TRANSCRIPT: 'Questions for the President: Prescription for America'

have a whole bunch of new customers, paying customers.

And if we are, as part of health care reform, going to go forward in

providing additional coverage to people who either don't have health

insurance or who are underinsured -- and that's a lot of working people.

I just want to be clear. These are people who are working everyday and

are still finding themselves having a great deal of trouble, and

oftentimes collecting huge amounts of debt.

If we're going to give all these new customers to the insurance

industry, one of the things that we should say is, in return, that we

change some of our practices and at least have some competition so that,

for example, you can't eliminate people for pre-existing conditions, you

can't cherry-pick just the healthiest folks, and a public option is one

tool by which we can do this.

And I think that the insurance companies will still thrive. They've got

terrific leadership. Aetna is a well-managed company, and I'm confident

that your shareholders are going to do well.

GIBSON: Mr. President, there is a lot of doubts about this as to whether

it's a level playing field. The Lewin Group studied this. There's 177

million in this country with private insurance through their employers.

That group estimates, with government insurance, that employers will go

to that because it will be cheaper. And they estimate, the head of the

Lewin Group, I believe, is here, Mr. Sheils -- they estimated that

two-thirds of people would go to the private -- go the public insurance

option.

Let me get you a microphone. Can we get him a microphone, please? Thanks.

JOHN SHEILS, THE LEWIN GROUP: Well, we looked at several different

options. You could design it in several different ways. There was a

particular scenario that people looked at, and that's what got all the

attention. It's one where the premiums would be -- for a family, for

example, would be as much as $2,500 a year less than in the private market.

The reason for it is that they paid under -- under -- they used the

Medicare payment reimbursement methodology, and they paid physicians a

lot less, hospitals a lot less. So the premium came out as much as

$2,500 a family lower in that particular scenario.

That's pretty attractive. We estimate that 70 percent of anybody with

private insurance would -- would make the shift to the public plan.

GIBSON: Which would be millions of people going over to public

insurance. You keep saying, if you have what you like, you can keep it,

but if your employer goes over to the government program, maybe you

can't keep what you have.

OBAMA: First of all, I think it's important to understand -- and I think

the Lewin Group acknowledges this -- that there are a whole series of

ways that we could design this. One of the things that we've said is

that, if you are eligible for your employer plan, then you can't just go

into the public plan, you can't decide that you're already having a

pretty good deal in insurance, and you're just going to dump that,

what's called a firewall.

The other thing we're doing is we're saying to employers, to provide

them a disincentive for just dumping people out of existing plans, is

there's going to be a pay-or-play provision. If you're not providing

health insurance to your employees and you're a large employer, you're

going to have to kick in a certain amount of money because it's not fair

for taxpayers to have to cover your employees, whether it's through a

public plan or through uncompensated care -- essentially sending people

to the emergency room -- which, by the way, adds to all of our premiums

collectively about $1,000 bucks a year.

So we would have -- I think there are some legitimate questions in terms

of how the public option is designed. One thing I have to say, though,

is, it's not an entirely bad thing if, as long as they're reimbursing

doctors in an adequate way, and -- and -- and so not being oppressive on

-- on health care providers, and as long as there are not a whole bunch

of taxpayer subsidies going into a public plan, if the public plan can

do it cheaper and provides good quality care, that's the competition

that we talked about.

Related

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I don't think you're going to get a lot of complaints from people if the

deal is a better deal. If it's not a better deal, then people aren't

going to choose it. And -- but what we think is, is that we can set up a

system in which you are expanding choices for individuals as opposed to

constricting them.

GIBSON: All right. We'll take a commercial break. "Nightline" will

continue. Stay with us, more questions for the president.

(COMMERCIAL BREAK)

GIBSON: And we're back. Our special edition of "Nightline" continues.

Mr. President, on this issue of costs, of this entire thing, a lot of

people are concerned that it's going to be so expensive, their taxes are

going to go up. And we have a question on that very subject. Is David

Hattenfield here?

David, where you are? Stand up.

DAVID HATTENFIELD, Cornerstone Baptist Church, Cumberland, MD: Yes, I guess the -- the -- first of all, I'd like to -- just to say it is good to be here this evening.

OBAMA: Thank you, David.

HATTENFIELD: With the -- with the cost of health care, you know,

I'm pretty satisfied with my own plan. It's not everything that it

should be or could be, but I am concerned that -- of the government

taking over health care. And, you know, Social Security isn't -- isn't

doing real well. At least that's what we're being told. And how can we

know that the government is going to be able to handle the cost of

health care? Isn't that going to tax me? Isn't it going to be taxing my

benefits, those kind of things?

OBAMA: Right. Well, look, I think it's a very legitimate question. I

guess that the first point I'd make is, if we don't do anything, costs

are going to go out of control. Nobody disputes this.

Medicare and Medicaid are the single biggest drivers of the federal

deficit and the federal debt by a huge margin. And at the pace at which

they're going up, if we don't do some of the things that we've talked

about tonight, you know, changing how we pay for quality instead of

quantity, making sure that we are investing in prevention, all those

game-changers that I discussed earlier, if we don't do those things,

Medicare and Medicaid are going to be broke, and it will consume all of

the federal budget.

Every program that currently exists under the federal budget, except

defense and entitlements, all that would be swept aside by the cost of

health care if we do nothing. So that's point number one.

Point number two is that a lot of what we're talking about is

reallocating existing health care dollars that are not being spent

wisely. And almost everybody agrees that there is a lot of room for us

to improve how we're spending existing health care dollars.

And point number three. There is going to be a need initially for some

additional revenue. And I talked about our suggestion -- my

administration's suggestion the best way to do that, capping itemized

deductions for people making over $250,000 a year.

But I also believe that if we are doing this right and we're bending the

curve on health care, then you who keeps a private plan will see

reductions in your out-of-pocket costs over time.

So that instead of your health care premiums going up three times your

wages over the next decade, it may only go up by the amount that

inflation goes up generally. And that's real money in your pocket.

That's real savings that would offset any potential increases.

By the way, I suspect that Charlie and I, again, 2-3 percent of the

population, we're the ones who would see our taxes go up a little bit to

pay for that initial outlay.

GIBSON: But let me -- on this tax question, let me get to this issue of

taxing health care benefits.

OBAMA: Right.

GIBSON: It isn't -- there is a massive amount of money that employers

pay for health care benefits, and it is not taxed for me or anybody else

in this room. You went after John McCain when he suggested taxing that

money. That we would have to pay taxes on that.

Should we pay taxes on that? A lot of people question whether there is

enough money to pay for all of this.

OBAMA: Right.

GIBSON: Are you willing to entertain the idea of taxing health care

benefits?

OBAMA: Well, I continue to strongly disagree with John McCain's plan

that he presented during the campaign which was to eliminate the

deduction -- let me finish…

GIBSON: But you went after -- you went after him for suggesting that we

tax that money.

OBAMA: I'm about to answer your question, Charlie.

GIBSON: OK, good.

OBAMA: The -- I continue to believe that it would the wrong way to go

for us to eliminate the deduction -- or the exclusion on health care

benefits that essentially taxes current benefits.

What is being discussed in Congress right now is capping those -- that

deduction or that exclusion at a certain level. I continue to believe

that's not the best way to do it, because I think that what you would

see, certainly if you eliminate it completely, essentially employers

would stop providing health insurance.

And then we would really have to have either a public plan or what John

McCain was proposing, everybody just gets that money back in wages and

then -- or tax credits and you go out and you shop by yourself.

The problem is that the amount of money you're getting back is not going

to be the same as the cost of an average insurance plan, especially if

you're not in a pool. What's being -- that's not what is being discussed

right now in Congress.

They're saying, at a certain level, whether it's $13,000 or $17,000 a

year, which is what they consider to be a high-end or a "Cadillac plan,"

maybe your deduction would phase out. I continue to believe that the

better way for us to fund this is through the capping of the itemized

deduction.

But I think there are people, you know, in good faith who are saying a

cap would at least prevent these "Cadillac plans" that end up having

people over-utilizing the system. That's a debate that is taking place

in Congress right now.

I'm pushing my idea, other folks are pushing their ideas. There is going

to have to be some compromise at the end of the day.

GIBSON: All right. Mr. President, we'll take another break. NIGHTLINE

continues. Stay with us.

(COMMERCIAL BREAK)

SAWYER: One quick question, if we can here, Charlie. Marissa Milton, skeptical?

MARISSA MILTON, HR Policy Association: A little skeptical on cost, Mr. President. Other industrialized nations provide coverage for all of their residents, they

have higher quality care, and they do so spending about less than half

of what we spend on health care now.

So there's an argument that could be made that we actually don't need to

spend any new money to fix the system if we're willing to make some

tough decisions. Could you comment on that and maybe exploring that as

an approach?

OBAMA: Well, you're absolutely right that we spend at least 50 percent

more than any other advanced country, and we don't have better outcomes,

in terms of infant mortality, longevity, all those various measures of

wellness.

Now, a lot of those other countries employ a different system than we

do. Not all of them, by the way, use a -- socialized medicine, as I

think the -- the British National Health Service is called. Some of them

have what would be considered -- almost all of them have what would be

considered a single-payer system, in which the government essentially

operates a Medicare for all, even though doctors and health care

providers are still separate.

The problem is, is that we have an employer-based system that has grown

up over decades. For us to completely change our system, root and

branch, would be hugely disruptive and I think would end up resulting in

people having to completely change their doctors, their health care

providers in a way that I'm not prepared to go.

This is one-sixth of our economy. I think that we can build on what

works, fix what's broken, and still save some substantial money.

SAWYER: Gary -- Gary Cloutier, who is a body shop owner.

GARY CLOUTIER, UNINSURED SMALL BUSINESS OWNER: Yes, body shop owner from Westfield, Massachusetts, Cloot's Auto Body. Got to give myself a plug.

OBAMA: There you go.

CLOUTIER: And I don't have insurance. I'm one of those 46 million

that has none at all. Under Massachusetts policy, I make too much money

and I don't qualify, so I'm on the outside looking in. What are you

going to do for people like me so that we don't fall through the cracks

and we're able to get insurance like everybody else?

OBAMA: Well, I think the self-employed are a huge example, and that's a

growing part of our population. And that's a huge portion of the people

who are having a very difficult time getting health insurance, partly

because, if you're not part of a big pool, you just can't get a good

deal. It ends up being really expensive.

That's why we want to set up these exchanges, because for a person like

you who's self-employed, doesn't have health insurance, for you to be

part of this exchange, this marketplace, along with millions of others,

suddenly you've got a little bit of market clout. Private insurers are

going to want your business, and that means that you can negotiate for a

better price.

If we've got a public option in there, then that's also an alternative.

And one of the things that we're going to need to do is to provide some

subsidies for folks who just can't afford it even when the option is

provided to them.

That's where some of the new money is going to come in, is to make sure

that people who don't have health insurance are able to get it without

taking on huge amounts of debt.

GIBSON: Dr. Tim Johnson, our medical editor, we started this with you,

outlining the parameters of this. An observation?

JOHNSON: An observation would be, if you're successful in getting rid of

some of that 30 percent of unnecessary care, you're going to dislocate a

lot of people. Now, some of them are criminals committing fraud; they

ought to go to jail. But a lot of them are real people with real jobs.

Why not right now start talking about retraining these people for

primary care jobs, nurse practitioners, physician assistants? I hear no

talk about that.

OBAMA: Well, I think you make a -- a reasonable point that, if you're

going to change the health care system over time, then to be very

specific, the amount of person power that goes into billing,

administration, all the things that we hate about the health care

system, even though those are wonderful people who are doing great work,

they're over time hopefully going to be moving into the actually

providing care side of the health care industry as opposed to the

bean-counting side of the health care industry.

Keep in mind, though, that this is -- our goal here is to over time

change the system, over time reduce costs, over time transition those

folks into the -- the health care side of it. We already mentioned that

we still have a nurse shortage out there. We still have a shortage of

people who are providing primary care. People who are already in the

health care system, I think, naturally would gravitate towards that.

And the last point I would make is, we've got an aging population, so we

know that health care is still going to be a growth industry. And that's

not an entirely bad thing. As societies get older, we spend a certain

larger portion of our overall income on health care.

And that's OK. We just don't want to spend it badly and in a way that

bankrupts the entire economy. And that's why we need the changes that

I've discussed.

GIBSON: Mr. President, we want to thank for joining us this evening,

both for the earlier hour and for this half-hour of "Nightline." As we

mentioned at the beginning, I think this is a topic that is going to be

discussed in every living room over every kitchen table, not only in the

Congress, but mostly in the living rooms and in the kitchens of America,

and that probably is where the decisions overall will be made.

Can we support this? Are we for this? Are we certain that we'll have the

care we need? And are we certain that this country can pay for it in a

time when we don't have a lot of money?

OBAMA: The answers are "yes" to all of that. And if the American people

get behind this, this is going to happen.

GIBSON: All right, Mr. President, I thank you for being with us. Thanks

very much.

OBAMA: Thank you so much. Enjoyed it. Thank you.

(APPLAUSE)

GIBSON: And we thank you for being with us for this edition of

"Nightline." Take care, and good night.