Good morning, everybody. Welcome. Thank you so much for participating today. I am very grateful to all of you because I know how busy you are.
What I want to do is just make a few brief remarks on the front end, and then we're going to allow leadership from the both the House and the Senate to make some opening remarks, and then we will dive in.
Last year obviously was one of the toughest years we've had on record, and all of us in one way or another were devoted to focusing on breaking the back of the recession, restoring economic growth, putting people back to work. We've still got a long way to go. And so I know both the House and the Senate are interested in how do we propel economic growth forward; how do we create more jobs. I was very pleased to see a glimpse of bipartisanship in the Senate recently in passing a jobs bill, and I hope that continues, and I know there are going to be some additional pieces of legislation moving forward around, for example, making sure that small businesses can get financing. And those are the kinds of things that I think all parties and both chambers should be able to agree to. So I'm very much looking forward to working with you on all those issues.
I have said repeatedly -- I said at the State of the Union, I said last night when I was meeting with the Business Roundtable -- that in addition to dealing with the immediate challenges we face in the recovery, it's absolutely critical that we also look at some fundamental structural problems in our economy that are hurting families, hurting businesses, and having an impact on the exploding deficits and debts that the federal government, but also state governments are carrying. And it's for that reason that last year, around this time, actually, I hosted in the White House a health care summit and indicated to Congress that it was absolutely critical for us to begin now moving on what is one of the biggest drags on our economy and represents one of the biggest hardships that families face.
Some of you know that I get 10 letters, out of the 40,000 that I receive every day, for me to take upstairs to the residence and read every single night. And these are letters from all across the country, constituents from every walk of life. And I can tell you that at least two, sometimes five, of the 10 letters relates to the challenges that people are experiencing in health care every single day. I'll get letters from parents who -- whose children have preexisting conditions and maybe those children were able to get health insurance when they were young but now they're growing up, they're about to move out, and they can't get insurance no matter what job they find.
I hear from small businesses who have just opened up their new rates from their insurance company and it turns out that the rates have gone up 20, 30, in some cases 35 percent. I hear from families who have hit lifetime limits and because somebody in their family is very ill, at a certain point they start having to dig out of pocket and they are having to mortgage their house and in some cases have gone bankrupt because of health care.
So this is an issue that is affecting everybody. It's affecting not only those without insurance, but it's affecting those with insurance. And when you talk to every single expert and you just talk to ordinary people and you talk to businesses, everybody understands that the problem is not getting better, it's getting worse. Right now it's projected that premiums for families with health insurance -- not people without health insurance but with health insurance -- will almost certainly double over the next decade, just as they doubled over the past decade.
In the individual markets, it's even worse. Businesses are having to make decisions about just dropping coverage altogether for their employees. If they're not doing that, then the money that they are spending on health care is money that otherwise could have gone to job creation.
And I don't need to tell people here about the effects on the federal budget. We've got some people who've been working a very long time on figuring out how can we control the huge expansion of entitlements. Almost all of the long-term deficit and debt that we face relates to the exploding costs of Medicare and Medicaid. Almost all of it. That is the single biggest driver of our federal deficit. And if we don't get control over that we can't get control over our federal budget.
Now, I'm telling all of you things you already know. Maybe more personally I should just mention the fact that I now have about as good health care as anybody could have. I've got a doctor right downstairs. And all of us, when I was in the Senate, and all of you as House and Senate members, have good health care. But remember maybe when you were younger, when you were first starting off -- I can certainly remember Malia coming into the kitchen one day and saying, "I can't breathe, Daddy," and us having to rush her to the emergency room because she had asthma; or Sasha, when she was a baby, getting meningitis and having to get a spinal tap and being on antibiotics for three days, and us not knowing whether or not she was going to emerge okay. In each of those instances I remember thinking while sitting in the emergency room what would have happened if I didn't have reliable health care.
My mother, who was self-employed, didn't have reliable health care, and she died of ovarian cancer. And there's probably nothing that modern medicine could have done about that. It was caught late, and that's a hard cancer to diagnose. But I do remember the last six months of her life -- insurance companies threatening that they would not reimburse her for her costs, and her having to be on the phone in the hospital room arguing with insurance companies when what she should have been doing is spending time with her family. I do remember that.
Now, everybody here has those same stories somewhere in their lives. Everybody here understands the desperation that people feel when they're sick. And I think everybody here is profoundly sympathetic and wants to make sure that we have a system that works for all Americans.
You know, I was looking through some of the past statements that people have made, and I think this concern is bipartisan. John McCain has talked about how rising health care costs are devastating to middle-class families. Chuck, you've been working on this a long time. You've discussed the unsustainable growth in Medicare and Medicaid in our budget. Mike Enzi, who's worked on this and partnered with Ted Kennedy on a range of health care issues as a chairman of the committee, you said that small businesses in your home state are finding it nearly impossible to afford health care coverage for their employees. And you said that the current system is in critical condition. And Mitch, you've said that the need for reform is not in question, and obviously there are comparable studies on the Democratic side as well.
So here's the bottom line. We all know this is urgent. And unfortunately over the course of the year, despite all the hearings that took place and all the negotiations that took place and people on both sides of the aisle worked long and hard on this issue and -- this became a very ideological battle. It became a very partisan battle. And politics I think ended up trumping practical common sense.
I said at the State of the Union, and I'll repeat, I didn't take this on because I thought it was good politics. This is such a complicated issue that it's inevitably going to be contentious. But what I'm hoping to accomplish today is for everybody to focus not just on where we differ, but focus on where we agree because there actually is some significant agreement on a host of issues.
I've looked very carefully at John Boehner's plan that he put forward. I've looked at Tom Coburn and Senator Burr's plan that's been put out there. Paul Ryan has discussed some of the issues surrounding Medicare. I've looked at those very carefully. Mike Enzi, in the past you've put forward legislation around small businesses that are very important.
And so when I look at the ideas that are out there, there is overlap. It's not perfect overlap, it's not a hundred percent overlap, but there's some overlap. Now, what I did, what the White House did several days ago, is we posted what we think is the best blend of the House and the Senate legislation that's already passed.
The basic concept is that we would set up an exchange, meaning a place where individuals and small businesses could go and get choice and competition for private health care plans, the same way that members of Congress get choice and competition for their health care plans. For people who couldn't afford it, we would provide them some subsidies. But because people would have some pooling power, the costs overall would be lower because they'd be in a stronger position to negotiate.
We think it is a plan that works with the existing system, the employer-based system, the private health care system, but allows a lot of people who currently don't have health care to get health care, and more importantly, for the vast majority of people who do have some health care, it allows them to get a better deal.
We also have some insurance reforms in there that, for example, prohibit people who have preexisting conditions from being banned from getting coverage. We also talk about how we can help to make the Medicare system more effective and provide better quality care.
In each of these cases there are corresponding ideas on the Republican side that we should be able to bridge. So I promise not to make a long speech. Let me just close by saying this. My hope in the several hours that we're going to be here today, that in each section that we're going to discuss -- how do we lower costs for families and small businesses, how do we make sure that the insurance market works for people, how do we make sure that we are dealing with the long-term deficits, how do we make sure that people who don't have coverage can get coverage -- in each of these areas what I'm going to do is I'm going to start off by saying, here are some things we agree on. And then let's talk about some areas where we disagree, and see if we can bridge those gaps.
I don't know that those gaps can be bridged. And it may be that at the end of the day we come out of here and everybody says, well, you know, we have some honest disagreements; people are sincere in wanting to help, but they've got different ideas about how to do it, and we can't bridge the gap between Democrats and Republicans on this.
But I'd like to make sure that this discussion is actually a discussion and not just us trading talking points. I hope that this isn't political theater where we're just playing to the cameras and criticizing each other, but instead are actually trying to solve the problem.
That's what the American people are looking for. As controversial as the efforts to reform health care have been thus far, when you ask people, should we move forward and try to reform the system, people still say yes, they still want to see change. And it strikes me that if we've got an open mind, if we're listening to each other, if we're not engaging in sort of the tit-for-tat and trying to score political points during the next several hours, that we might be able to make some progress. And if not, at least we will have better clarified for the American people what the debate is about.
So, with that, I just want to say again how much I appreciate everybody for participating. And I am going to now turn it over to Senator McConnell so that he can make some opening remarks. And we'll just go back and forth between the Democratic leaders and the Republican leaders, House and Senate, and then we'll just open it up and we'll start diving in. All right?
Thank you very much, Mr. President. John Boehner and I have selected Lamar Alexander of Tennessee to make our opening framing statement, and let me turn to him.
Thanks, Mitch and John. Mr. President, thank you very much for the invitation. Appreciate being here. Several of us were part of the summits that you had a year ago, and so I've been asked to try to express what Republicans believe about where we've gotten since -- since then.
As a former governor, I also want to try to represent governors' views. They have a big stake in it. I know you met with some governors just the last few days. We believe that our views represent the views of a great number of the American people who have tried to say in every way they know how -- through town meetings, through surveys, through elections in Virginia and New Jersey and Massachusetts -- that they oppose the health care bill that passed the Senate on Christmas Eve.
And more importantly, we want to talk about -- we believe we have a better idea. And that's to take many of the examples that you just mentioned about health care costs, make that our goal -- reducing health care costs -- and start over, and let's go step by step toward that goal. And we'd like to briefly mention -- I'll briefly mention and others will talk more about it as we go along -- what those ideas are, what some of them are, what some of the suggestions we have are.
I'd like to begin with a story. When I was elected governor some of the media went up to the Democratic leaders of the legislature and said, "What are you going to do with this new, young Republican governor?" a few years ago. And they said, "I'm going to help him because if he succeeds our state succeeds." And they did that. That's the way we worked for eight years. But often they had to persuade me to change my direction to get our state where it needed to go.
I'd like to say the same thing to you. I mean, we want you to succeed, because if you succeed our country succeeds. But we would like, respectfully, to change the direction you're going on health care costs. And that's what I want to mention here in the next few minutes.
I was trying to think about if there were any kind of event that this could be compared with, and I was thinking of the Detroit Auto Show, that you'd invited us out to watch you unveil the latest model that you and your engineers had created and asked us to help sell it to the American people. And we go and you do that and we look at it and we say, that's the same model we saw last year, and we didn't like it and neither did they because we don't think it gets us where we need to go, and we can't afford it. So as they also say in Detroit, again, we think we have a better idea.
Your stories are a lot like the stories I hear. When I went home for Christmas, after we had that 25 days of consecutive debate and voted on Christmas Eve on health care, a friend of mine from Tullahoma, Tennessee, said, "I hope you'll kill that health care bill." And then before the words were out of his mouth, he said, "But we've got to do something about health care costs. My wife has breast cancer; she got it 11 years ago. Our insurance is $2,000 a month. We couldn't afford it if our employer weren't helping us do that. So we've got to do something."
And that's about -- that's where we are. But we think to do that we have to start by taking the current bill and putting it on the shelf and starting from a clean sheet of paper.
Now, you've presented ideas. There's an 11-page memo on the -- I think it's important for people to understand there's not a presidential bill. There are good suggestions and ideas on the Web. We've made our ideas. But it's said -- it's a lot like the Senate bill. It has more taxes, more subsidies, more spending. So what that means is, that when it's written it will be 2,700 pages, more or less, which means it will probably have a lot of surprises in it. It means it will cut Medicare by about half a trillion dollars, and spend most of that on new programs, not on Medicare and making it stronger, even though it's going broke in 2015. It means there will be about a half trillion dollars of new taxes in it. It means that for millions of Americans premiums will go up because those -- when people pay those new taxes, premiums will go up -- they will also go up because of the government mandates.
It means that from a governor's point of view, there are going to be what our Democratic governor calls "the mother of all unfunded mandates." Nothing used to make me madder as a governor than when Washington politicians would get together and pass a big bill, take credit for it, and then send me the bill to pay. And that's exactly what this does with the expansion of Medicare.
And in addition, it dumps 15 to 18 million low-income Americans into a Medicaid program that none of us would want to be a part of because 50 percent of doctors won't see new patients. So it's like giving someone a ticket to a bus line where the busses only run half the time.
When fully implemented, the bill would spend about $2.5 trillion a year, and it still has the sweetheart deals in it. One is out; some are still in. I mean, what's fair about taxpayers in Louisiana paying less than taxpayers in Tennessee? And what's fair about protecting seniors in Florida and not protecting seniors in California and Illinois and Wyoming?
So our view, with all respect, is that this is a car that can't be recalled and fixed, and that we ought to start over. But we'd like to start over.
When I go down on the floor -- and I've been there a lot on this issue -- some of my Democratic friends will say, well, Lamar, where's the Republican comprehensive bill? And I say back, well, if you're waiting for Mitch McConnell to roll in a wheelbarrow in here with a 2,700-page Republican comprehensive bill, it's not going to happen because we've come to the conclusion that we don't do comprehensive well. We've watched the comprehensive economy-wide cap and trade. We've watched the comprehensive immigration bill. We had the best senators we've got working on that in a bipartisan way. We've watched the comprehensive health care bill, and they fall of their own weight.
Our country is too big, too complicated, too decentralized for Washington, a few of us here, just to write a few rules about remaking 17 percent of the economy all at once. That sort of thinking works in the classroom but it doesn't work very well in our big complicated country.
And it doesn't work for most of us. I mean, if you look around the table -- and I'm sure it's true on the Democratic side, as it is on the Republican -- we've got shoe store owners and small business people and a former county judge and we've got three doctors. We've got people who are used to solving problems step by step. And that's why we said 173 times on the Senate floor in the last six months of last year, we mentioned our step-by-step plan for reducing health care costs.
And I'd like to just mention those in a sentence or two. You mentioned Mike Enzi's work on the small business health care plan. That's a good start. It came up in the Senate. He will explain why it covers more people, costs less, and helps small businesses offer insurance, too, helping Americans buy insurance across state lines. You've mentioned that yourself. Most of the governors I've talked to think that would be a good way to increase competition.
Number three, put an end to junk lawsuits against doctors. In our state, half the counties, pregnant women have to drive to the big city to have prenatal health care or to have their baby, because the medical malpractice suits have driven up the insurance policies so high that doctors leave the rural counties. Give states incentives to lower costs, number four. Number five, expanding health savings accounts. Number six, House Republicans have some ideas about how my friend in Tullahoma can continue to afford insurance for his wife who has had breast cancer -- because she has a preexisting condition, it makes it more difficult to buy insurance. So there are six ideas. They're just six steps, maybe the first six. But combined with six others and six more and six others, they'd get us in the right direction.
Now, some say we need to rein in the insurance companies; maybe we do. But I think it's important to note that if we took all the profits of the insurance companies, the health insurance companies, entirely away -- every single penny of it -- we could pay for two days of the health insurance of Americans, and that would leave 363 days with costs that are too high. So that's why we continue to insist that as much as we want to expand access and to do other things in health care, that we shouldn't expand a system that's this expensive; that the best way to reduce cost -- to increase access is to reduce cost.
Now, in conclusion, I have a suggestion and a request for how to make this a bipartisan and truly productive session. And I hope that those who are here will agree I've got a pretty good record of working across party lines and of supporting the President when I believe he's right, even though other members of my party might not on that occasion. And my request is this, is before we go further today, that the Democratic congressional leaders and you, Mr. President, renounce this idea of going back to the Congress and jamming through on a bipartisan -- I mean, on a partisan vote through a little-used process we call reconciliation, your version of the bill. You can say that this process has been used before, and that would be right, but it's never been used for anything like this. It's not appropriate to use to write the rules for 17 percent of the economy. Senator Byrd, who is the constitutional historian of the Senate, has said that it would be an outrage to run the health care bill through the Senate like a freight train with this process.
So this is the only place, the Senate, where the rights to the minority are protected and sometimes, as Senator Byrd has said, the minority can be right. I remember reading Alexis de Tocqueville's books, which most of us have read, and he said in his "American Democracy" that the greatest threat to the American democracy would be the tyranny of the majority.
When Republicans were trying to change the rules a few years ago -- you and I were both there; Senator McCain was very involved in that -- about getting a majority vote for judges, then-Senator Obama said the following: "What we worry about is essentially having two chambers, the House and the Senate, who are simply majoritarian -- absolute power on either side. That's just not what the Founders intended." Which is another way of saying that the Founders intended the Senate to be a place where the majority didn't rule on big issues.
Senator Byrd in his book -- Senator Reid in his book, writing about the Gang of 14, said that the end of the filibuster requiring 60 votes to pass a bill would be the end of the United States Senate. And I think that's why Lyndon Johnson in the '60s passed the civil rights bills in Everett Dirksen's office, the Republican Leader's, because he understood that having a bipartisan bill not only would pass it but it would help the country accept it.
Senator Pat Moynihan said before he died that he couldn't remember a big piece of social legislation that passed that wasn't bipartisan. And after World War II in this very house in the room back over here, President Truman and General Marshall would meet once a week with Senator Arthur Vandenburg, the Republican chairman of the Senate Foreign Relations Committee, and write the Marshall Plan. And General Marshall said that sometimes Van was my right hand and sometimes he was his right hand.
And we know how to do that. I mean, John Boehner and George Miller did that on No Child Left Behind. Mike Enzi and Ted Kennedy wrote 35 bills together. You mentioned that in your opening remarks. You and I and many other senators worked together on the America COMPETES Act. We know how to do that and we can do that on health care as well.
But to do that, we'll have to renounce jamming it through in a partisan way. And if we don't, then the rest of what we do today will not be relevant. The only thing bipartisan will be the opposition to the bill. And we'll be saying to the American people, who have tried to tell us in every way they know how -- town halls and elections and surveys -- that they don't want this bill; that they would like for us to start over.
So if we can do that -- start over -- we can write a health care bill. It means putting aside jamming it through. It means working together the way General Marshall and Senator Vandenburg did. It means reducing health care costs -- and making that our goal for now, and not focusing on the other goals. And it means going step by step together to re-earn the trust of the American people. We'd like to do that, and we appreciate the opportunity that you've given us today to say what our ideas are, and to move forward.
Thank you very much.
Well, thank you, Lamar. Both I and Lamar went a little bit over our original allocated time. (Laughter.) Not wanting to be a hypocrite, I wanted to give you some slack. We're going to have Nancy and Harry -- I think my understanding is you guys want to split time. We'll split it up, and so we'll let them make some quick remarks.
What I will then do is just address -- John, are you going to make the presentation yourself? Okay. What I will then do is just address a couple of points that were raised by you, Lamar, in terms of process, and then we will start diving in and getting to work.
All right? Nancy.
Yes, Mr. President. Thank you very much for bringing us here today. I will try to stick to the time because we have many people to hear from. Thank you, Mr. President, again. It was almost a year ago, March 5th of last year, when you brought us together in a bipartisan way to set us on a path to lower cost, improved quality -- expand access to quality health care for all Americans. In the course of that time in our committees in the House and the Senate, we've had lively discussions. Here we are today.
You began your remarks, Mr. President, by saying there was a glimmer of bipartisanship in the Senate for the passage of the jobs bill. I want you to know there was a blaze of bipartisanship in the House yesterday -- with, what, 406-19, we passed under leadership of Congresswoman Louise Slaughter, Tom Perriello, Betsy Markey and others the lifting -- repealing the exemption that insurance companies have on health insurance and the antitrust laws for health insurance -- 406-19, a very strong message that, yes, the insurance companies need to be reined in. So put us down on that side of the ledger.
That day, March 5th, we all remember the bipartisan spirit, the hope that was in the room, and also when Senator Kennedy came into the room and declared himself a "foot soldier" in the fight for health care for all Americans. And then, later he wrote to you and said this is not just about the details of policy, it is about the character of our country. The character of our country has formed the backbone of our country, our working middle-class families in America.
As we sit around this table, I think we should be mindful of what they do when they sit around their kitchen table. What we do here must be relevant to their lives. And for them, they don't have time for us to start over. Many of them are at the end of the line with their insurance, with their caps, with their -- this and that. You talked about stories -- Senator Alexander did, too. I can tell you many stories as I travel the country where I've seen grown men cry. One man in Michigan, Mr. Dingell told me that his wife had been sick for a long time. He was at the end of the line in terms of his finances; he might have to lose his home, and she was bedridden. He was afraid of what was going to happen. He was too proud to tell his children that he needed help, because they were raising their own families. He said, "When is something going to happen on health care in America? I can't hold out much longer."
I have a letter -- and Michigan seems to be where I get some mail on this subject since I've travelled there recently -- the woman who said that their family -- to pay their deductible, they have to subtract it from their food budget. And that's just one of the concerns she mentioned.
I can't mention health care in Michigan without acknowledging Chairman Dingell. His institutional memory of how difficult it was to pass Medicare, how he has worked over the decades to improve it, how committed he is to preserving it, and how important a part of preserving Medicare is to this passing this health care bill. Later he will inspire us with that, but he, Mr. President, as you know, as a young Congressman gaveled Medicare into law in the House of Representatives.
You have talked about how the present system is unsustainable for families, for businesses large, modern and large, small -- any size, and how it's unsustainable, as you said on March 5th of last year. And health care reform is entitlement reform. Our budget cannot take this upward spiral of cost. We have a moral obligation to reduce the deficit and not heap mountains of debt onto the next generations.
But I want to talk for a moment about what it means to the economy. Imagine an economy where people could change jobs, start businesses, become self-employed, whether to pursue their artistic aspirations or be entrepreneurial and start new businesses if they were not job-locked, because they have a child who's bipolar or a family member who's diabetic, with a preexisting condition, and all of the other constraints that having health care or not having health care places on an entrepreneurial spirit.
Think of an economy with that dynamism of people following their pursuits, taking risks -- we want them to take risks and yet we lock them down, and we have an anvil around their businesses because of these increasing costs of health care.
So this bill is not only about the health security of America. It's about jobs. In its life it will create 4 million jobs -- 400,000 jobs almost immediately; jobs, again, in the health care industry, but in the entrepreneurial world as well. You, Mr. President, with your leadership we passed the American Reinvestment and Recovery Act last January and got a running start on some of the technology and scientific advancements in this by the investments in biomedical research, health IT -- health information technology -- a running start by your signing the SCHIP, the children's health bill, insuring 11 million children. You had a running start on expanding access, and not only that, but doing it in a way that is of the future.
This is not just about health care for America; it's about a healthier America. This legislation is about innovation; it's about prevention; it's about wellness. But most people haven't heard about that. And those people sitting at that kitchen table, they don't want to hear about process; they want to hear about results. They want to know what this means to them. And what it means is a health initiative that is about affordability for the middle class, lowering costs, improving access for them. Accessibility -- affordability and accessibility are closely aligned -- and accountability for the insurance companies.
So it is -- it's a very important initiative that we have to take. And I want to say, because Medicare was mentioned, unless we pass this legislation we cannot keep our promises on Medicare. We simply must make the cuts in waste, fraud, and abuse in Medicare so that the benefits and the premiums are untouched. We owe it to our seniors. We owe it to our country.
That day, March 5th, Senator Kennedy said health care is a right, not a privilege. Let us move in a way -- who can say "ram"? We started this six weeks after your inauguration, just six weeks after your inauguration, on March 5th, with you extending a hand of bipartisanship. And many of the provisions that are in our bill are initiatives put forth by the Republicans -- others of our colleagues will talk about this.
But I just hope that as we sit around this table, we understand the urgency that the American people have about this issue, how it affects not only their health but their economic security. And I thank you, Mr. President, for your leadership in getting us to this place.
Mr. President, my friends in the House and in the Senate, I want to spend a few minutes talking about Nevada, about our country, and not what's going on here in Washington. I want to start by talking about a young man by the name of Jesus Gutierrez. He works hard. He has a restaurant in Reno, Nevada. He had everything that he wanted, except a baby. He had health insurance. He had employees that liked him. But he was fortunate -- they were going to have a baby and it was going to be a little girl. And the baby was born, and in just a few minutes after the birth of that baby, he was told that the baby had a cleft pallet. "But that's okay," he was told. "We can take care of that." And they did. They did some surgery on the baby; he was happy -- that is, Jesus was happy -- until he got his mail four months later, opened the envelope, and the insurance company said, "We didn't realize that your baby had a preexisting disability. We're not covering the $90,000 in hospital and doctor bills you've already run up." So he's trying to pay that off. The baby needs a couple more surgeries. This shouldn't happen to anyone in America. He had health insurance. He paid his premiums.
I say to my friend, Lamar, who I have great respect and admiration for, you're entitled to your opinions, but not your own facts. Your opinion is something that is yours, and you're entitled to that, but not your own set of facts. Senator Moynihan said that many years ago, and that's what we have to do here today. Let's make sure that we talk about facts.
Last Monday, a week ago Monday, all over America, results were run from a poll done by the Kaiser Foundation. It was interesting what that poll said: 58 percent of Americans would be disappointed or angry if we did not do health care reform this year -- 58 percent. Across America, more than 60 percent of Republicans, Democrats, and independents want us to reform the way health care works. Is it any wonder? They want it so that businesses can afford health care. They want to give consumers more choices and insurance companies more competition.
And the doughnut hole. What is the doughnut hole? Well, a senior citizen will tell you what the doughnut hole is. Under the Medicare law that is in existence, you can be sick and you can get your medication paid for for a while. After you spend $2,000 approximately in medication, you are finished until you spend $3,500 more out of your own pocket. And what happens during that hole that we've called the doughnut hole? Seniors in America are splitting pills in half, not getting the prescriptions filled, taking them every other day. Again, Lamar, you're entitled to your opinion but not your own facts.
No one has said -- I read what the President has online -- no one has talked about reconciliation but that's what you folks have talked about ever since that came out, as if it's something that has never been done before. Now, we as leaders here, the Speaker and I, have not talked about doing reconciliation as the only way out of all this. Of course it's not the only way out. But remember, since 1981 reconciliation has been used 21 times. Most of it has been used by Republicans, for major things, like much of the Contract for America, Medicare reform, the tax cuts for rich people in America. So reconciliation isn't something that's never been done before.
It's as if there's a different mindset, a different set of facts than the reality. Remember, Chairman Dodd in the HELP Committee held weeks of markups. And in the bill that he reported out of that committee, there's more than 150 Republican amendments that are part of that legislation. The same happened with Chairman Baucus in the Finance Committee. And those were put together, that's what we brought to the floor.
So the bill on the floor that my friend Lamar is lamenting here has significant input from the Republicans. So let's look at the facts a little bit more because they can be stubborn, you know? Harvard just completed a study that shows 45,000 Americans die every year because they don't have health insurance -- almost 1,000 a week in America. In 2008, about 750,000 bankruptcies were filed. About 70 percent of those bankruptcies were filed because of health care costs. Eighty percent of the people that filed for bankruptcy because of health care costs had health insurance. America is the only country in the world where if you get sick or hurt, you're going to have to file bankruptcy -- 750,000 bankruptcies in 2008.
These facts show that the story that I told about Jesus is not just a story of some young businessman in Reno, Nevada, running a restaurant that gets jerked around by an insurance company. Happens all over. Health reform shouldn't be about political parties fighting each other. It should be about people fighting for their lives and fighting for a better quality of life, people like Jesus and that little girl. This debate shouldn't be about whether an idea came from Democrats or Republicans, or one side of the aisle or the other side of the aisle, but whether the idea will improve the health care delivery system in our country.
I know, it's obvious, we've heard it -- our Republican friends oppose our legislation. And that is your right. But also, it becomes your responsibility to propose ideas for making it better. So if you have a better plan for making health insurance more affordable, let's hear it. If you have a better plan for making health insurance companies more accountable, let's face it. Let's work on it. If you have a better plan for doing this while cutting the deficit, as our bill did -- during the first 10 years, our bill cuts the deficit by $132 billion; the second 10 years up to $1.3 trillion. Those aren't my numbers; they're from Congressional Budget Office.
So we're ready to listen. I so appreciate the President getting us together. I want the American people to know that we need to work together, and I want to do everything that I can as a senator to work with my colleagues on both sides of the aisle to get this done. We need to do health care reform.
I've spoken with Madam Speaker on many occasions, numerous times, about health care. We spent most of the last year talking about health care. I so admire her tenacity, her legislative brilliance. And I will do everything I can, Mr. President, to get this health care reform over the goal line.
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.
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.
No, no, no, no -- let me -- and this is an example of where we've got to get our facts straight.
That's my point.
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.
Well, may I -- may I --
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.
Mr. President, I've had my time --
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.
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.
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.
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?
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.
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.
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.
Tom, you made some powerful points. You want to just wrap up real quick?
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.
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 --
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 --
It would help.
-- we're shifting it to the private sector.
You and I agree on this. Steny.
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.
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?
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.
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.
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.
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.
We took some additional ideas from folks like Congressman Roskam.
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.
Mitch, is there somebody --
Yes, Mr. President. I'm going to yield to John here.
I'd like to yield to Dave Camp to continue this conversation about cost containment.
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.
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 --
Well, I'm almost -- I'm almost done.
-- but I just want to kind of point out that --
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.
This is the discussion that I just had to -- about Lamar. And --
Yes, they do say that. And they do say that the value of the benefit is higher, and that is why it goes up.
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.
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.
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 --
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 --
-- 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.
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?
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 --
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.
Good. This has been a useful conversation. Paul Ryan wants to make a comment but --
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.
I think the Republican leaders are controlling the time for the Republicans, if I'm not mistaken -- is that right?
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.
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.
Paul, would you yield -- Mr. President, can I ask him to yield?
We're not in a formal hearing here -- (laughter) -- so go ahead.
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?
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.)
Depends on who it is, Paul.
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 --
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 Schumer for the Senate --
I know Senator Schumer wants to speak, and I know that Jim Clyburn wants to say something very quickly and --
And Jon Kyl would like to as well.
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.
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.
Mr. President, can we turn to Jon Kyl. I'm sorry --
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.
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.
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.
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.
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.
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.
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.
Mr. President, I'd like to yield to Dr. Boustany to continue this conversation about insurance reform.
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.
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.
Mr. President, I don't know if anybody -- we weren't told of what the time limits are.
Well, I'm trying to be flexible.
I know, I'm just curious if you've got a certain amount of time in mind.
We've got about half an hour remaining for this section. So if people can keep their points brief.
Mr. President, from the Senate we have Senator Harkin and Rockefeller to respond for the Democrats.
Right. And I've got a list. George.
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.
Thank you, George.
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 --
John, can I just say --
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.
Let me just make this point, John, because we're not campaigning anymore. The election is over.
I'm reminded of that every day. (Laughter.)
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 --
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.
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.
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.
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 --
Let me just guess -- that that's the 2,400-page health care bill. Is that right?
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.
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.
Mr. President, if I could respond.
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.
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.
Mr. President, can I have 10 second? Literally, 10 seconds.
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 cost issue is legitimate; we're going to address it. I want to --
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.
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.
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.
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.