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President Obama Shifts on Health Care Reform Law for States

February 28, 2011 at 6:57 PM EDT
President Obama announced he supports a change allowing states to opt-out of certain provisions of the health care reform law at an earlier date. Judy Woodruff talks with Health and Human Services Secretary Kathleen Sebelius and Sen. Orrin Hatch, R-Utah, about the president's compromise with opponents of the law.

JUDY WOODRUFF: Next, health care reform and the latest move by President Obama to deal with opposition to the law.

The president announced today he supports a change allowing states to exempted from major requirements of the Affordable Care Act at an earlier date. Under the health care reform law, states can ask in 2017 to opt out of requirements to increase coverage, such as the individual mandate. That is three years after the insurance mandate takes effect.

But President Obama told governors today he supports a bipartisan bill in the Senate to allow waivers even earlier.

U.S. PRESIDENT BARACK OBAMA: It would allow states to apply for such a waiver by 2014 instead of 2017.

I think that’s a reasonable proposal. I support it. It will give you flexibility more quickly, while still guaranteeing the American people reform. If your state can create a plan that covers as many people as affordably and comprehensively as the Affordable Care Act does — without increasing the deficit — you can implement that plan. And we’ll work with you to do it.

JUDY WOODRUFF: But those waivers would not necessarily be granted. States would have to prove that they could find ways of insuring equal numbers of new Americans for similar costs.

The president’s move comes amid growing complaints from governors about Medicaid costs. And some Republican governors are calling for more autonomy over eligibility and cuts.

Kathleen Sebelius is the secretary of health and human services. I spoke with her a short time ago.

Secretary Kathleen Sebelius, thank you very much for talking with us.


JUDY WOODRUFF: So help us understand what the change would be that the president’s talking about. If as many people have to be covered at the same cost, where’s the flexibility?

KATHLEEN SEBELIUS: Well, actually what we’ve been hearing from governors really from the outset was that states have great ideas.

I met with two or three governors in the last couple of hours who want to do programs that bring all the private payers and Medicaid and others to the table, work with doctors and providers. States want to — are looking at regional exchanges. They’re looking at all kinds of innovative ways to cover everybody, but they think they can actually lower costs and have some even more effective delivery system changes.

So, what the president said today is — is, this innovation waiver has always been part of the Affordable Care Act since it was passed. It was not scheduled to start until 2017. But the more we got input from states around the country who are eager to roll up their sleeves and get going, why not put this on the table from the outset?

Why have a state start in one direction around a kind of formulated exchange, only three years later to move in a different direction? So, if states have creative ideas, innovative ideas that, as you say, cover the same amount of people — he doesn’t want to back away from the 32 million additional Americans who are promised health insurance — if they have more creative strategies about ways to make sure that costs aren’t shifted on to consumers or on to the federal government…


KATHLEEN SEBELIUS: … this isn’t going to be a deficit-buster, you know, bring them to table, and let’s — let’s figure out if we can make them work. States want flexibility, so let’s figure out what the CEOs of the country want to put in place.

JUDY WOODRUFF: So, what would this mean, for example, for the individual mandate? That was going to be — that was a federal requirement. Would that be still be in effect? I mean, would people still have to pay the penalty if they didn’t participate?

KATHLEEN SEBELIUS: Well, again, if — if a state has a strategy different from the individual mandate that they think will cover the same amount of people — so, for instance, they could come up with a strategy that says, we’re just going to automatically enroll uninsured people in various plans, or we’re going to, you know, work it out a different way, or we’re going to have, you know, a different kind of — something that encourages people to come into the market, but if they don’t come in, have a large barrier for several years, something that folks would indeed see as a dramatic encouragement.

We looked at all kinds of ways to balance getting rid of preexisting conditions with getting everybody in the marketplace, because those are the two frameworks that have to be tied together.

And if there are other ways of doing that, we’re eager to see what states have to suggest, what insurers have to suggest, because, as you know, Judy, the individual responsibility piece really came from the private insurance companies saying: We can only get rid of the preexisting condition limitation if then we have everybody in the pool, if people cannot buy coverage on their way to the hospital or after they have had an accident.


Let me read you what Sen. Orrin Hatch, who has long been immersed in health care legislation, as I’m sure you know, for many years — he immediately reacted. He called this a gimmick. He said it does nothing to undo what he calls the law’s — quote — “budget-busting onerous requirements, including the mandates, Washington-dictated coverage.”

KATHLEEN SEBELIUS: Well, I would love to have a longer conversation with Sen. Hatch about it.

Again, I want to stress that this is not a new concept. It is not backing away from the Affordable Care Act. This innovation strategy was part of the framework in the first place. What the president has suggested is let’s move up the implementation date. Let’s say, this is also — this is one of the options available to states in 2014.

Sen. Hatch clearly has some objection to covering all Americans and doing at least what the Congressional Budget Office says will be a fairly dramatic deficit reduction of a trillion dollars over the next two decades, while you’re get — bringing everybody into the health insurance pool.

I think it’s a concept that is much needed in America. I think it’s something that we have to move forward on. But the president has said from the outset if they’re good ideas, Republican or Democratic, bring them to the table. And this is one he thinks let’s accelerate and put it in place from the outset.

JUDY WOODRUFF: Secretary Sebelius, does this come because the law is under siege? It is being — there are 28 states, I believe, that have sued to exempt themselves from the law. Polls show that a significant number of Americans don’t like the law. Is this an attempt by the president to respond to all that?

KATHLEEN SEBELIUS: I think, Judy, what’s — what it is, is that the president has listened to governors.

This has never been the federal takeover of health care, as has been reported, inaccurately, over and over again. It always has been a state-driven program. What we had governors tell us from the beginning is: We have ideas which we would like to put in place even more quickly. Why should we wait until 2017? Can we come to the table and tell you what we think would work in Arkansas or in North Carolina, what we think is a better strategy?

The president listened to that. As you know, this particular piece of legislation has been proposed by a Republican senator, Sen. Scott Brown, and a Democratic, Sen. Ron Wyden, along with a third Democrat, third senator, Mary Landrieu.

So, it’s a bipartisan approach, saying let’s move up the timetable. Let’s let innovation be part of this strategy from the outset.

JUDY WOODRUFF: One other thing. The governors, as you know very well, say their most immediate concern with regard to health care costs has to do with Medicaid…


JUDY WOODRUFF: … the government program covering the poorest people. More than half the states are ready to take hundreds of thousands of people off the Medicaid rolls if the government will simply grant them the flexibility to do that. Is that something the administration is prepared to do?

KATHLEEN SEBELIUS: Well, Judy, I think that nothing could be worse for the prosperity of this country than to have millions more Americans without health coverage.

We have seen the toll that that takes on families and on personal budgets, on states. So, that is the worst of all outcomes. I think what we’re trying to do is really work flexibly with states. We have sent teams out around the country to look at in Arizona, in Florida, in other areas, what are the ways that you can save additional dollars without slashing the benefits of programs?

And what we really know is that one population which is a very high-cost population is the so-called dual-eligibles, people who are eligible for Medicaid because of their income and also eligible for Medicare. We — the president also asked governors to come together in a bipartisan fashion to work with me on how we can better address the care, the benefits, but also the cost of that population.

And I think that will yield some big results. That’s about 50 percent of the costs of anybody’s Medicaid program, and yet it’s a fraction of the beneficiaries. So, it’s a relatively small number of people overall, but with very high costs.

And we think there are ways to deliver care much more effectively and also dramatically lower costs.

JUDY WOODRUFF: Well, we want to leave it here — leave it there for now.

Secretary Sebelius, these are all issues that we’re going to continue to follow.


JUDY WOODRUFF: Thanks very much.

KATHLEEN SEBELIUS: Sure. Nice to visit with you.

JUDY WOODRUFF: And now, a Republican view of all this. It comes from the person I just quoted, Sen. Orrin Hatch of Utah. He sits on the Finance Committee, as well as the Health, Education, Labor and Pension Committee.

Senator, thank you for being with us.

SEN. ORRIN HATCH (R-Utah): Well, nice to be with you, Judy.

JUDY WOODRUFF: Senator, you may have heard Secretary Sebelius just now say this is simply an attempt to let states come up with their own structure, their own way of providing coverage, as long as they cover the same number of people and they don’t increase the costs.

SEN. ORRIN HATCH: As long as they continue to do all that Obamacare requires them to do. I mean, she just doesn’t know what she’s talking about, because this waiver doesn’t do one thing for anybody.

And the fact of the matter is if you read the law, you realize that it’s not going to help the states at all. The states now are $175 billion in the hole. That was before this doggone bill. Now there’s $120 billion going to be added on to them.

And you will notice she said that, as long as they meet all the qualifications of the law, which they can’t do. They have moved 16 million people under the state Medicaid rolls, and at the time the government did put up a little bit of money, but now that money is gone, and there’s no way the government can help them. And the states are in an uproar, because they really can’t do this.

And I have to tell you, they have mandated the states to have to live with provisions that really don’t make sense. And this waiver business, moving it up from 2017 to 2014 doesn’t do a thing.

JUDY WOODRUFF: Well, again…

SEN. ORRIN HATCH: The waivers aren’t going to help.

JUDY WOODRUFF: Again, Senator, I mean, what I heard — and I made some notes on what she said — she said, if a state has a strategy different, for example, from the individual mandate wherein they could automatically enroll people, she said, in various plans or work it out some other way, and she said this is an attempt to let the states write their own plan.

SEN. ORRIN HATCH: Oh, isn’t that wonderful?

If the state has another way of doing exactly what they want done, then the state can do that. Well, my gosh, I think everybody knows that. The problem is the states can’t afford to do what they — what they are demanding here.

Yes, they’re saying if they want to move away from the individual mandate. How do they do that? The individual mandate, which I think is unconstitutional, 28 states now think it’s unconstitutional, two major federal judges think it’s unconstitutional, for the first time in history, they’re going to apply the Commerce Clause to an inactivity? It’s always been applied to activities in commerce.

And if they apply it to an inactivity, in other words, the desire of state governments and people in the states not to purchase this insurance or not to purchase this health care, it will be the first time in history they have done that. And if they can do that, they can do anything to you.

JUDY WOODRUFF: At one point, Senator, we heard the secretary say — she said that you and she have a — or you and the administration have a different fundamental view on who ought to be covered…


JUDY WOODRUFF: … that you don’t agree that more Americans should be covered. Is that accurate?

SEN. ORRIN HATCH: That’s what I call bull corn. I would love to cover everybody. I would love to make sure nobody suffers from a lack of health care. I would love to be able to help everybody.

But there are some economic realities that we’re going to have to realize. And the states are here up in arms. And these aren’t just Republican governors up in arms. These are Democrat governors that know that they can’t meet these mandates that this idiotic bill is requiring them to meet.

Look, I hate to be mean to anybody. I hate to talk this way, but it’s true. It is one of the worst pieces of legislation in the history of this country. And it’s not going to work. And they know it’s not going to work, so they phony it up with these, well, we will move these waivers that aren’t going to work, we will move those from 2017 to 2014, but you have got to meet all the requirements of the Obamacare law as it is.

Well, now, what do you think that means? It means the waivers aren’t worth the paper they’re written on.

JUDY WOODRUFF: So, Senator, you don’t see any middle ground at all on this health care reform…

SEN. ORRIN HATCH: Yes, I see a middle ground. They ought to get — they ought to trash the bill and get rid of it, and sit down with Republicans and Democrats who really care for this country, who really want to put together health care so it will work for everybody. And let’s see if we can do a bipartisan bill, instead of this totally partisan bill, that will work in this country.

And you knew that’s what was going to happen when they refused to work with Republicans. All 60 Democrats in the Senate had to pass it, not one Republican. All of the Democrats in the House had to pass it, not one Republican. And there’s good reasons why the Republicans didn’t support this bill.

And now they find themselves in trouble, so what do they try and do? They phony it up by saying, well, we’re going to move this waiver situation from 2017 to 2014. And — but you have to meet all the requirements anyway in the bill. I mean, my gosh, anybody with brains will know, that ain’t going to work.

JUDY WOODRUFF: And what I — I did see, Senator, there was — there have been comments from administration officials who were briefing reporters after the president spoke who said, you know, that this allows states the flexibility to move in a different direction.

For example, if it’s a state that wants to move more toward a single-payer system, that’s one thing, or if it wants to move — they even used the example of your state, of Utah, said if they want to move in the direction of what Utah does, we want to give them the flexibility to do that.

SEN. ORRIN HATCH: Well, no, we Republicans would have made sure that there were 50 state laboratories to begin with, so that you could pick and choose out of the various states what really works.

Utah happens to have a fairly decent health care system. And they are heralded by the rest of the states and by the rest of the country. But — but we’re having our troubles out there as well. And I have to tell you, the way they’re going, doctors are not going to be taking Medicaid patients. We already have 40 percent of the doctors saying that they may retire, rather than put up with this type of stuff.

And then talk to the governors. Talk to the Democrat governors.


SEN. ORRIN HATCH: Ask them how they like these waivers. Ask them how they like Obamacare.

JUDY WOODRUFF: Well, as a matter…

SEN. ORRIN HATCH: And you’re going to find that they’re — they’re beside themselves.

JUDY WOODRUFF: As a matter of fact, we did look for some quotes and comments today, I should say, from governors. Some of the Democratic governors said they are interested in this. They think it opens the door.

And I’m going to quote, you know, your former Republican colleague in the Senate, Sam Brownback. He’s now the governor of Kansas. He said, yes, he does still object to the law overall, but he sees what the president said today as a positive thing.


JUDY WOODRUFF: He said, this does offer some flexibility.

SEN. ORRIN HATCH: Well, when the president talks positively, that’s great. The problem is he’s saying you still have to meet all the requisites of this law. And the states can’t afford to do it.

We’re talking about a maintenance-of-effort problem here that the governors, both Democrat and Republicans, are up in arms over. Look, I would love to see a system that would work. I think we could have had one that would work. This one is not working. Don’t think that those waivers mean anything. They really don’t.

You read the Associated Press article today. They basically said these waivers aren’t going to work. And frankly, they’re not. And the reason they’re not going to work is because they pound all this stuff on top of the states run by nothing else but the almighty federal government.

And I know what’s going to happen. If President Obama is reelected, within a couple of years, he’s going to throw this his hands in the air and say, this isn’t working. We must go to a single-payer system, in other words, a Washington determination completely done by Washington…


SEN. ORRIN HATCH: … and, in other words, socialized medicine.

JUDY WOODRUFF: We did — we did just hear Secretary Sebelius say this is never — this wasn’t and is — is never intended to be a government — federal government takeover.

Finally, though…

SEN. ORRIN HATCH: Oh, come on. Come on. You can’t look at it without knowing that the federal government is the totally — totally — totally dominant in this bill.



SEN. ORRIN HATCH: That’s why people are up in arms.

JUDY WOODRUFF: Very quickly on Medicaid, serving the most vulnerable Americans, the idea that states could throw some of those people off coverage altogether, the administration trying to stop that, what’s your response to that?

SEN. ORRIN HATCH: Well, what do the states do, if they have got $175 billion in the hole right now, and then they’re going to have to come up with another $120 billion? This is the worst situation since the Depression.

And nobody wants to hurt anybody. People have — people got health care before. They had to go to emergency rooms, but they got it. I’m not saying that’s what we should return to, but we could have come up with a bill that would have much more economic sense, would work better, would have both the — Republicans and Democrats together.

No, it was an arrogance of power that they had that they just put this through this way. Now look, I don’t like — I don’t like finding fault with my Democrat friends. I don’t like finding fault with the president. And I don’t even like finding fault with Secretary Sebelius.

But, to be honest with you, what she said is — if you read through the lines, if you read what she said, you’re still going to have to meet all the onerous provisions of this bill. And — and you can’t do it. That’s the problem.

JUDY WOODRUFF: Coming through loud and clear.

Sen. Orrin Hatch, thank you very much.