President Participates in Conversation on Health Care (Text Only)

President Participates in Conversation on Health Care
National Institutes of Health
Bethesda, Maryland

THE PRESIDENT: Thank you all for coming. Please be seated. Thanks for the warm welcome. Thanks for coming. I'm looking forward to having what I think you'll find to be a very interesting dialogue about innovative ways to make sure that our health care system addresses the needs of our individual citizens.

This is an issue that requires a lot of dialogue so people understand the problems, and a lot of innovative thinking to make sure that the system works. My judgment is the system won't work if medical decisions are made by government. I believe the best kind of decision-making occurs when consumers make decisions and the relationship between their doctors and the patients are -- become the cornerstone of good health care policy.

And so we're going to have a dialogue. I want to thank our fellow citizens for being here. We just had a little discussion about how to make sure this conversation goes without flaw. (Laughter.) I'm confident it will.

First, I want to thank the governor of the great state of Maryland for joining us today. (Applause.) As you know, at times I take a little -- a brief weekend retreat in the great state of Maryland at a fine facility called Camp David; and the last time the Governor was there, was with Laura and me, he and the First Lady were there and it happened to be the day of the blizzard. So I've invited him back in the summer. (Laughter.)

I want to thank my friend, Elias Zerhouni, the Director of the National Institutes of Health. I appreciate the job you're doing, Doc; you're doing a fabulous job. (Applause.) I want to thank Les Crawford, who's with us today, the Acting Director of the -- Acting Commissioner of the FDA. Thank you, Les, for being here. (Applause.) And I want to thank everybody else who has come. I'm honored that you're interested in this very important subject.

Before we talk about health care, though, I do want to talk about a couple of other subjects. One, I am -- as you could tell from the speech I gave last week -- a firm believer in freedom and the ability of freedom to bring peace to our world. I am so pleased to watch liberty advance throughout the world in places that -- in places where people never dreamt liberty would come. I want our fellow citizens to see what is happening in our world in the last couple of months.

I mean, in Afghanistan millions of people voted for a president for the first time in 5,000 years. It's a grand moment in history when people who had been condemned to tyranny by -- in this case, the Taliban -- have a chance to express themselves in the ballot box -- at the ballot box, to let their opinions be known as to how government ought to respond to their needs.

As well, the Palestinians elected new leadership. I am very pleased by the courage and leadership shown by Abu Mazen, his desire to unify security forces within the Palestinian territory, so as to defeat the terrorists there and allow for democracy to advance. I believe -- I believe a Palestinian democracy will emerge and will grow, enabling us to achieve a goal of two states, Israeli and Palestine, living side-by-side in peace.

As well, the Ukraine swore in a new president, which was a remarkable advance of democracy in that part of the world. And, finally, this Sunday after years of brutal tyranny, the long-suffering people of Iraq will go to the polls to vote for a -- (Applause.) Freedom is on the march. Freedom will continue on the march, and therefore the world will be more peaceful and we'll be able to say we left behind a more steady and stable and peaceful world for our children and our grandchildren.

At home, we've got to make sure freedom continues on the march, as well. That starts with making sure every child receives a great education. The No Child Left Behind Act is the beginning of making sure high standards and accountability come to our classrooms, so that not one single child is left behind. We're making progress, and over the next four years, we'll continue to make progress.

The world is watching as to whether or not we're able to manage our budgets. One of the things people say, are you capable of dealing with twin deficits? On the one hand, we have a fiscal deficit, so I'll be submitting a budget to the United States Congress that sets clear priorities. One of the priorities of my administration was doubling the funding for NIH so we continue to stay on the leading edge of research and technological change. (Applause.)

We understand how important science is. And we understand it's important to be the leading nation when it comes to research, and we'll continue to stay there. But we are funding some things that aren't effective, as well. And so the budget I submit to the United States Congress will work on reducing our deficit in half by over a five-year period of time, and at the same time, funding much needed priorities.

As terms of the current account deficit -- that would be the deficit, as far as our trade goes -- the best way to deal with the current account deficit is to make sure America is the best place in the world to do business, to risk capital, so that we can continue to grow our economy. And the first step of doing that is for Congress to bring meaningful legal reform to my desk early in this legislative session, reforming the asbestos law, reforming class action lawsuits, and reforming medical liabilities. (Applause.)

We'll continue to work on free and fair trade. I believe we can compete with anybody, anywhere, so long as the rules are fair. We need to open up markets around the world so our farmers and entrepreneurs and manufacturers can sell our products around the world. We need to make sure that regulations are fair. We've got to make sure that -- we've got to make sure that taxes remain low so as not to snuff out the entrepreneurial spirit in America. Our economy is growing, small businesses are vibrant and alive and well. New jobs are being created by small business, and we want to continue that momentum. People are finding work. We've recovered from recession. And it's important for Congress to understand that we've got to create an environment for continued capital expansion if we want our people to find jobs.

And so I'm looking forward to working with them. We've got a lot of big challenges ahead of us. And one of the biggest challenges of all is Social Security. And it's a challenge because if you're a dad, for example, of a 23, 24-year-old child, when that child comes time to retire, the system is broke. It's flat bust. In 13 years, the system begins to go negative. That's more money going out than coming in.

And so it seems like to me for people like me, who have gotten positions of responsibility, we should deal with this issue, and not pass it on in hopes that it gets better. It's not going to get better unless Congress works with the administration to have a permanent, long-term fix for Social Security. If we do not act, the cost becomes more expensive in the out years. If we do not act, there's going to be a need for huge payroll tax increases, and/or major benefit cuts. So now is the time to move. And I understand there's a reluctance by some in Congress to take on a tough decision. But I believe we've been elected for a reason, and that is to confront problems and to work together in a bipartisan spirit.

For those seniors who are worried about the debate on Social Security, you have nothing to worry about; nothing will change. But your children and your grandchildren do have something to worry about. And so I look forward to working with the Congress to come up with a long-term solution to fix Social Security. (Applause.)

As well, we need to come up with reasonable, common-sense policies to address the rising costs of health care. And so today we're going to talk about some innovative ideas. One is health savings accounts. And we'll be talking to an employer, and somebody -- a beneficiary, like me, of a health savings account. A health savings account enables a person to be in charge of his or her own health care decisions. Health care savings account will cover major catastrophic problems, and at the same time, allow a person to save, and/or a business to save tax-free for the everyday expenses of health care. And if, in fact, you have not reached your limit for your catastrophic care -- in other words, if you have money left over, you can roll it over, tax-free, into a savings account that you call your own.

We've got some people who can probably explain this better than me here, consumers of health savings accounts. But health savings accounts all aim at empowering people to make decisions for themselves, owning their own health care plan, and at the same time, bringing some demand control into the cost of health care. Our view is, is that if you're a consumer of health care and you're in the marketplace making health care decisions, it is more likely that there be more cost control in health care than a system in which the consumer of health care has his or her health care bills paid by a third party provider.

Secondly, we're going to talk about association health plans, which will allow small businesses to pool across jurisdictional boundaries to be able to afford health care insurance at the same discounts that big companies get. The principle behind association health plans is that the more risk you're able to spread amongst beneficiaries, the lower your cost of health care. And, unfortunately, too many laws restrict small businesses from being able to pool risk. And so we're going to talk about that.

We're going to talk about an integrative way to establish a national marketplace for health care by allowing people to get on the Internet and buy a health care plan in a state other than that in which you live. It's kind of an interesting way to encourage more consumer activism, more choices for our citizens here in the country.

And, finally, we're going to talk about making sure that we expand our children's health savings program. And we're going to talk to a lady who has been very much involved in encouraging people to sign up for what's called S-CHIP, so the youngest citizens can take care [sic] of the government programs that are now available.

As well, I want to remind you all that we will continue to promote an adequate safety net for our citizens, and by that, we've got community health centers in America today. I want to continue to expand community health centers. This is the place where the poor and the indigent can get primary care. And they're great centers. And Congress has been very cooperative in the past of funding our budget requests, and I hope they do again as we continue to expand these community health centers all across the United States of America.

We will, obviously, continue to make sure Medicare fulfills its promise. Obviously, I felt the system needed to be reformed. It was a system that would pay, for example, for hospitalization of a senior citizen for heart surgery, but not for the medicine that could prevent the heart surgery from being needed in the first place. It's a system that needed to be changed. And at the same time, it was a system that needed to respond to the demands of our senior citizens. And so we introduced market -- market forces into the Medicare system to make it such that it can continue to evolve and grow and change as medicine changes and, therefore, meet the needs of our senior citizens.

Tomorrow, I'm going to go to Cleveland to talk about the importance and need of information technology in the health care field. If you really think about many industries in America, they've been able to modernize and become more productive by introducing IT -- information technology -- into their industries. It's a little difficult -- a little more difficult task here in health care. We've got 21st century medical practices, but 19th century paperwork system. Doctors are still writing prescriptions by hand. Most doctors can't write clearly anyway and so it's a -- (Laughter.) So there's a better way to enable our health care system to wring out inefficiencies and to protect our patients. So medical electronic records is going to be one of the great innovations in medicine. And I look forward to talking about ways to advance information technology and health care.

Finally, a way to make sure that our citizens are able to better afford health care is to speed generic drugs to the market. I want to thank the FDA for propagating rules that prevent pharmaceuticals from delaying the advent and access to our consumers of generic drugs. These drugs do the exact same thing as brand name drugs do and, yet, cost a fraction of the cost of the brand names. And so we're doing a better job of speeding generics to the markets. And that's a positive development for our seniors, and all citizens for that matter.

So here are some practical ways to address the cost of health care without allowing the federal government to become the health care decider. The federalization of health care would be bad medicine for the American people. And one way to prevent that from happening is to propose positive alternatives. And that's what we're going to discuss today.

And the first person I'm going to discuss health savings accounts with is Pat Zakula -- correct? Exactly. Pat Zakula. (Laughter.) She called me George Brush. (Laughter.)

THE PRESIDENT: Great, thanks for doing that. You're a soldier in the army of compassion. So you've got employees, right? How many?

MS. ZAKULA: Yes, we have 70 employees. Because most of our services are home-based, it takes a lot of people to do what we do. Most of our staff are women, some in their 20s to in their 50s.

MS. ZAKULA: That's right. And we've been doing -- providing health care -- health insurance for people for many years, as we keep growing. But it became a real struggle, because the costs were just exorbitant, and they would go up, you know, in double digits every year, and sometimes twice a year they would go up.

THE PRESIDENT: Right, which is a common problem for a lot of smaller enterprises. So how did you deal with it?

THE PRESIDENT: That's interesting. Listen to what she's saying. First of all, they're going broke. They can't afford health care. Like many small businesses or small enterprise or small non-profit, she's faced with a choice: Do I keep the doors open and have employees without health care -- basically, is what you're saying.

The HSA comes along and so the plan, as I understand it, has a deductible of $1,700 -- in other words, you pay for the first $1,700 of expenses -- and then you have insurance to cover the --

MS. ZAKULA: That's correct, to cover the hundred percent after you reach that $1,700.

THE PRESIDENT: Right. And the way this HSA works is you take the high deductible plan, of $1,700 in your case, and contribute $1,700 into the plan, tax-free, so that the person has the $1,700 to cover expenses, up until the insurance policy kicks in. I think that's the way yours works.

THE PRESIDENT: If the $1,700 isn't spent, it rolls over to the next year, tax-free, and the owner of the HSA can pull the money out, tax-free, for health care. And so it's an incentive to save.

Now, think about this, if for example, you make healthy choices in your life and the $1,700 can be rolled over, the healthier you are, the less likely you're going to spend on normal health care needs, the more money you have that you call your own. And, secondly, the benefit is, your employees start making decisions -- as opposed to saying, you've got to go by X, Y, Z for this amount, people all of a sudden start to shop for that which is best for them.

MS. ZAKULA: That's true. And people who -- when they found out that their visit to the doctor really didn't cost $20, which was our co-pay -- (laughter) -- then they're not -- then they don't run to the doctor all the time. However, they are using -- they're doing preventative care and doing the things that they need to do, but they're more likely to shop around and to weigh things, whether I need to do this or not.

THE PRESIDENT: Part of the issue with health savings accounts is for people to even understand they exist. And so you're talking to an owner who is on the leading edge of change. These are relatively new products available. And part of the reasons why we're discussing this is we want small business owners and individuals to realize that health savings accounts are now available. And I urge everybody to look into the benefits of a health savings account.

And you need to listen to Bill Lomel who is with us. You are an owner of a health savings account?

THE PRESIDENT: Exactly, Lomel, just as I said. (Laughter.) Two for two. (Laughter.)

MR. LOMEL: I'm a commercial roofing contracting business with 25 employees, and like Pat, was faced with a similar decision. I mean, the monthly premium for our family coverage two years ago went from $450 to $750, and then it was going up over a thousand. And the group kept getting smaller because people were dropping out of the plan. The individuals couldn't afford their portion of the coverage. And it was kind of an effect going on, making it --

THE PRESIDENT: You getting that? It's important for people to understand what he's saying. He buys the high deductible policy to cover major medical expenses, and the savings on that policy from what he was paying otherwise more than equals the zero to $5,000 cost up until the insurance kicks in. It's his own money, the $5,000. He owns it. It earns interest tax-free. In other words, he's able to put it in an interest-bearing account. And if he or his three children do not spend the $5,000, whatever the balance is, it rolls over to the next year. And it's -- and it enables, frankly, small businesses to stay in business and families to be able to better afford health care.

MR. LOMEL: Yes, it's great. And it's made providing that benefit possible again.

MR. LOMEL: So we're meeting with all of our employees to get them signed up individually on programs that I can kind of help facilitate.

THE PRESIDENT: Absolutely. Most of the working uninsured in America work for small businesses. And so for small business owners out there who are worried about being able to pay for insurance for your employees -- and a lot of owners are, like you were; I mean, it must be nerve-wracking.

MR. LOMEL: Well, one of the key things that has come out of this is that when I go to the doctor, I'm interested in the cost. (Laughter.)

MR. LOMEL: They offered me two procedures, and I said, well, how much does this one cost and how much does that one cost, and what are their effectiveness? And they were virtually the same, so --

THE PRESIDENT: You know, it sounds simple, but it is a dynamic that in many cases is absent from the health care markets because if a third party makes that payment, he never gets to ask the question. He just accepts the decision. And all of a sudden when you have consumers starting to ask questions about cost, it is a governor on cost at the very minimum. And so part of -- one way to make sure that costs don't continue to escalate is to introduce consumer demand into health care decision making. And since HSAs enable a consumer to own their own account and manage their own account and make decisions for their account, we've introduced demand into the marketplace.

Thank you two for sharing this. I signed up for an HSA. I'm feeling pretty good these days -- (laughter) -- I think I'll have some money left over. (Applause.) But recognizing that I can prevent disease, I want to encourage people to exercise on a regular basis, make wise choices about what you put in your body, be mindful of what you eat. And if you happen to be an HSA owner, like the three of us, you will realize -- more likely realize savings that you can roll over, tax-free, and call your own.

Hopefully, one of these days when I get to be an old guy, my HSA will be bulging with money -- (laughter) -- and I will be comfortable in the security of retirement because my HSA will be a part of a -- you know, other options to provide good health care for me and my family.

We've got Rich Parsons with us. I actually got it right, two for three now. What do you do, Rich?

MR. PARSONS: I run the Montgomery County Chamber of Commerce, which is a small non-profit right here in Montgomery County, Maryland, and we represent the employer community.

THE PRESIDENT: Good, thanks. Welcome. I'm glad you're here. You are here not only to talk about the wonderful benefits of having a business in Montgomery County, but as well, to discuss --

MR. PARSONS: Well, what we want to talk about is really the same issue you just heard from a consumer standpoint, it's the lack of choice. It doesn't affect just consumers, but small business owners in particular, and small non-profits, like ours, we have a very small range of choices that we can select from when we go to do what we all want to do -- which is provide our employees with good coverage at good prices. We're finding our choices in a state like Maryland -- even though this is one of the leading biotech and medical innovations centers of the world today, we have about four policies, four companies that will even write policies for small businesses in the state. And we've got to expand choices, and that's what I wanted to talk about today.

THE PRESIDENT: Well, I appreciate that. That's common sense, isn't it? If you want there to be reasonable price, the more consumers have to choose in a marketplace, the more likely it is you'll be able to find something at the price you want. That's how the marketplace works. You're telling me, the marketplace is somewhat restricted here.

MR. PARSONS: Well, because of regulatory factors and just the way the marketplace has turned out here in Maryland, we are not allowed by state law to do what some states are allowed to do, which is offer association health plans, where my --

THE PRESIDENT: An association health plan will allow people to pool risk -- that's what we're saying. And I happen to think that we ought to allow small businesses to pool risk across state boundaries. In other words, I think a restaurateur in Maryland ought to be able to combine in the same insurance plan as a restaurateur in Texas. I think we ought to be focusing on the social objective of making sure our small business owners can find affordable health care so that fewer people are working uninsured, rather than jealously guarding jurisdictional lines, for whatever reason.

And so I look forward to working with Congress to get an association health plan out, a bill out that will allow for pooling of risk for small business owners across jurisdictional boundaries, and non-profits, by the way, should be allowed to pool risk, as well.

Have you heard of health savings accounts, in the meantime? I mean, these are really great. (Laughter.)

But Congress needs to understand that, on the one hand, you cannot complain about people who don't have insurance and you work for a small business, and then not allow small businesses to be able to have the opportunities in the marketplace -- the same opportunities afforded companies with large pools, large employee bases -- you got to give them the opportunity to be able to shop.

And so association health plans make a lot of sense. I want to thank you for sharing that with us, Rich.

THE PRESIDENT: I agree. That's what we're here to do. We're here to remind Congress about the benefits. (Applause.)

MR. PATTON: Associations Marketing Group, in Des Moines, Iowa. We're actually an insurance agency that specializes in the sale and service of both individual and group health insurance plans. And we do business in 42 states, so we work with individuals not only in Iowa, but across all of the United States.

THE PRESIDENT: And Jesse wants to talk about an idea that I broached early on, and that is to allow consumers to shop.

MR. PATTON: The nice thing about this proposal is that people would be able to go across state lines, but they would still have the safety feature of having their products still regulated by insurance division, insurance commissioner.

THE PRESIDENT: That's an important point. Sorry to interrupt you. You were on a roll. (Laughter.)

THE PRESIDENT: So you heard Bill talk about -- he got on the Internet. He was trying to find more information. He was worried about finding a product that he could use. Imagine someone living in Maryland getting on the Internet and being able to shop nationwide for an insurance plan that meets his or her specific needs. Basically what you're saying.

MR. PATTON: Correct. If you look at an example that we did for your staff of a 35-year-old -- an individual with a 35-year-old spouse and two children on a $500 deductible, premiums from the various states -- my home state of Iowa, that premium actually comes in at $430. Other states that we looked at, those premiums are at $1,500, $1,200, $1,609. So they're up to a thousand dollars difference in that individual rate for the same product, same insurance carrier, just based on the state that you reside in.

THE PRESIDENT: And so, perhaps, one way to encourage reform at the state level is to allow consumers to actually make choices. And the more consumers that buy a product in a certain state may cause other states to have the incentive necessary to change the regulatory burden, so that products can be delivered at a less expensive price in their own state.

But the real question people have is, well, how do I know I'm not getting cheated? In other words, it's one thing to open up additional consumer price. But how do you know it's not a fly-by-night or a shyster? We caught a guy the other day flimflamming people on the tsunami relief effort. There was a lot of innocent folks who think they're making a contribution, in this case, to help somebody's life, and it turns out he was a -- the FBI found out that he was a flimflam artist. How do we make sure that the innocent consumer is not buying a product from a company that doesn't have the capital base necessary to provide insurance, for example?

MR. PATTON: Correct, and there's actually a couple safety features here. I, as an insurance agent, am licensed and able to do business based on a license I hold by the insurance division of the state that I operate in. I must also get a non-resident license in another state that I plan to sell business. So I'm actually regulated -- if I would sell a product here in Maryland, I'm actually regulated by the insurance division in Maryland under my insurance license here, plus I'm also regulated by the insurance division in Iowa, which is my home base. And then, again, you would have the Insurance Commissioner's Office also regulating the carrier and the product.

THE PRESIDENT: Right. So in other words, if you're a Texan buying into Iowa, and you feel like you've been cheated, there would be a complaint mechanism --

THE PRESIDENT: -- and the state would, therefore, make the decisions as to whether or not the -- on the capital-worthiness of a particular entity offering insurance in that state.

MR. PATTON: Correct. You would actually have two safety features. Your home state and your state that you were buying your insurance from.

THE PRESIDENT: Right. I think it's an interesting idea. I think the more we give choice to consumers, and the more consumers are allowed to be in the marketplace designing and shopping for product that meets their needs, the more likely it is we'll be able to control costs and make the marketplace work. It works in other industry, and I think we need to bring -- I know we need to bring market forces into the health care field.

For those of you who live in Maryland, by the way, you're fortunate to have a governor who understands all this. I appreciate your efforts, by the way, on medical liability reform, addressing the cost. (Applause.) And we look forward to working with you, Governor, and other governors, as well, to do the best we can to make this system work on behalf of consumers in the health care field.

Finally, we've got Tammi Fleming with us, from the great city of New Orleans, Louisiana. Isn't that right?

THE PRESIDENT: Tammi runs an interesting program. Why don't you describe your program, Tammi.

THE PRESIDENT: The point is, is that we have programs aimed at helping people who need help, basically is what you're saying. And one such program is S-CHIP -- that's the Children's Health Care Insurance Program. And it's not fully subscribed. In other words, we had the money available and states did not access the money to help children with good health care.

THE PRESIDENT: The reason we've asked Tammi to come is because it's very important for states to develop effective outreach programs. At the federal level, we're willing to help fund outreach programs. We think it's important for people who qualify for the S-CHIP program to know that that program is available, without stigma. And it is an effective way to provide our children with the insurance we want our children to have.

And so what Tammi is saying is she's pointing up the fact that we need a grassroots effort across the country to enable people to know what is available for the Children's Health Care Program.

THE PRESIDENT: Well, I appreciate what you're doing. Walkers and talkers. That's good; good job.(Applause.)

Well, listen, I want to thank you all for joining the discussion. The solution is -- is one that -- the solution to health care costs is one that requires a myriad of approaches, as opposed to a single federal government approach. I believe the more we empower people to make decisions, the better off we are in terms of achieving a national objective, which is affordable health care that's available. And I want to thank you all for sharing with people innovative ideas.

I'm pleased to inform you that Dr. Condi Rice has just been confirmed by the United States Senate. (Applause.) She will be a great Secretary of State for the United States of America. I'm honored to be working with her, and I look forward to spreading freedom and peace.

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