President Obama's ASU Healthcare Q&A

FACTUAL Commentary by Julius Gordon

President Obama: And I'll start with this young lady over here. Yes.

Q: Oh, thank you. Thank you, Mr. President. I work for one of the large corporations here. But I talk to a lot of people about health care. My question is, so many people go bankrupt using their credit cards to pay for health care. Why have they taken single-payer off the plate? (Applause.) And why is Senator Baucus on the Finance Committee discussing health care when he has received so much money from the pharmaceutical companies? Isn't it a conflict of interest? (Applause.)

THE PRESIDENT: Well, as you know, I campaigned vigorously on health care reform, and I think that we have a better chance of getting it done this year than we've had in decades. I am optimistic about us getting health care reform done.
Now, health care is one-sixth of our economy, so it is a complicated, difficult task. And Congress is going to have to work hard. And everybody is going to have to come at this with a practical perspective, as opposed to trying to be ideologically pure in getting it done.
Here are my principles in terms of health care: Number one, we've got to control costs across the system, because if we simply insured everybody under the current system, we couldn't afford it -- we'd go broke.

FACT: This might be true, but if so, why? Could it be the 31 percent administrative costs that the private health insurers take off the top? Over $350 billion – about half of the money currently wasted on overhead and bureaucracy – could be saved with simplified single-payer administration, enough to cover all the 46 million uninsured. Physicians for a National Health Program, “Financing single-payer national health insurance: Myths and facts”

The fact of the matter is, is that families are seeing their premiums go up -- skyrocket each and every year. Businesses are getting crushed by the rising costs of their employees' health care. And the federal government -- Medicare and Medicaid -- is going broke. That's the single biggest driver, by the way, of our deficits.

I want everybody to be clear about this, because driving in I saw some folks who were saying, what are you going to do about debt, et cetera. Listen, by far the biggest contributor to our national debt and our annual deficit is the costs of Medicare and Medicaid -- as well as the other entitlement, Social Security -- defense, and interest on the national debt. That's the lion's share of the federal budget.

FACT: This year’s report by the trustees who oversee the fund found that, if left alone, the Social Security system will continue to be able to pay its bills for at least the next 40 years — thanks in part to a $1.4 trillion nest egg of Treasury securities that has been stashed away over the past several decades. (A separate analysis by the Congressional Budget Office figures the fund is in good shape until 2052.) "Is Social Security Really Going Broke?"-- John W. Schoen, Senior Producer MSNBC

The things you read about in the newspapers and you see on TV about earmarks -- I want to get rid of earmarks, but the truth of the matter, they're only 1 percent of the entire budget. Most of what's driving us into debt is health care. And so we've got to drive down costs.

FACT: Single-payer financing is the only way to recapture this wasted money. The potential savings on paperwork, more than $350 billion per year, are enough to provide comprehensive coverage to everyone without paying any more than we already do. – Physicians for a National Health Program

Now, here is some good news. There are ways that we can drive down costs, because we just have an inefficient system. If we emphasize prevention and wellness programs; if we help -- (applause) -- if we -- so that we're reimbursing doctors and providers not just for treating people after they get sick but for helping people stay well if we use medical technology to reduce error rates and ensure electronic medical billing so when you go to the hospital, you don't have 15, 20 forms that you have to fill out over and over and over again.
There are simple things that we can do that will save us money, so we need to focus on cost, that's number one.
Number two, I think that it is very important that we provide coverage for all people, because if everybody's got coverage then they're not going to the emergency room for treatment.
(Applause.)
And right now, if you've got health insurance, the average family is paying about $900 a year in additional hidden costs because you're subsidizing the folks who are going to the emergency room.

FACT: Medicare is already paid for partly by a payroll tax and partly by general revenues. Why not cut the payroll tax and make up the difference out of general federal taxes? If you want to be revenue-neutral, the Social Security shortfall of about 2 percent of GDP between now and mid-century could be patched with general revenue funds diverted from defense, if without endangering our safety we could gradually lower defense spending from its present wartime level of about 4 percent of GDP to 2 percent, which is more than most other advanced industrial countries spend on defense.” Let's cut Social Security to pay for banker bailouts!” By Michael Lind, Salon.com May 15, 2009

And so you'd be better off with a system that might cost the federal government overall a little bit more -- and we do have to pay for that -- but that would lower your premiums so that you don't have these hidden costs, because it's cheaper to treat a child for asthma with an inhaler than it is to have them go to the emergency room and take up a hospital bed. So that's the second principle.

Now, this brings to the last principle, and so this touches on your point, and that is, why not do a single-payer system. (Applause.) Got the little single-payer advocates up here.
(Applause.)

All right. For those of you who don't know, a single-payer system is like -- Medicare is sort of a single-payer system, but it's only for people over 65, and the way it works is, the idea is that you don't have insurance companies as middlemen. The government goes directly -- (applause) -- and pays doctors or nurses.

If I were starting a system from scratch, then I think that the idea of moving towards a single-payer system could very well make sense. That's the kind of system that you have in most industrialized countries around the world.

The only problem is that we're not starting from scratch. We have historically a tradition of employer-based health care. And although there are a lot of people who are not satisfied with their health care, the truth is, is that the vast majority of people currently get health care from their employers and you've got this system that's already in place. We don't want a huge disruption as we go into health care reform where suddenly we're trying to completely reinvent one-sixth of the economy.

FACT: Private business funds less than 20 percent of total health spending. (Government employees have taxpayer-funded coverage through the FEHBP program and employer payments for private insurance receive a substantial tax subsidy). Physicians for a National Health Program, “Financing single-payer national health insurance: Myths and facts”; “A Reappraisal Of Private Employers' Role In Providing Health Insurance, Carrasquillo et al, New England Journal of Medicine, Volume 340:109-114

FACT: the current tax-financed share of health spending is far higher than most people think: 59.8 percent. “Paying For National Health Insurance—And Not Getting It” by Steffie Woolhandler and David U. Himmelstein, HEALTH AFFAIRS~ Volume 21 , Number 4

So what I've said is, let's set up a system where if you already have health care through your employer and you're happy with it, you don't have to change doctors, you don't have to change plans -- nothing changes. If you don't have health care or you're highly unsatisfied with your health care, then let's give you choices, let's give you options, including a public plan that you could enroll in and sign up for. That's been my proposal.
(Applause.)

FACT: This is a typical red herring, manufactured by the health insurance industry. Under a single payer system, in particular HR676, there would be NO requirement for anyone to change their doctor, hospital, or anything else. Also: why would those who do have employer-based health care be happier with their current plans than they would with one that took care of all their heath care needs, with no deductibles?

Now, obviously as President I've got to work with Congress to get this done and -- (laughter.) There are folks in Congress who are doing terrific work, they're working hard. They've been having a series of hearings. I'm confident that both the House and the Senate are going to produce a bill before the August recess. And it may not have everything I want in there or everything you want in there, but it will be a vast improvement over what we currently have.
We'll then have to reconcile the two bills, but I'm confident that we are going to get health care reform this year and start putting us on a path that's sustainable over the long term.
(Applause.)
That's a commitment I made during the campaign; I intend to keep it.And here is the rest of it.