s different than the AHPs, which is what they were talking about, and they cover some of the problems that were talked about.  One of the problems is mandates.  And Olympia Snowe contributed to that part.  She had a provision that if 26 of the states adopted a mandate it would be a mandate nationwide.  And as other mandates became 26 they’d be included with it, too.

We talked about health savings accounts.  I don't think that meets some of the federal minimum standards that the federal government might put on it, and that's going to disappoint some of our employees because that is one of the options that federal employees have, is health savings accounts.  And it’s particularly good for the younger, healthier people.  They can get that; they’ve got catastrophic coverage.  If they put the amount of money that they would have spent on a Blue Cross plan or some other plan, the difference between the two, into a savings account, in three years they’ve covered the huge deductible.  And they can continue to do that tax-free.  So it’s a process that would be really objected to if it’s excluded or changed.

I like the exchanges, and the reason I like the exchanges is it’s kind of a form of bidding.  It’s more transparent, so people can see what they're buying.  And that would be a big help.  When we were in the shoe business, my wife used to, after 10 years, she decided she would bid out our insurance.  We didn't know there was that much flexibility in insurance -- she saved a bunch.  And then of course she didn't -- since we were selling shoes, it's kind of a fixed price, so she didn't really take the low bid and then go back and somebody else and say, can you make this a little lower.  But that insurance company we had been with for 10 years came to us and said, we could have done a better deal.  She said, you should have when I was buying the insurance.  And we got much better bids the next year.  So these exchanges can be good.

But what I would hope you would consider is having the exchanges to list anybody's insurance that wants to put it on there, and then mark the ones that meet the federal minimum standards so that people can decide really what's out there in the market -- and I think it would pull up some of the ones that are lower down up into the category, and at the same time everybody could see what all is on the market out there and hopefully regardless of states.

Thank you, Mr. President.

THE PRESIDENT:  Thank you very much, Mike, and thanks for staying succinct.  Thank you very much.  And I thought you shared some important ideas there.

Tom Harkin.

SENATOR HARKIN:  Mr. President, thank you again for bringing us together today.  I think if anything of what I've learned here so far is that quite frankly we may be closer together than people really think in actually getting agreement that we can move forward on.  I hope that's the case.

There's been a lot of figures thrown out here and a lot of process things, but I keep thinking we've got to bring it back home to what this is all about.  We all have our stories.  I got a letter yesterday from a farmer in Iowa -- really encapsulates:

"I'm a 57 year old Iowa farmer.  I'm writing to voice my concern regarding my family's rapidly escalating health care cost.  On Saturday, February 20th, I received a notice from Wellmark Blue Cross Blue Shield of Iowa informing me that our health insurance premium will be increasing $193.90 per month, to a monthly total of $1,516.20.  This is a 14.6 percent increase and will result in a yearly cost of $18,194.40 for a family of four.

"Ten years ago, our monthly health insurance premium was $373.50 per month for a similar policy which had a lower deductible and covered three additional children.  Health care costs are out of control and as a self-employed individual I feel powerless.

"At the current rate of increase by the time I meet Medicare age my premiums will cost $42,000 per year.  As a farmer, I manage risk on a daily basis -- weather, weeds, insects, and fluctuating commodity prices.  I have not yet found a way to control my exposure to health care expenses.

"Because of preexisting conditions, I have been denied access to coverage under more economical insurance plans.  Therefore I am stuck in an expensive pool and have few options.  The best option would be for the U.S. Congress to pass comprehensive health care reform resulting in affordable health care for all.  The health of my family and the future of small business depends on it.  Sincerely, Raymond Smith, Buffalo Center, Iowa."

Mr. President, we spent -- and I hear talk about, well, we got to start over and do all this thing again.  You know, we spent one year considering a range of ideas from experts from all over the political spectrum.  Two committees -- the HELP committee under the able leadership of Senator Dodd; the Finance Committee under the leadership of Senator Baucus -- held over a hundred bipartisan meetings and walkthroughs to discuss this bill.  Our bill contains over 147 distinct Republican amendments.

Now, on the issue of health insurance reform of the 10 key elements in the House bill, we have nine of them in our bill -- nine out of 10, that's not bad.  The only one that's missing is the health savings accounts.  But nine out of 10 are in our bill that are in the House Republicans bill.

Now, again -- what are they?  Again, preexisting conditions, we've covered that; no rescissions when you get sick; no lifetime annual caps; no gender-based ratings; keeping you kids on until they're age 26 -- that's in the House Republican bill, that's in our bill.  So I think we're very close on this.

The last thing I just want to address myself to is this idea that somehow we can do a little bit, we can take an incremental type of an approach.  Somehow we can do insurance reforms, but we don't have to do anything else.  Well, quite frankly, if we want insurance reforms you can only do that if everybody is in the pool.  You can only get everybody in the pool if you make it affordable for middle class families and others.  You can only make it affordable for middle class families and others if you have cost controls.

What I'm saying, Mr. President, and others, is this all hangs together.  You can't pick one out and do it without doing it all together.  It all hangs together.  Cases in point:  some states in the '90s tried to do health insurance reform without doing anything else.  And they found it to be a debacle because the insurance premiums skyrocketed.  New Hampshire, Kentucky, and Washington were forced to repeal their reforms because of that.

Case in point:  Massachusetts in the '90s put in health insurance reforms (inaudible) -- individual market premiums doubled.  Four years ago when they did their comprehensive reform and they put the package together, premiums dropped by 40 percent in Massachusetts.  That's why you can't do this incremental approach.

Every time I hear about -- we're sinking, we're drowning in this country on health care -- an incremental approach is like a swimmer who's 50 feet offshore drowning and you throw him a 10 foot rope.  And you say, well, it didn't reach him but we'll get it back and we'll throw him a 20 foot rope next time.  Then we'll throw him a 30 foot and a 40 -- by that time, the swimmer has drowned.  And that's what's going to happen to Ray Smith and so many other families in this country -- they're going to drown by the time -- if we do this kind of incremental type of an approach that I hear others talking about.

Lastly, I'd like to put this in a different kind of a contextual framework.  We don't allow segregation in our country on the basis of race, creed, color, national origin, et cetera.  Twenty years ago this year we also said we're not going to allow segregation on the basis of disability when we passed the Americans with Disabilities Act.  And yet, we still also segregation in America today on the basis of your health.  Why should we?  Why should we allow that to happen?  It's time to stop segregating people on the basis of their health.  That's why insurance reform is so vital, because the health insurance industry in this country is based on a flaw.  And the flaw is their ratings are based on segregating people because of their health.

Think about that.  Whenever I hear the word "pool" -- this pool, that pool, this pool -- I think segregation.  You're segregating people out because of their health status.  I think it's time to end that.  I sold insurance.  I was an insurance agent when I was a young man.  And there's one principle of insurance I learned then that I've never forgot -- the more people in the pool, the cheaper it is for everybody.  You start setting up these pools, you're going to make it more expensive and you're going to be segregating people on the basis of health.  Let's think about that.  It's time to stop that kind of segregation in our country.

THE PRESIDENT:  All right, Tom.  Dave Camp.

REPRESENTATIVE CAMP:  Thank you very much.  On the issue of insurance reform and preexisting conditions, there are responsible ways to solve this problem and reduce the cost of health insurance for everyone.  And we support state universal access programs that address high-risk pools and reinsurance that makes affordable coverage available to those who are sick and those who have a preexisting condition.  And I won't go all of those -- through all of those things that Dr. Boustany and others here have talked about.

But -- and our approaches are somewhat similar on this issue pre-2014, in the period where the House and Senate bills are wrapping up -- ramping up.  But they are -- there is a pretty big distinction.  And that is that there's a key difference in the approaches.  We prevent waiting lists during that period.  And we have these programs managed by the state level.  And they're robust enough that CBO has scored that they'll be effective.  And what -- what the House and Senate approaches are -- is that those rules are set in Washington.  And the House and Senate bills are similar in that if you look at the Senate bill on page 48, 51, and 52, it's the unelected Secretary of Health and Human Services who has the authority to establish waiting periods for access to these programs; raise premiums; reduce benefits.  And so, it is a very -- while we are similar in what we talk about.  There is a very key different approach there.

And then, after 2014, when the bill fully comes into play, you have a very different approach there.  And what you do is establish a preexisting condition and link it with the individual mandate.  And the American people have told us they don't want to be forced to buy health insurance that they don't want and they can't afford.  And this is a significant issue across the country.  And the American people are telling us that -- that the individual -- the mandates, the requirements to buy insurance are something that they want us to scrap and start over on.  And that's why you're seeing state legislatures around the country passing resolutions saying our citizens are going to have a choice on whether they buy health care.  They're going to have a choice on the kind of coverage they want to have.

And so, this is a fundamental difference in this area of insurance reform that I think we -- we have to really begin again and really take into what the American people are saying and expressing this through their elected representatives in the state legislators.  I know there's a lot of former state legislators here; I am one as well, and I think that's a very serious point that we need to address.

THE PRESIDENT:  I'll just touch on your last point, which is the whole issue of preexisting conditions.  Tom Harkin mentioned it.  And I'll be very brief, because I know that we've got to move on to the next topic.

The way I understand Leader Boehner's bill works, and I think that's the one you're referring to, the way you deal with a preexisting condition is to essentially set up a high-risk pool.  I mean, that's the mechanism.  So what you're saying is, if you're sick or older or you got hip replacements or what have you, and you're having trouble buying insurance on the open market, you're going to be able to buy into a high-risk pool.

Now, Tom made the point earlier that -- and this is indisputable; I don't think anybody would disagree with this -- that if you set up a high-risk pool in which you don't have healthy people, younger people in the same pool as older, sicker people the premiums for the older, sicker people who have been segregated into this pool is just going to be higher.  Now, I have -- you know, we looked at the Boehner bill to see sort of how you approach that.  And you've got some reinsurance -- keep in mind, we use a high-risk pool as well until we get to the exchange.  And we have reinsurance.  For example, for people who are on retiree plans, we want to help employers maintain those plans.  And they've got an older population.  So we want to help reinsure them.

But given the amount of money that you have allocated for that pool, it's just not going to be a very useful tool for the vast majority of people who've got preexisting conditions; just because there's just not enough money that you guys put into it to be able to cover all the people with preexisting conditions, which is why other states have high-risk pools, as Kathleen mentioned.  There are -- I don't know how many states, but let's say 20, 21 states currently have high-risk pools.  Out of all those 21 states, about 200,000 people use the high-risk pool.  And the reason is because by just dealing with older, less healthy individuals separately or people with preexisting conditions, it is very, very expensive.

Tom's point was, if everybody is in it -- because presumably none of us know at any given moment who is going to end up being healthy and who is not; we don't know whether our kids are going to be suffering some sort of disease that we don't anticipate yet or our spouses get ill -- that if everybody is in it, then that drives prices down cheaper for everybody.

So it's not that I think that the high-risk pool idea is a bad one.  As I said, the House, the Senate bill, the bill -- the proposal that I put forward all use the high-risk pool as a stopgap measure to get to a broader pool.  But the goal has to be to get everybody in, in a place where those risks are spread more broadly.

REPRESENTATIVE CAMP:  And if I just might say, we support high-risk pools and reinsurance with $25 billion in funding.  The House and Senate versions are $5 billion in funding.  And because of that robust support, CBO says this will work.

The fundamental difference after that is that the Health and Human Services Secretary -- in that four-year period when they're somewhat similar -- has the authority to raise the premiums, all that -- all of that is brought to Washington.  We leave that authority in the states, so that they can manage their state pools.  And then after the bill becomes effective in 2014, the real problem becomes this -- the mandate and the cost -- the forcing of the purchase of insurance, which many Americans find objectionable.  And that -- you can avoid that mandate if you continue to design this as we do in the beginning.  And both plans are somewhat similar on that, but it's a very different structure.

THE PRESIDENT:  What I'd like to do is to move on to the topic, which I think underlies -- oh, I'm sorry.  We've still got Jay, my apologies.  Jay, please go ahead.

SENATOR ROCKEFELLER:  Thanks, Mr. President.  One of the -- we really haven't discussed I think what is at the basis of the frustration about this whole business of preexisting conditions and lifetime limits, all the rest of it, and that is, the way and the nature of the health insurance industry for the most part.  They are, among all industries I've ever encountered -- and in the Commerce Committee we have spent a year analyzing and bringing out some of their sins and ills -- they're terrible.  They're in it for the money.

A nice lady who runs Wellpoint said, we will not sacrifice profitability for membership -- money first, people second.  They -- we had a fellow named Wendell Potter (phonetic) who worked for CIGNA for 20 years as a high executive.  He came before us on his own, volunteered, and described the way health insurance companies operate.  They are looking for reasons to kick you out.  They are looking for reasons, if you already have the health insurance, for doing the rescissions.  Yes, we're going to ban those, but not unless we pass a bill.

And, in fact, often employees are incentivized financially to find reasons to kick people off of the insurance which they're paying for.  So you can be paying your premiums and then they discover -- they come up with something they found in your background they don't like and they just kick you off.  They can do that now legally.  And so people say, well, maybe the states ought to do this, they can do it better.  Well, that’s the situation we have now, but 44 of the 50 states make it perfectly legal for health insurance companies to do this preexisting condition, to simply deny coverage for something which people just got sick, as babies or as adults or whatever.

I got a letter from -- the CEO of CIGNA had written to me and he said, I want to apologize because we had said that we spent $5 billion in this small group insurance market.  Well, I checked a little bit more; in fact, we hadn’t.  Now, why don't people know that?  Because the health insurance industry is the shark that swims just below the water and you don't see that shark until you feel the teeth of that shark.  Now, less I be accused of trying to over-dramatize my statement, this is the way they operate.  Nobody has particularly oversight of them; they’re not under any antitrust type rules.  They can do what they want.

They so dominate the market, as the Secretary pointed out, that there really isn’t any real competition.  They can do what they want, and they do.  And it’s money.  It’s money.  And it makes me sick.  It shouldn’t happen in America.  People say, well, government run, you're going to do this or put that restriction on them.  If you don't put the restriction on them, they’re going to go on doing this.  And so the public option was -- I like that a lot, but that's not going to probably be possible.  So you have to go at them, to clip their wings in every way that you can.

And that's why -- and with this general agreement on preexisting conditions and rescissions and lifetime annual limits -- you know, it’s not a lot of fun to see an eight-year-old kid -- which I have done and I knew this kid, Samuel Borge (phonetic), and he had leukemia, and he had life -- annual limits.  And he ran out and then he died because there was no insurance.  Could they have cured his cancer?  I don't know.  But that's what insurance is for.

So this is a rapacious industry that does what it wants, unknown in their behavior to the people of America -- except on an individual basis, and individuals can't shake up us the way they are now doing it, I think.

So when you talk about the individual mandate, that's not in there for some government makes that decision purpose.  It’s there because you’ve got to have a big pool.  Everybody has made that point.  I got a son who’s old enough to have health insurance; he doesn’t have it.  And when my wife and I found out about it we told him to get it the next day.  He didn’t think he needed to have it, he would live forever.  Well, that's -- of course, that's the premise among young people.  That's why we have the requirement, people sign up for health insurance.  And they don't know if they’re going to need it, and he doesn’t know that he’s going to need it, so you make everybody participate and then you have a bigger risk pool, you can do a better job.

I'm going to say one word about medical loss ratio, because it’s sort of a crazy name but it’s a really good concept.  What we say is that -- the health insurance industry says that they spend 87 percent of all their revenues from premiums or any investment they might have on health care.  That doesn’t work out quite that way.   For large businesses, they do a much better job; but for small businesses and the individual market, they’re down, in West Virginia, in the high 60s and the low 70s.

So how do you stop that?  You can't stop that by asking them to.  You stop that by having a law, which is a good law, saying that you have to spend between 80 and 85 percent of everything you take in, in revenue on medical care for your patients.  And if you don't we will know about it because we'll be tracking it.  And then you have to rebate that difference to the people.

So there’s a reason for doing that.  It’s good public policy.  It can't just happen on a voluntary basis.  I mean, it’s -- but it’s a way to make sure you get your objective.

Let me just close on one other issue.  The rate review -- and I wish we could talk about the Medicare board -- advisory Medicare board, which is controversial, but which is --

THE PRESIDENT:  Well, we will have a chance to talk about it next.  So, Jay, let’s wrap it up, because I want to make sure everybody --

SENATOR ROCKEFELLER:  I'm going to wrap it up.  The insurance rate review is important.  And if Kathleen Sebelius is to be called an unelected person and she’s head of the group that does all of Medicaid and Medicare and Health and Human Services, and she’s been an insurance commissioner, she’s been a governor, she knows the whole thing -- I don't call her down because she’s not elected, but was appointed by you.  And it was a brilliant choice.

People say decisions can't all come from Washington.  Sometimes decisions have to come from Washington because what we're about here is not trying to run by government; we're trying to protect consumers.  And if you're going to protect consumers, you’ve got to have a way that they really do get protection and that they know it and that they feel it in their lives.

So this is -- this insurance reform is important; a profoundly emotional subject out there and we've got to do something about it.

REPRESENTATIVE BOEHNER:  Mr. President, Ms. Blackburn was on the list I thought before we left.

THE PRESIDENT:  Okay.  Go ahead, Marsha.

REPRESENTATIVE BLACKBURN:  Thank you, Mr. President.  And, yes, one of the points that we did want to cover today was the across-state-line purchasing of insurance.  You’ve alluded to that a couple of times and mentioned that you felt like we were close on that issue.  I think that there are some very important structural differences in the way we approach this, just as I think that there are very deep philosophical differences in how we approach health care reform.

Now, a lot of the people that I talk to want us to start over in this issue and they want us to give them the ability to hold insurance companies accountable.  One of those ways is through very robust competition.  And when you have a district like mine in Tennessee, where the bulk of our constituents are within 15 miles of the state line, the ability for those individuals -- who have families and live and work and have employees on the other side of the state line who shop for major purchases every day -- is to allow them to be able to make those purchases.

Also, when you talk about holding insurance companies accountable, if you want to empower patients in front of those insurance companies, take the power away from them, then give them the ability to buy a policy that suits their needs.  They are really tired of paying for coverage they don't want.  If you want to prevent premium acceleration, such as the issue in California right now, where the premiums have gone up 39 percent, if you are siding with protecting those insurance companies and not allowing across-state-line competition, then what you're doing is denying Californians the ability to go to Oregon, where they could buy a policy for 25 percent less, or individuals in New Jersey who could go to Pennsylvania and buy a policy and lower their cost 26 percent, or go to Wisconsin and buy one and lower their cost 74 percent.

Now, some of the very differences in our bill -- we have a way to do this without putting a federal bureaucracy in charge of it.  States can already do compacts, but the Senate bill legislation would require state action and then federal approval for those compacts to take place.

There's another important point here.  The bill that you all are proposing would not put these in place until 2016, and quite frankly I think a lot of the American people agree with us that care delayed and access delayed is care and access denied.  And they would like to see those -- basically what you have -- state lines right now basically have stop signs up when it comes to across state line access.  They would like to see that come down, and like to see those access portals opened up so that they can first lower their cost, secondly so that they have greater ability to hold insurance companies accountable.  And then also state legislators, even some of our governors -- many of the governors -- favor approaching this model and allowing our constituents a way to access this, get the cost down.  And I will be brief so that we can move on to other topics.  Thank you.

THE PRESIDENT:  I appreciate that very much, Marsha.  Just to close, because there have been two issues that were raised -- one, the purchasing insurance across state lines; and the other was the issue of the mandate, and I just want to address those very briefly, and then I'm going to turn it over to Joe.

I support the idea of purchasing insurance across state lines.  And you're right that the way we structure it is to have compacts between states so that you start getting a regional market.  But I think there are two things that are important to understand.

Number one, with respect to California, for example, the problem, as was presented yesterday, in California, was not that there were a whole bunch of insurance companies from other states who were clamoring in to get into California to sell insurance to those individuals who saw their premiums spike by 39 percent.  There weren't.

The problem has to do with the fact, according to them, that people who have lost their jobs now who are healthy and can't afford the individual market have basically just decided, I'm going to go without insurance; I'll see -- I got to take my chances, because I just can't afford it.  What that's left is people who, because of preexisting conditions, because of special health care needs, because of age, they have to keep their insurance.  And so the pool has become older and sicker.

Now, the way to get at that problem is actually what we've discussed earlier, which is to broaden the pool; make sure everybody is in the pool.  And that's what the exchanges do.

I actually think that on the purchasing insurance across state lines, there may be a way of resolving the philosophical difference -- not entirely, but there's a potential way of bridging this gap, and that is to say that once there was a national exchange with some minimum standards, then potentially you could just have a national marketplace, and anybody could be able to sell into the exchange.  This is something that Mike Enzi just mentioned.  I actually think that could be workable once the exchange was stood up.  So there may be a way of bridging this difference.

Now, on the mandate, though -- because the mandate issue is connected, and so I'm just going to mention this real quickly, and then I will move on.  When I ran in the Democratic primary I was opposed to the mandate.

A PARTICIPANT:  Bless you.

THE PRESIDENT:  Well -- and I'll -- because my theory was, you know what, the reason they don't have health insurance isn't because somebody is not telling them to get it, but because they just can't afford it, and that if we lowered costs enough then everybody would be able to get it.  So I was dragged, kicking and screaming to the conclusion that I arrived at, which is, is that it makes sense for us to have everybody purchase insurance.  And I have to say this is not a Democratic idea.  I mean, there are a number of Republicans sitting around this table who have previously supported the idea of an individual mandate, responsibility.

The reason I came to this conclusion is twofold.  One is cost-shifting, which is a fancy term for saying everybody here who has health insurance is one way or another paying for those who don't.  Every time somebody goes into the emergency room -- if Jay's son got hit by a bus and his dad wasn't Jay Rockefeller, and he ends up in the emergency room, we'd give him emergency treatment, and we'd all pick up the tab.  And the calculation -- not our calculation, but independent economists -- is that each family with health insurance right now is picking up $1,000 to $1,100 worth of costs for people who don't have health insurance.

So when Tom Coburn earlier said, you know, if a kid comes to the emergency room, they're going to get treated -- yes, they will get treated.  Who's paying for it?  Well, we're paying for it.  Every American family who's got health insurance is paying for it.  Every employer who is covering their employees is paying for it.

So we're already putting the money in.  It's just in a very inefficient way.  And so the notion that somehow if we don't ask people to carry their responsibilities, that we're saving money -- no, we're not saving money; it's just we don't see it.  It's called uncompensated care, and we all get charged an extra thousand bucks.  So that's part of the reason.

The second reason has to do with the issue of preexisting conditions and the pool that we've already discussed, but I just wanted to address those two issues.  Marsha, you had one thing that you wanted to respond to.

REPRESENTATIVE BLACKBURN:  Yes, Mr. President, I did, very quickly.  I would just suggest that we're looking at this from, in your example, we're looking at it the wrong way.  You're talking about letting companies into California.  I'm talking about letting individuals out.

THE PRESIDENT:  No, but it's the same idea, Marsha.  It doesn't matter whether they're -- companies are going in or people are going out.  I promise you if --

REPRESENTATIVE BLACKBURN:  Free it up.  Free it up.

THE PRESIDENT:  I promise you that the problem that's going on in California is going on in every state.  It's not unique to California.  It's not as if there are insurance companies that are given great deals in Iowa.  That gentleman farmer who just talked about -- these are some structural problems that exist in every state.

It is -- what is true -- no, I want to say this, hold on a second, guys -- what is absolutely true is that some states probably have higher mandates than others and so you can probably attribute a certain amount of the cost in a high -- a state that has more requirements for bare minimum coverage, doesn't allow drive-by deliveries or requires mammograms or what have you.  Those things all may add some incremental cost, but the truth of the matter is, is that that's not the reason that you're seeing such problems.  In a lot of states, the problem is just you don't have competition at all.  We want competition.  We just want some minimum standards.