WIDENING THE NET January 6, 1998 NEWSHOUR TRANSCRIPT

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President Clinton has proposed making younger retirees and laid-off workers eligible for Medicare Health Insurance. He said the plan would pay for itself because the new recipients would pay fixed premiums. After an excerpt from the President's press conference, Secretary of Health and Human Services Donna Shalala discusses the plan from the White House perspective, and Congressman Bill Thomas of California gives the Republican response.

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A RealAudio version of this segment is available. NEWSHOUR LINKS: January 6, 1998 The Republican response to the new White House Medicare proposal. November 20, 1997 Secretary Shalala discusses the consumer bill of rights for health care. August 7, 1997 The budget bill plans to carve $115 million off federal health care spending. July 31, 1997 A discussion on Columbia/HCA's defrauding of Medicare. July 15, 1997 Senator John Breaux (D-LA) and AARP representative Martin Corry debate changes to the Medicare system. Browse the NewsHour's coverage of Medicare. OUTSIDE LINKS: U.S. Department of Health and Human Services

MARGARET WARNER: The Medicare program currently provides government-sponsored health insurance for nearly 33 million Americans age 65 and old. Today the President proposed expanding access to Medicare for some younger Americans between the ages of 55 and 64. He explained why at a briefing this morning.

President Clinton explains his proposal.

PRESIDENT CLINTON: We know that for different reasons more and more Americans are retiring or leaving the work force before they become eligible for Medicare at age 65. We know that far too many of these men and women do not have health insurance. Some of them lose their health coverage when their spouse becomes eligible for Medicare and loses his or health insurance at work. Some lose their coverage when they lose their jobs because of downsizing or layoffs. Still others lose their insurance when their employers, unexpectedly, drop their retirement health care plans. These people have spent their lifetimes working hard, supporting their families, contributing to society. And just at the time they most need health care they are least attractive to health insurers who demand higher premiums, or deny coverage outright. The legislation that I propose today recognizes these new conditions and takes action to expand access to health care to millions of Americans.

MARGARET WARNER: The President's proposed legislation would affect three groups of Americans. People between the ages of 62 and 65 could buy into the Medicare system early by paying about $300 a month. They also would have to pay slightly higher monthly premiums after age 65 than those who didn't join early. People 55 to 62, who involuntarily lose their jobs and their employer-provided health coverage, could also buy into Medicare. They would pay the full cost up front, about $400 a month. Retirees over 55 whose employers reneged on promises to provide health coverage could buy into their former employer's health plans until eligible for Medicare at age 65. Joining us now is Secretary of Health & Human Services Donna Shalala.

Welcome, Madam Secretary. We heard the President lay out some of the circumstances that affect people in this group, but how big a problem is it really? How many Americans are in these situations?

Who will be eligible?

DONNA SHALALA, Secretary of Health & Human Services: Well, there are 3 million Americans over 55--between 55 and 65--who have no health insurance; one million between 62 and 65, which is the core of the president's proposal. They don't have health insurance for a variety of reasons, but every one in every neighborhood knows that people are losing that health insurance, they are losing their jobs, they are changing jobs, going to jobs that don't have health insurance.

MARGARET WARNER: All right. And of this 3 million how many would qualify by circumstances for one of these three programs, and how many do you actually think will take advantage of it?

DONNA SHALALA: Well, we think about 300,000 will actually take advantage of it. After all, they're going to pay the full freight. This is not a free lunch for anyone. This is paying the full cost of their premium and paying the full cost over time of the actual health insurance that's going to be provided.

MARGARET WARNER: Is that, do you think, the main reason why such a small percentage actually you think would take advantage of it?

DONNA SHALALA: Well, I think in part and in part because there isn't private health insurance out there. This, after all, is another choice for Americans, particularly those that are ill and those that are 62 to 65, often wives of people who have worked all their lives, they've been at home; they're in Medicare, their wives are a little younger; they need health insurance.

Republicans liken the future of Medicare to that of the Titanic.

MARGARET WARNER: All right. Let's turn to some of the criticisms and the debatable points and the first one we just heard Sen. Phil Gramm essentially say--and we've heard this from other members of Congress--that Medicare is already potentially in trouble. He likened it to the Titanic. Talk is that we should raise the eligibility age, not lower it. You all are trying to add more people to the program.

DONNA SHALALA: Well, in fact, this is a fiscally responsible program. I'm a trustee of the Medicare system. There isn't a chance that the President would recommend a program that would increase costs for the Medicare trust fund. We are fiscally responsible. We did work with the Republicans last year. We did extend the life of a health care plan called Medicare, and we continue to want to contribute in a way that will extend the life of the Medicare plan. We have a commission that's going to be meeting. This is fiscally responsible. We will indeed make sure that this is paid for, paid for by the recipients and if not by them, it will be paid for by other savings in the system.

Who will pay for the added benefits?

MARGARET WARNER: All right. Now, explain that, because, as we just laid out, you're going to ask most of these new members or whatever to pay $300 a month, yet, I think Medicare pays out average in benefits to people something like $5,000 a year. So $300 a month doesn't quite add up. Who's going to make up the difference and how?

DONNA SHALALA: Well, this is part of an insurance pool, obviously, and we all pay a certain amount into the system, and then some of us are sick and need to use it, and some of us aren't. This is an actuarial decision, how much will people have to pay in this age group. So they will pay in what it will cost us to run this program for this group of people in this--in this age group.

MARGARET WARNER: But the group that's only going to pay $300, this bulk--that isn't the full cost, is it?

DONNA SHALALA: Well, actually, they're going to pay $300 until they're 65. And after that, they will pay in addition to pay off the additional cost that we have been the ages of 62 and 64, think of it like Social Security--some people take early Social Security at 62. In some ways the Medicare program we're suggesting matches that early Social Security. You can take Social Security at 62, but you get less money over time. If you take Medicare at 62, you will have to pay more over time. That's the way we pay for this proposal.

What other side-effects could there be?

MARGARET WARNER: Now, some of the other criticisms are that this is going to create a lot of disincentives in the marketplace; it'll encourage people to retire early, who now mostly work to 65 to get their health care coverage. It'll encourage Americans who can afford some private insurance to opt out and go for the government plan, and that it's also going to encourage employers to stop any sense of responsibility for their retirees' post retirement health care costs.

DONNA SHALALA: Actually, I would suggest that the economic incentives run the other way. If you decide to take Medicare at 62, it costs you more than it would if you take it at 65. If an employer decides to suddenly drop their retirees' health plan, their unemployment insurance costs are going to go up. The incentives here are really in the direction of people using this plan responsibly. We believe that about 300,000 people will use it. They will be people who are ill, who have pre-existing conditions--there is no market, no insurance market--and for spouses who can't get into the Medicare program because they are not 65 yet, and for a group of people that are pushed out of their jobs, people over 55. Many people are worried about this. They'll be able to buy some health insurance until they get another job, for example.

MARGARET WARNER: Can the private insurance market not take care of these people?

DONNA SHALALA: They're not now in most parts of the country. If they are and if there's a plan out there that people can get into and it's cheaper than this Medicare option, people will take that plan. But in most parts of the country if you have a health condition and you're 62 years old, you cannot get health insurance.

Comparisons with the Kennedy-Kassebaum bill.

MARGARET WARNER: But then what was the point of the Kennedy-Kassebaum bill that passed last year that was supposed to, in fact, take care of it?

DONNA SHALALA: A good question. In the Kennedy-Kassebaum bill if you had health insurance, you would not lose that health insurance when you changed jobs. You actually had to be in a health insurance plan for a period of time. This is really focused on people who have lost their health insurance or don't have health insurance or have a pre-existing condition. What Kennedy-Kassebaum didn't do is take care of the rating of the health plan; that is, it made it expensive if you had a pre-existing condition. We take care of that in this proposal, but, again, it's paid for; it's fiscally responsible; it's carefully targeted to a real need out there.

MARGARET WARNER: Now, you keep repeating that it is paid for. But as a political matter, once you start providing this option to middle income people who can afford it won't there be tremendous political pressure and pressure of all kinds from people who can't afford it and are going to say we ought to have this option too, I too was laid off, I too lacked health insurance coverage, and I need a program that the government helps subsidize?

DONNA SHALALA: In fact, this administration for children last year pushed a program and successfully passed a program for poorer children of working parents to get health insurance. But in this case what we're talking about is not a subsidy but access to health insurance for people who don't now have access and for people that are prepared to pay for it over a period of time.

MARGARET WARNER: But are you saying this is not sort of the nose under the tent to a much larger subsidized plan, to full Medicare for anyone over 62, for instance?

DONNA SHALALA: The President is committed to be fiscally responsible both in balancing the budget, as well as making certain that we're not adding costs to the Medicare Trust Fund. This proposal is targeted to a group of people who can pay for their health insurance but who don't have access to good health insurance.

MARGARET WARNER: You know--I know you know because they've already been saying it--what the Republicans are saying about this--and one of them is that this is just part of the administration's attempt to pass their sweeping health care reform plan piece by piece; this is just another piece of slowly having the government take over the health care system.

DONNA SHALALA: As a matter of fact, we think the role of government is where the private sector doesn't provide health insurance. This is, indeed, an attempt by the administration to make certain that those who can't get health insurance in the private sector can find a place to pay for health insurance. It is a self-supported proposal, so to speak, but it is dealing with an access issue.

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