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Week of 9.24.09

Transcript: Health Care Reform

BRANCACCIO: Welcome to this PBS special report on health care reform. I'm David Brancaccio. You can hide from many public policy issues, but not this one. At this very moment, politicians and policymakers are working on big changes to America's health care system and I can say this with confidence: whatever gets decided, legislation or no legislation, will ultimately touch each and every one of us in some intimate way. This is among the reasons that health care reform has stirred the passion and in some cases the anger that we've been seeing. Three PBS programs have come together to offer some journalism that we hope will help explain why we're here in this debate and where we go next. We'll start with some extraordinary stories from the heartland; stories of how cracks in the current system of coverage have life altering consequences for multiple generations of a single family. NOW on PBS producer Brenda Breslauer and Senior Correspondent Maria Hinojosa have our report.

HINOJOSA: 8-year-old Sophie O'Reilly just started the second grade here in Tulsa, Oklahoma. This morning, she's accompanied by her best friend Breezey. Who's offering a little moral support. Because today Sophie will be giving her first big class presentation.

SOPHIE O'REILLY: What is asthma? Asthma is swollen airways and it can make it harder to breathe.

HINOJOSA: But this isn't just any school presentation... it's a window into Sophie's world. From the time she was 4, she's lived with chronic pulmonary disease.

SOPHIE O'REILLY: I have asthma sometimes it makes it harder for me to run as fast as other kids sometimes I wheeze and sometimes I just get tired.

HINOJOSA: In 2006, Sophie underwent major surgery to take out an entire lobe of her tiny lung.

SOPHIE O'REILLY: This is me after my lung surgery when I was five years old.

HINOJOSA: It's a tough concept for her classmates.

GIRL: How was your heart collapsing?

SOPHIE O'REILLY: It wasn't my heart that was collapsing, it was my right middle lobe. In my lung.

HINOJOSA: And they aren't the only ones with questions. Even Sophie's own doctors still don't know why her lungs are weaker than everyone else's. Without a clear diagnosis, she's suffered with symptoms for years. And her parents, Natalie and Stephen, have watched their little girl confront this very big disease.

HINOJOSA: Keeping Sophie healthy has become a way of life for the O'Reilly family. To prevent a serious incident: inhalers, pills and oxygen monitors are all part of the daily routine—from early in the morning 'til late at night. To find out how health care is working for middle class families today, we came here to the middle of America. In fact, you can't get much more central than Tulsa: it's a mere 80 miles from the midpoint between New York and Los Angeles. Like many Americans, before their problems began, the O'Reilly's never thought much about health insurance.

natalie o'reilly: I say to people pretty frequently, because they're like "Oh, you know, my plan works great for me." And my answer to that is, insurance works really well until you need it. Until you really, truly need it.

HINOJOSA: Natalie is a social worker with a master's degree. Husband Stephen plays guitar for a successful rock band and co-owns a small recording studio. Along with Sophie and younger brother Felix, the family lives here —in a house just three minutes from the hospital because access to medical care is their number one priority.

STEPHEN O'REILLY: We've had to, you know, sort of keep a cap on our lives and how we—how we planned our lives based on this one factor, health care.

HINOJOSA: But it wasn't always this way.

NATALIE O'REILLY: We had this healthy, beautiful little girl.

STEPHEN O'REILLY: Nothing more than like a little cold. Or, you know, I think she had a stomach—I think she had a stomach thing once. That was it.

HINOJOSA: Natalie and Stephen had been paying for the same health insurance policy for five years to cover their family. But then Natalie finished grad school, and got a job that offered a health plan. So she cancelled the old policy.

NATALIE O'REILLY: Looking back, I wish we had been a lot more cautious.

HINOJOSA: The insurance plan through Natalie's work turned out to be too expensive, they say, so they decided to shop for a more affordable one on the independent market.

What was the mistake that you think you made from the time that you left your old insurance, and decided to get new insurance?

NATALIE O'REILLY: We allowed for a gap between the policies. Our biggest mistake was setting that end date before we had something lined up. Solidly lined up.

HINOJOSA: During the gap between policies, Sophie, who had recently had several bouts of pneumonia, got labeled by the insurance industry as having a "pre-existing condition;" two words that today are center stage in the debate over health care reform. Those two words also meant that Sophie's parents couldn't find a plan that would cover her for respiratory problems.

STEPHEN O'REILLY: Nat spent hours and hours talking to insurance companies, looking for possibilities. And we never found any. I thought it was just crass that—that she could be denied coverage. I mean, we're—we're willing to pay, you know?
HINOJOSA: They were told if Sophie went a year without incident, she could get coverage. So her parents tried to keep her out of the doctor's office.

NATALIE O'REILLY: So that there would be no trace that she had this illness. There would be no paper trail for an insurance company to see that she had had this illness.

HINOJOSA: They were uninsured, still searching for a plan when Sophie woke up sick one day and began wheezing.

STEPHEN O'REILLY: And the debate begins about, "Well, what's the right thing to do here? Well, I mean, you know, we need to get her to the doctor. Is she doin' okay enough that we can not?"

NATALIE O'REILLY: And so, we knew it was bad. But we just thought, "We've got the medication here. We're on the phone with the doctor. We just can't—we simply can't afford to have another strike against her by taking her to the doctor."

STEPHEN O'REILLY: As she's becoming more lethargic, then it's like, "Okay, we need to get her to the doctor." Screw the insurance. Let's go.

HINOJOSA: They made it to the doctor's office but then Sophie took a turn for the worse.

NATALIE O'REILLY: Sophie—started shaking violently, and she threw up, and she turned blue and limp. And the nurse said—"Should I call 9-1-1, should I call an ambulance." And the doctor said, "There's not time to get one over here." We threw her in her car seat. Didn't strap her in. Just threw her in. And I drove around the corner to the hospital. And—it was just the most sickening feeling. I—I just—you know, the most sickening feeling. On the drive over there, she was not—talking. She wasn't alert. And I'm just yelling, "Baby, please talk to me, please cry, please, please, please talk to me." And—they got her stabilized pretty quickly. But having to make that call to my husband and say, "This kid, who we tried to keep home today, we're in ICU right now."

STEPHEN O'REILLY: I remember just going, "Oh my god, I can't believe that I just pushed—that I just suggested that we—you know, that we keep her from the doctor over insurance."

NATALIE O'REILLY: The guilt and the shame, you're terrified for your child. But the guilt and the shame was almost unbearable.

HINOJOSA: You almost didn't take her?

NATALIE O'REILLY: We almost didn't take her. We almost tried to ride it out at home.

HINOJOSA: Because you didn't want the insurance companies to see that she was sick?

NATALIE O'REILLY: Right. Right. The system as it stands is placing parents—and it's not just us. It's placing parents in a situation where you have to decide take her to the doctor and get that next strike against you, or keep her at home, and you're basically backed against a wall to committing medical neglect.

HINOJOSA: But if you keep her at home, you might get—


HINOJOSA: —health insurance?

NATALIE O'REILLY: Right. Craziness. Craziness.

HINOJOSA: That incident marks the first time doctors put it all together, Sophie has a serious, recurring respiratory problem. And then...the hospital bills start to arrive.

NATALIE O'REILLY: I'm working through the absolute horror and fear of seeing this tiny little body hooked to all these machines. And there's a piece in the back of mind saying, "This is when we lose our house. We will lose our—we will lose our house over this."

HINOJOSA: But then, a reprieve. With Natalie working at a non-profit and Stephen just starting out as a music producer, their income is low enough to qualify for children's Medicaid in Oklahoma. It will cover Sophie and her brother Felix, even the trip to the emergency room.

STEPHEN O'REILLY: It saved us. I mean, at the time, it saved us. I mean, it probably saved us from losing our house.

HINOJOSA: The O'Reilly's are not unique when it comes to the threat of losing a home because of medical costs. We met a second family here in Tulsa who live in the same neighborhood as the O'Reilly's. Five-year-old Cale is Felix O'Reilly's best friend and Cale's story also shows how tough it can be for families to get insured and stay that way.
Last year, Cale's mom Merica met Natalie when they were both waiting to pick up their rowdy, pre-schoolers one afternoon. Cale normally has a tough time socializing with other kids, so Merica was surprised to see them getting along so well.

MERICA: I turned to Felix's mother Natalie and I said, "You don't know how rare this is. You know, you don't understand that we've never seen Cale do this before." And this is—this is my—the best thing that's happened all year.

HINOJOSA: Cale and Felix were playing make-believe, something Cale has a hard time doing.

MERICA: When he was two years old we started realizing that his speech was behind where it should be and I found myself saying, "He turns in a circle all the time but we don't think it's because he's autistic." "He walks on his tiptoes all the time but we don't think it's because he's autistic." And after I heard myself say that three or four times then I started getting really scared.

HINOJOSA: When Cale was two and a half, his pediatrician confirmed Merica's suspicions and diagnosed him with autism, a disorder that now impacts a staggering 1 in 150 children in this country.

So from the time that your son was born your husband had a full-time job and he had medical insurance?


HINOJOSA: And your understanding that whatever your son needed, he was gonna be covered?

MERICA : Uh-huh

HINOJOSA: And then what happened?

MERICA: Then autism happened. And I started reading online that children with autism aren't covered by insurance. If he had a stroke. If he had an accident he would of course be covered for that. But not for autism.

HINOJOSA: 15 states do have a legal mandate requiring insurers to cover treatments like speech and occupational therapy for autism -but Oklahoma isn't one of them.

MERICA: How could autism cause you to not be covered for things like speech therapy or occupational therapy? Things that doctors have said, "This is what your child needs."

HINOJOSA: Some insurers say schools should provide the treatment, claiming these are educational, and not medical problems. So in states without mandates, doctors have to be creative to ensure their patients get care. On insurance forms, they'll write that children have conditions like "encephalopathy," which is covered. But they try to avoid the word "autism."

MERICA: I think over the years you just learn to accept that that's the way the system works, let's not say the "A" word.

HINOJOSA: With their doctor's help, they were getting by, until March, when things suddenly fell apart. Cale's father Brad lost his job and the entire family lost their health insurance.

BRAD: You just hope nothing happens. And how ridiculous is that? He's a five-year-old child.

MERICA: It gets to the point where you say, "Oh my god. Don't jump on the sofa, because if you fall down and break an arm we could be bankrupt." And there are so many families in the exact same situation. It just boggles my mind.

DR. JOHN STUDBAKER: I think there are a lot of people that are one surprise health care problem away from being underinsured or uninsured.

HINOJOSA: Dr. John Studbaker is Sophie's pediatrician at Oklahoma University's school of medicine. He says a lot of people are not as well covered as they might think.

DR. JOHN STUDBAKER: They'll unfortunately find out that, you know, their—their company's health plan will drop them, or their company will decide to change health plans. One—one unexpected situation and—their lives change forever.

HINOJOSA: Studebaker says he's seen first hand how a government program like Medicaid can provide a safety net, as it has for the O'Reilly family. Medicaid pays 100% of Sophie's treatments, specialists, and hospitalizations. Her medicines, in an average month, cost five hundred dollars. All covered by Medicaid.

STEPHEN O'REILLY: That has made our lives functional.

NATALIE O'REILLY: If tonight, Sophie started looking sick, I could take her to the hospital right away, and say, "What do we need to do." And if they said, "We need to do a CT scan," it would be covered. If they said, "We need to put her in ICU," it would be covered. And that peace of mind is the biggest things in our lives. We structure everything around it.

HINOJOSA: Literally everything. In fact, to keep their children enrolled in Medicaid, Natalie and Stephen have had to limit how much money they make.

And so, basically, you've decided we are going to have to stay poor enough to qualify for this state children's Medicaid?

NATALIE O'REILLY: Uh-huh. What we've had to do is really step back from our professional lives, and not take the promotions that we might usually take. Not take pay raises. I will not ever let my child get that sick again, if I have anything to do about it. I will live on the street if I have to. But that's not happening again.

STEPHEN O'REILLY: We wanted to just do the normal thing—just—you know, provide for our kids and now, we find ourselves in a position where we haven't been able to do that without the help of government-run—Medicaid. We don't mind paying for—for insurance. But we need a level of coverage that—that, you know, does not exclude her conditions.

HINOJOSA: Keeping their Medicaid coverage has not always been easy, and at one point bordered on the absurd. A few years ago Natalie started earning too much money and the kids were about to be disqualified.

NATALIE O'REILLY: I called—a case manager—kind of frantically and said, "But I need this coverage. What can we do?" And she said, "What you would need to do is divorce your husband, because he earns less than you. You would need to then give him full custody of the children, and then he could apply for state Medicaid. And he would be eligible because—since he earns less. But you would have to be out of the picture." You know, and I was a little bit horrified by that. I put ten good years into a marriage. I wasn't really willing to walk way from it. But she said that that was what other families had had to do.

HINOJOSA: So, someone from the children's Medicaid office here in Oklahoma actually said to you, "To keep your daughter covered, divorce your husband?"

NATALIE O'REILLY: Absolutely. And, you know, it was just one—it was one of those defining moments when you realize how ridiculous—this thing you're caught up in is.

STEPHEN O'REILLY: For us, absolutely not even a consideration. We love being married. We want to be married.

HINOJOSA: The marriage survived but they've had to make other tough choices.

You are turning 45 today.


HINOJOSA: You don't have any health care.

STEPHEN O'REILLY: No. I don't. This was the year that I had hoped to have insurance and to—to open a retirement account. A lot of my friends that—that aren't dealing with the same kind of issues we are, maybe they're actually, you know, planning for retirement or—or, you know—able to—you know, to—to sorta organize themselves for the future better than—than we've been able to. And that's frustrating.

HINOJOSA: Does Natalie have health coverage?

STEPHEN O'REILLY: No. No. Neither of us do.

NATALIE O'REILLY: We're taking a calculated risk, thinking, "I hope we don't get in a car wreck. I hope he doesn't have another kidney stone. I hope—that I don't find a lump in my breast." You know, grown up, organized people should not live without health insurance. We just can't afford it right now.

HINOJOSA: What does that say to you? That you're—the American dream for a couple like you is that you guys are supposed to be doing the professional thing, right?


HINOJOSA: Moving up on the ladder?

NATALIE O'REILLY: Uh- it says to me that the system is broken for families who have chronically ill kids or kids with special needs.

HINOJOSA: As the health care debate reaches a fever pitch in Washington, what can families like the O'Reilly's expect?

PRESIDENT OBAMA: Under this plan, it will be against the law for insurance companies to deny you coverage because of a preexisting condition.

HINOJOSA: Getting rid of the exclusion for pre-existing conditions was top of the list when the president laid out his health care plan this month. It's one of the few issues that has widespread support from Democrats...and Republicans. And, it could be a game changer for the O'Reilly's.

STEPHEN O'REILLY: I've gone through my adult life feeling pretty a-political. And this is the first time where I've been like, "Wow, this could really, really actually impact my life."

HINOJOSA: Tom Coburn is the O'Reilly's senator. We went to Washington to ask him about Sophie's story.

She actually had been denied health care coverage because of a pre-existing condition.

SENATOR COBURN: Here's an emotional story of a very difficult situation and the answer is more government or fix it without more government? And my answer is we can fix that without more government.

HINOJOSA: Senator Coburn, is also Dr. Coburn, a practicing physician. He's a Republican who opposes all of the active plans coming out of Congress right now.

SENATOR COBURN: I don't know what the answer is and what ultimately will happen, but I can assure you that if we run a government-centric program we will bankrupt this nation for sure.

HINOJOSA: Are you prepared to stand in the way of a bill like—

SENATOR COBURN: If—if—it's government-centered, absolutely.

HINOJOSA: And when people say, "Well, but if so many Americans are losing everything and the families, like the O'Reilly's, worried about their daughter. Having to change their lives because of the health care of their daughter. And they say, "We want something now.

SENATOR COBURN: Look, the American people, if you talk to 'em, they want us to get this right. That's number one.

HINOJOSA: But —what happened during the past 12 years when the Republicans—

SENATOR COBURN: Absolutely nothin' and it should have.

MARIA HINOJOSA: And why didn't it happen?

SENATOR COBURN: Well, I—you know, I can't—for four of those years—six years I was here, four of 'em I wasn't. The Republicans—through 2006 or through 2004 anyway missed a great opportunity to markedly change and improve this country. They missed it. They blew it.

HINOJOSA: And when these Oklahomans say, we are on pins and needles because the future of our lives, whether or not we'll be able to pay rent, lose our house, if we'll have to leave the state of Oklahoma. For those people who need responses now—

SENATOR COBURN: Since there is no answer through the government right now, the only option is for us to help one another. And that's what we oughta be about.

HINOJOSA: But that isn't always an option. Back in Tulsa, Sophie's grandparents, for example, would love to help out but they can't because of their own medical bills.

MYRA MCLOUGHLIN: We had insurance. It just didn't come through for us when we needed it.

HINOJOSA: Ken and Myra McLaughlin, both now in their sixties, thought they were prepared for any medical emergency. They had not one but two health insurance policies.

MYRA MCLOUGHLIN: We were paying $1500 a month. We thought we had done everything right. We had a health insurance policy, and we had this cancer insurance policy.

HINOJOSA: And they were paying a lot for that extra policy. What cost $14 a month in 1990 has skyrocketed to over $500 today.

MYRA MCLOUGHLIN: There have been many times where I've said to Ken, "We need to get rid of that. It's starting to creep up." But Ken refuses to get rid of it.

KEN MCLOUGHLIN: Both of us have had two cancers each. You can't say that you're not gonna have it again.

HINOJOSA: After Myra's first bout with cancer, Ken started his own business and the McLaughlins switched insurance plans. With the new policy, cancer became a pre-existing condition. If Myra got the disease again, it wouldn't be covered. And that's exactly what happened. When she was diagnosed with leukemia three years ago her primary insurance didn't cover her chemotherapy.

MYRA MCLOUGHLIN: We have a lot of money that we owe.

HINOJOSA: A lot could be an understatement.

KEN MCLOUGHLIN: It's—it's only $109,843.62.

MYRA MCLOUGHLIN: I mean, there's a choice we—we sell the house, or we declare bankruptcy, and of course, Ken doesn't agree with either of those—situations, but that's the only thing I can see, because $110,000 isn't gonna happen in my lifetime.

HINOJOSA: This tight knit family has had some tough years. But now, some hope.

STEPHEN O'REILLY: What happens over the next few months in Congress—you know, they duke this out—is gonna—you know, is gonna form, you know—a big part of how we can move forward. A strange time, you know, and a nerve-wracking time.

HINOJOSA: And through it all, they just want Sophie to be a regular kid, like any other second grader.

So, when you did your presentation, what did you want the kids to understand about that?
SOPHIE O'REILLY: I wanted them to understand what lungs are, and so they would know. 'Cause most people, when I tell 'em about my lung surgery, they—they don't know what lungs are, and I have to explain. And so I wanted to make sure everybody knew.

HINOJOSA: When you're standing at the front of the class, what do you want them to see in Sophie?

SOPHIE O'REILLY: I'm—that I'm—just a bit different.

HINOJOSA: That you're just a bit different?

SOPHIE O'REILLY: Or different. 'Cause—I had lung surgery when I was a little girl, and I have four lobes, and the other kids have five.

HINOJOSA: Other kids have five lobes, and you have four lobes.

Last week, the O'Reilly's got some bad news. Sophie's disease has progressed and she will need yet another difficult surgery.

STEPHEN O'REILLY: The future is, I think, the—the thing that I worry about the most. As she gets older and begins to move into her own life more because we don't know where all of this is headed. We don't know where—you know, where her sickness is going. I know we'll take care of her somehow. I know she'll be taken care of. That part of it will be no matter what. And I just want her to be happy and know she's loved. That's all.

SUSIE GHARIB: You may be wondering, why health care reform right now...given everything the country's facing. Among stars that have aligned is the recognition by corporate America that the present health system is putting many firms at a disadvantage. Companies large and small are finding that the high cost of health insurance is making it hard to compete in the global arena. And while Washington deliberates, American businesses are already looking at innovative and sometimes controversial ways to hold down costs. Nightly Business Report's Jeff Yastine produced our story.

Powerboat racing is not for the faint of heart. At speeds of over 200 miles an hour, drivers, boats and engines all take a pounding. Latham Marine, a 12-person firm in Fort Lauderdale, Florida, designs and builds high speed steering systems for these offshore racers, pleasure boats, and military vessels. Hiring and training specialized machinists and engineers—and keeping them—is not easy. That's one reason why Kathy Latham and her husband Robert, provided fully-paid healthcare benefits, for workers and their families.

KATHY LATHAM: I've always felt that if we could provide good benefits, then the worker could do a better job. They're not worried about their family as much if they can provide health care and what not.

GHARIB: But last year, Latham was hit with a thirty percent rise in health care costs—and had to break some bad news to its staff.

MARCUS DE SOUZA: I'm married. I have a wife. And unfortunately, she was on the plan.

GHARIB: Workers like Marcus de Souza still have healthcare benefits. But family members, like his wife. Do not. It was just too expensive for the company.

MARCUS DE SOUZA: So, it's tough news for us, you know. But I understand why they had to do it. They had to do something. And rather than compromise the benefits to the actual employees, unfortunately the spouses and family got affected.

GHARIB: Providing health care benefits poses the biggest challenge for smaller companies like Latham Marine. Nearly all large companies—with 200 or more workers—offer health benefits. But only half of the smallest firms do. Companies with 9 workers or less. That number has fallen steadily in recent years. Balancing bottom-line concerns with a desire for a happy, healthy workforce creates a real dilemma for business owners like Latham.

KATHY LATHAM: That was like, literally, probably, cutting out a piece of my heart, that day, when I made that announcement. Tears in my eyes. It's hard for me now to speak about it now. But I feel like I'm literally being chipped away at.

GHARIB: And it's a challenge for employees like De Souza and his wife.

MARCUS DE SOUZA: Obviously you have to swallow the pill and deal with the consequences. And so I covered her under the plan here for a period of time and actually she started shopping around and she's off the plan right now. She currently does not have insurance.

GHARIB: Ten years ago, companies and their workers paid an average of nearly $5,800 for a family's coverage. Last year, that bill was nearly $13,000. According to a study by the Towers Perrin Research Firm, the total cost of worker health care jumped 151 percent since 1999; but wages rose just 37 percent. Researcher David Guilmette says that affordability gap eats a quarter to a third of an average worker's yearly wage increase.

DAVID GUILMETTE: And that's just the cost piece to participate in the program. There's additional cost burden from having the benefit not be as rich as it was before; so higher levels of co-pays, higher levels of co-insurance and deductibles. So not only are you paying more to buy the coverage, but you're having to pay more each time you use the service.

GHARIB: In many countries, citizens get health care benefits through a government-administered plan. Not so in the U.S., where the vast majority of Americans get health care benefits through their jobs. To understand how that came to be, you have to look deep into U.S. history.
In the 1870s, railroads were among the first companies to provide health care for workers. The cost of full-time, company-run hospitals and medical staff was deducted from workers' wages. The largest U.S. retailer of the early 20th century, Montgomery Ward was one of the first to provide group health coverage for its workforce; the company paid half, the rest from wage deductions. Then came World War II. With 16-million men and women in military service, domestic wartime industries competed for a limited pool of workers. With wages frozen by federal order, generous fringe benefits, like company paid health care, came into play. But Paul Fronstin, of the Employee Benefits Research Institute, says the benefits weren't considered "wages" by wartime labor regulators.

PAUL FRONSTIN: As a result, employers were able to claim the cost of those benefits as a business expense, just like they do wages; and workers were able to deduct or exclude from income the value of those benefits. So it was very valuable to the employee, in fact more valuable to the employee than the employer, from a tax perspective.

GHARIB: That exclusion became a part of the U.S. tax code after the war, and remains a key reason why most companies offer some form of health benefit.

PAUL FRONSTIN: For the most part, employers provide health benefits on a voluntary basis. With the exception of the state of Hawaii and Massachusetts, there are no laws requiring employees to offer health benefits to their workers. They do it on a voluntary basis because they believe there's a business case for doing so.

GHARIB: As costs rise, that business case gets harder and harder for some kinds of companies to make. For instance, 86 percent of all finance and insurance firms offer health benefits, and 77 percent of manufacturers. On the other hand, only 50 percent of construction companies and 40 percent of the nation's hotels and restaurants provide those benefits to workers.
But as Washington debates whether health care coverage should be mandatory for all workers businesses are already on the hunt for their own answers to lower health care costs.
K-P Studio Architect, a 9 person building design firm in Central Florida—is using its limited capital for company-paid health care—more efficiently. For years, partners Ed Plaster and Larry Krietemeyer provided a fully-paid "gold plated" health plan. But as costs rose, they took a second look, and found employees used only a small portion of what the plan offered.

ED PLASTER: We found that we were paying high premiums and money was leaving our company that could have been retained, for hiring additional staff or paying for additional operating expenses. So we found that we had to more closely scrutinize what type of health care coverage we can offer and provide.

GHARIB: The firm now offers a health reimbursement plan. It has some higher out-of-pocket costs for workers, but a lower cost to the firm.

ED PLASTER: Overall we've had good feedback. I think staff also understands the current economic climate that we're in, that we're having to make some tough decisions, and we're having to share in some of those tough decisions, not just in terms of owners but in terms of employees as well.

LARRY KRIETEMEYER: The savings we incurred in making this change in our health care, in essence, amounts to about a salary position. And for a 9 person firm, one salary position offset with health care savings is a pretty good thing.

GHARIB: Businesses are trying different approaches to reduce health care costs. Here's one way to think about it. We all buy auto insurance. If you have no accidents and no speeding tickets, you get a "good driver" discount. You're considered "a good risk." What if companies and their workers could get discounts on health insurance, by becoming better "health risks" That's the focus of a small but growing number of companies and insurance providers. Instead of managing the cost of someone having a heart attack. The idea is to lower the chances that person will have a heart attack at all, through good exercise and eating habits. It sounds simple, but it works.

DAVID GUILMETTE: There are probably a half dozen serious conditions that drive the majority of health care spend and most of those conditions can be impacted by behavioral changes. In fact almost 50 percent of health care costs can be impacted by changes in individual behaviors whether it's exercising, eating right, knowing your numbers, cholesterol levels, blood pressure etc. done consistently across a large population of people—can really have a positive impact over time.

GHARIB: Of course, it's easy to buy a gym membership for employees. But how do you get them to use it? How do you change their long-standing habits of exercise and eating? One answer? Cold hard cash. And a few companies see a business in that. For example, Virgin Health Miles. Founded by entrepreneur Richard Branson. It signs up corporate customers, like the American Diabetes Association, to give hi-tech pedometers and heart rate monitors to employees. The gadgets keep tabs on how physically active workers are. Employees upload the data to Virgin's computers, compete to see who gets the best results, and in the process earn cash and rebates.

CHRISTOPHER BOYCE: They're actually lowering the health care cost for those employees that are taking their health into their own hands that are being active that are trying to really be responsible with their behavior and take personal responsibility in their health. And so a lot of our clients actually are implementing us on day one and they get a return on investment the day they implement us. Because they're sharing that portion of the cost of the program, those people who don't participate their health insurance is a little bit more. And those who do their health insurance is less.

GHARIB: Those kinds of efforts are paying off. The first half of this decade saw yearly double-digit gains in health care costs at Fortune-1000 companies. But the last four years have seen a moderation of that trend. David Guilmette of Towers Perrin says that's due in part, to the new corporate focus on health, rather than sickness.

DAVE GUILMETTE: The large employers are saying workforce health is hugely important to them. They see the direct correlation to having a healthy workforce and having good business results. At least this group of companies are saying that they would stay the course and continue to be a large plan sponsor.

GHARIB: But the lifeblood of the American economy, small businesses, have not stayed the course. Fewer offer health benefits. They can't afford it, and they're waiting to see if the health care landscape changes. What's clear is that businesses and their employees want something done to bring down the cost of health care. And you can see just what's planned for business in the proposed reforms by going to our website at

SMILEY: One-third of the children in this country are overweight or obese. That means about 23 million of our kids are at a higher risk for diabetes, high cholesterol and a wide-range of other health problems. And for people of color, the statistics are even more alarming. All too often, parents lose the battle of the bulge to the battle over the family budget.

MOM (FILM CLIP): "You can find candy that's cheaper. You can find chips that are cheaper. The sodas are really cheap." "Sometimes you look at a vegetable and say, 'Ok, well we can get two hamburgers over here for the same amount of price.'"

SMILEY: In the acclaimed documentary "Food Inc.", the Orozco family of Los Angeles illustrates what so many families deal with on a daily basis.

MOM (FILM CLIP): "We don't have time to cook, because we leave at 6, we don't get home 'til 9, 10 at night. When you have only a dollar to spend and you have two kids to feed, either you go to the market and try to find something that's cheap, or just go straight through a drive-thru and get two small hamburgers for them and, 'Okay here, eat em.'"

SMILEY: The reality for the Orozco's and families all across America is that low-cost food becomes a high-calorie conundrum.

MICHAEL POLLAN (FILM CLIP): "We've skewed our food system to bad calories, and it's not an accident. I mean, the reason that those calories are cheaper is because those are the ones we're heavily subsidizing. All those snack food calories are the ones that come from the commodity crops. From the wheat, from the corn and from the soy beans. By making those calories really cheap, that's one of the reasons that the biggest predictor of obesity is income-level."

MOM (FILM CLIP): "We didn't even think about a healthy eating because we used to think everything was healthy."

SMILEY: But there is light at the end of the tunnel. A new report offers solutions for how families and communities can tackle this growing problem. Dr. Antronette Yancey is the co-director of UCLA's Center for Health Equity and a leading voice on the issue of childhood obesity. Let me start with the obvious, how did this issue get so out of control. Childhood obesity.

DR. YANCEY: I wish I could tell you the exact reason for that. I can tell you a lot of the things we think right now. We've allowed corporate America to sort of build its profits on our children's backs by having fast food chains and soda manufacturers in schools. You know pouring rights contracts have sort of substituted for the public funding that we should be providing our schools. So schools are scraping to try to get enough money for pencils and books and so forth. We have engineered so much of the physical activity that we used to have to do just to survive. I mean, kids used to walk to school, you know. As adults we used to walk places, now we don't do any of that, and when adults don't do certain types of activity, then that means that kids don't do it because adults make the decisions for kids. So, we have many, many forces that have, sort of, eliminated the healthy foods, the nutrient dense foods, and substituted a lot of really energy dense but nutrient poor foods in our food supply, and then at the same time made it so that we can do essentially nothing and survive.

SMILEY: The problem seems so massive, um, where do you even start to try to reign it in?

DR. YANCEY: Well I just came back yesterday from Washington where we released the Institute of Medicine, Local Government Role in Preventing Childhood Obesity Report. And that report provides about 58 very basic concrete suggestions. In the IOM report we talk about the these things that local government can do, and again it does of course come back to individual choice and personal responsibility, but what I would like to do is to level the playing field and make sure that the healthy choice is the easy choice.

SMILEY: How do you get traction on the issue of recess and physical education or otherwise, physical activity, when we're trying to have a conversation about the kids not learning even inside the classroom. One could argue, and not at all facetiously, they need to be spending more time inside the classroom given these grades, than the need to be spending on the playground.

DR. YANCEY: That is a great segue to what I'd love to talk about, which is, that a part of the problem with children not scoring well on tests and not performing well academically, is being cooped up and not getting physical activity. A group at University of Kansas demonstrated that just an additional 10-minute break a day improved performance across the board. Spelling, composition, math and so forth, so we've got to get that activity back into the kids day in order for the kids to perform. I mean come on, you probably remember when you were a kid, you needed that recess break. Gotta burn off that energy. We beat activity out of our kids, and that's a part of the problem in terms of performance.

SMILEY: Time for my recess break right now. Glad to have you on Dr. Yancey. Whether the issue is childhood obesity or any of the other problems facing our health care system, there is so much talk about the notion of wellness care vs. Illness care today. But what does that actually mean? I asked that question of Dr. Michael Roizen, Chief Wellness Officer at the Cleveland Clinic.

ROIZEN: Well, wellness care—if you will, the focus on lifestyle changes—is tobacco, physical inactivity, food choices and stress account for over 75 percent of our total cost of care. That is, we're twice as expensive as Europe, three times as Asia, because we have twice the chronic disease of Europe, three times of Asia because of those four factors—tobacco, physical inactivity, food choices and stress. Those are under our control and helping our employees get control of those is what we're doing.

SMILEY: For more now on this critical issue of childhood obesity I am joined by Dr. Elaine Batchlor, Chief Medical Officer for the L.A. Care Health Plan—- the largest public health plan of its kind in the U.S. and Elizabeth Medrano is the School Food Coordinator at the Center for Food and Justice which is helping to provide access to better foods through their Healthy School Food Coalition. Glad to have you both on the program.

Doctor let me start with you and get right at it. The stuff that is the least expensive, is the stuff that's the worst to buy and to eat. What's a family, a poor family, to do?

DR. BATCHLOR: Well Tavis I think you're identifying a lot of the environmental issues that are at the roots of this obesity epidemic, and that is that poor families don't have access to affordable healthy foods. So we need to change the environment. We need to have public policies that help to subsidize healthy affordable food for families. And we need to bring more grocery stores and produce markets into poor neighborhoods so that families have access to healthy food.

SMILEY: Is there a movement afoot in the country to do that? I'm just trying to figure out. So often poor people, those who suffer, don't have a voice and nobody wants to tell the truth about their condition, so their suffering isn't allowed to speak, so how does that actually happen?

DR. BATCHLOR: Well I think people like Elizabeth are starting to raise the awareness of some of these issues. I think as a society we're just becoming aware of the problem of obesity and beginning to understand some of the things that are at the root of that problem, like the problem with access to affordable food. Some of the solutions are starting to bubble up from the grass roots so communities and community organizers and community health workers are organizing people to try to address those issues in their own neighborhoods.

SMILEY: Elizabeth what does then school food reform mean and what does it look like?

MEDRANO: Well the Healthy School Food Coalition is a group basically of parents and students, community members, health advocates that have seen what doctor was describing. And where we see focus on changing strategies around ensuring that there's healthy food access to students. We focus on LAUSD because as we know a lot of obesity and diabetes and all kinds of conditions are related to diet and they affect directly to the youngest members of the society. We focus basically on developing leadership among students and parents so that they can see the problems and think of the solutions, and basically develop those into policies at the district level. We've been very successful since 2002 when we got involved. We were the ones that launched the campaign basically to ban the sell of sodas in LAUSD, second largest school district in the country and we did that. It was hard and there's still many challenges so we didn't stay at the soda, but then we moved on to junk food, figuring out policies to get rid of junk food sales, and then straight to the kitchen, improving the meal quality, access to the actual food. Because many times students at school don't complain per se about the quality, but actually the access, the long lines, the tickets, the meal tickets which we are trying to eliminate too. With that eliminate stigma. When you go to middle school, when you go to high school, students stop going into the cafeteria because it's not cool, they want hang out with their friends, so food, it's more basic food as chips and soda, and we want to change culture and culture is really hard to change so we do it through leadership, through policy development and action.

SMILEY: Culturally is hard to change to your point. You successfully got rid of soda in LAUSD- that's Los Angeles Unified School District- we got rid of sodas here in L.A. How do you go about getting rid of junk food? I want to take them one at a time. I'll come to the cafeteria in just a second. Finally here, but how do you get rid of junk food, especially with kids that have grown accustomed to it?

MEDRANO: It is, it is, talking about culture it's really hard. I think we have a huge monster that we're trying to fight which is the junk food industry—the fast food industry which is accessible, it's affordable and it's quick. It's everywhere in my neighborhood—I have three McDonald's and three liquor stores around. It is through education, it is, I mean we see the cafeteria as a place of learning not only a place where you eat, or don't get to eat because the line is long. We see, we really try hard to involve parents and see this- this is our health care prevention. We want to stay healthy we've got to change our habits. And it's really hard.

SMILEY: Dr. Batchlor I wonder whether or not it's your sense that parents see this as the problem that it is. I mean the question's almost laughable because all one has to really do is to look at our kids to see that we have a problem walking amongst us, or waddling amongst us, because obesity's such a serious issue amongst young kids these days. But I wonder if that said whether you have to reason to believe that parents see this as the life-threatening issue that it really is.

DR. BATCHLOR: I'm not sure that they do see the size of the problem and the seriousness of it, and I think that's where education plays a big role, in helping people understand what a healthy weight is, what a healthy lifestyle is, good nutrition, the importance of physical activity. One of the things we do as a health plan is work with our health care providers to educate their patients, and parents and families about healthy weight, and to monitor kids as they grow, and to monitor their weight and their activity and to have sensitive, culturally appropriate conversations with parents about nutrition and weight. Sometimes that's hard to do because in some cultures children who are larger are regarded as healthier. So we have to work at that and we have to do it in a sensitive and culturally appropriate way. For example, at family resource centers that we operate in low income communities, we have cooking classes. And in those cooking classes we show people how to prepare healthy foods that are culturally appropriate. So soul food that isn't full of fat and salt, Mexican cuisine that's healthy, that has a lot of vegetables and fruits. There are ways to cook food that is healthy and still tasty and attractive and faithful to ones culture.

SMILEY: Let me close by asking you doctor whether or not you are hopeful given the enormity of the problem. Sometimes we wrestle problems that are so massive we really can't see ourselves getting our arms around them successfully. Your sense of that is...

DR. BATCHLOR: My sense is that this is a tremendous problem and a real threat to our health and well being, and that we are at the beginning of recognizing the size and seriousness of the problem. I think there is hope in groups like Elizabeth's and government policies that are changing in California. The governor recently signed a law requiring restaurants to put nutrition labels on menus, so I think we're starting to take some steps in the right direction, but it's a very big problem, it's a complex problem and it's going to be with us for a while.

SMILEY: Dr. Elaine Batchlor, Elizabeth Medrano, thank you both for your work and for coming on to talk to us about it.

If and when a health care reform bill passes in congress there will be much said about the influence of the senate's long time champion of health care coverage, Ted Kennedy. I spoke with Senator Kennedy's son, Ted Kennedy Jr. about what health care reform would mean for his father's legacy.

KENNEDY JR.: I think that we will have health care reform in this country. My father always believed that health care is a right and not a privilege of the lucky few. So I think he is, you know, I know he wanted to get kind of more involved in this debate and I grieve for that, that he is not here to see this thing through, but I do believe that it will happen with or without him.

SMILEY: The conversation continues now on our website, where you'll find links to resources and information about wellness programs that may be available in your state. If you're one of the persons who has a good medical plan, then you're probably wondering why you should even care about health care reform to begin with. Well imagine for a moment that you need to go to the emergency room, but the E.R. has gone out of business. Something happening everywhere these days. In California alone, more than one hundred forty hospitals and emergency rooms have shut down over the last ten years, due largely to the high costs of treating the underinsured. Correspondent Vince Gonzalez of L.A. member station KCET's "SoCal Connected" has this report.

GONZALES: It's the start of the late shift on a Friday night at Downey Regional Medical Center. The emergency room waiting area is already standing room only, filled with patients suffering all kinds of ailments. A few years ago, many of them would have gone to other nearby hospitals like King Drew or Freeman Memorial, but now those places are closed, so the sick and injured end up here. But tonight, like many others, the Downey ER has been pushed to the limit. The patients who are already here are consuming the staff's attention, so at 10 p.m., head nurse Nanette Boochie tries to take action, closing the doors to new ambulance arrivals.

NANETTE BOOCHIE: So at this present time, ten o'clock, we're gonna actually close because we have some critical patients, several critical patients, and no beds within the hospital. "We're closed. Extremis. Okay, go ahead. Cardiac arrest." I try to let them know that we're closed, but in this kind of situation, especially like a cardiac arrest, it doesn't matter. They need to go because that means like immediate intervention, so they can't wait.

GONZALES: When this 67-year-old heart patient collapsed, Downey Regional was the closest ER.

NANETTE BOOCHIE: Even though our department is pretty stressed, we needed to take this patient.

GONZALES: So a dozen doctors, nurses and emergency medical technicians are now called upon to save one patient. The staff at Downey is proud of the fact that they save lives, but the question for this hospital and a host of hospitals across California is how will they survive and continue to provide care into the future? For months Downey Regional, one of Los Angeles County's best community hospitals, has been teetering on the brink of disaster. Chief Operating Officer, Rob Fuller says officials at the not-for-profit facility found themselves facing the threat of bankruptcy.

ROB FULLER: We went to the financial side and we found everything in the financial side was broken.

GONZALES: What was broken was a system that now took in a lot less money than was going out for patient care. Costs were rising rapidly and the funds from medical insurers were shrinking. Like most hospitals, Downey Regional stayed afloat by using private insurance payments to subsidize the costs of those on government assistance or Medi-Cal. It's estimated that Downey loses $1,000 a night for every Medi-Cal patient they treat.

ROB FULLER: We provide about 10,000 patient days a year of Medi-Cal service, so I lose roughly $10 million dollars a year by being a participant in the Medi-Cal program. So I have to find ways to offset that, so it falls on the private insurers. We have to negotiate the rates up as high as we possibly can to offset those losses in the state-sponsored program.

VINCE GONZALES: But that balance is being thrown out of whack as more and more Californians lose their jobs and their health insurance and wind up on the government plan where reimbursement rates haven't gone up in nearly 20 years. In fact, California ranks 51st behind Puerto Rico and every other state for reimbursements, says hospital industry spokesman Jim Lott.

JIM LOTT: Medicaid or Medi-Cal in California only pays $.78 on the dollar. So if a hospital can't make it up through private pay or through commercial insured patients, they eat it. And 56 percent of the hospitals in Southern California are doing just that, eating it.

KATHY FOSTER: Federal regulations require that you treat anybody that comes to your door. You have to screen them and you have to make sure that they're not in some sort of emergency condition before you can ask about their ability to pay.

PATIENT: "It kind of twisted and gave out."

KATHY FOSTER: Those that are now losing their jobs because of the recession and aren't gonna have insurance are not gonna have the ability to pay the hospital and the state doesn't have the ability at this point to pay the hospital, so it's really, really getting tough for us to survive in this area.

VINCE GONZALES: And according to veteran nurse, Deb Gale, the problem is compounded because those patients are coming in with more severe problems than in the past. When you look at the trends 20 years ago, you wouldn't have predicted what you see today in the ER?

DEB GALE: No, no. When I first started, we had about 58 patients a day. Now we see about 150 patients per day and they're much sicker than they were 20 years ago.

GONZALES: Much sicker because they've put off primary medical care until their condition became critical.

DEB GALE: Before, you had a patient that would come in and they would have pneumonia and that would be their only disease process. Now they come in and they've got HIV, they have diabetes, they've got hypertension and they have pneumonia.

GONZALES: And sicker patients, many with minimal or no insurance, cost more to care for. Making things even worse, as patients have become sicker, the number of care facilities in Southern California has been shrinking.

JIM LOTT: What I worry about every night, and this is almost literally every night, is waking up the next morning and hearing that one more hospital with an emergency room in Los Angeles is announcing that it's going to close.

ROB FULLER: The problem is just lack of hospital beds. We have the I-105 Corridor which used to have seven large ERs servicing that area. Now there's just three.

GONZALES: So many hospitals have disappeared that, in some parts of L.A., there are fewer than one hospital bed per thousand people. By that measure, we're in worse shape than New Orleans after Katrina.

JIM LOTT: In New Orleans, today there's 1.2, 1.3 beds per thousand, so we are really —even just a small number —we're actually under what they have available today.

GONZALES: So a city most Americans still pretty much consider to be in tatters may actually be a better place to be a patient than near Downey?

JIM LOTT: I would say so right now. If you're looking at access and availability of services, I would say that's actually the case.

GONZALES: To keep their hospital alive, every member of the staff at Downey Regional has been instructed to keep meticulous records of every pill handed out, every procedure performed on their shift. They can't afford to let one potential charge go unaccounted for.

KATHY FOSTER: The nurses didn't really have to think about that in the past, but now they have to have this added aspect of business where they're making sure that all of the things that they're using they're charging for and not just, you know, focusing on the patient, but really looking at the business aspect of taking care of that patient as well.

VINCE GONZALES: Back in the ER, that cardiac arrest patient is getting the best care the hospital can offer. It takes about twenty tense minutes before the situation is brought under control. That's when the staff gets more bad news. Several other ERs nearby have now closed and ambulances they turned away are bringing patients back here.

NANETTE BOOCHIE: Our local EMS systems are calling us to want to bring us more patients and the reason for this is now that all the other hospitals are closed as well.

GONZALES: Those other hospitals are in the same bind as Downey Regional. Most are in even greater peril.

JIM LOTT: In Southern California, we've got a situation where about 56 percent of all of the hospitals with emergency rooms are operating in the red. Many of them have been operating in the red for longer than two or three years at a time and that's an unsustainable policy. There's only so much philanthropy, there's only so much reserves available to cover those kinds of losses.

ROB FULLER: This is pretty much the epicenter for everything that's wrong in health care. If it starts to go wrong, it starts to go wrong in L.A. first and then spreads elsewhere and we've seen that on a number of fronts. The low Medicaid reimbursement that we get in Southern California certainly is one of the huge issues that are impacting the viability of lots of hospitals and not just Downey Regional.

GONZALES: In the short time it took to stabilize that cardiac arrest patient, the cost in manpower and machines is estimated to be as high as $10,000. The question for administrators is how long can they provide care at a loss before they just have to go out of business? And when any hospital shuts down, it affects everyone.

JIM LOTT: Any and all of us, at any given time can be impacted by this, if you get into an accident, you want to be taken to the nearest hospital with the emergency room and the capability of taking care of you. And it doesn't matter what kind of insurance card you have in your wallet. If that hospital is down, you're going to be affected by it.

GONZALES: Just last week, despite cost-cutting efforts, Downey Regional filed for bankruptcy. Officials promise no layoffs or changes in care... but say bankruptcy was the only way to get a much-needed loan and renegotiate contracts so the hospital can keep its doors open to patients in need.

SMILEY: As for that requirement that hospitals provide emergency medical treatment for the uninsured, that isn't new; President Reagan signed that into law back in 1986.
You can find out more on this on our website.

BRANCACCIO: There's been a lot of rhetoric coming out of Washington about making health care reform a bipartisan effort. So where are the Republicans, and how do they fit into the picture? NOW on PBS's Maria Hinojosa sat down with Senator Tom Coburn. A Republican from Oklahoma, he's also one of the few practicing doctors in Congress, and a fierce critic of the current plans for reform now dominating discussion.

HINOJOSA: Senator, you're a practicing physician. Many of our viewers, for example, have health care. Have health insurance. Do you believe that the system is working for people like that?

SENATOR COBURN: Yes, but it—it—some of it is working wonderfully but it's way too expensive. And for others it's not working at all because they can't get access. So, you know, I'd say it's a mixed bag. What we don't wanna do is destroy what is great about America—American health care as we tackle the problems with what's wrong with it.

HINOJOSA: And what is great about American—


HINOJOSA: —health care?

SENATOR COBURN: —sick in this country, this is the best place to be in the world to be sick. Whether you're poor, you have no insurance or you've got the best. You're gonna get better care here for an acute illness than anywhere in the world.

HINOJOSA: But if it means that you're gonna get great care but you may end up having to declare bankruptcy and your family may become homeless in the process, then—

SENATOR COBURN: Well, that's part of the problem. The cost of it. And so how do we drive down the costs? One of the reasons we don't get good value is we think somebody else is payin' for it. So we don't make an economic decision. When a doctor says you need to have an MRI you get an MRI. You don't say, "I need an MRI. First of all, are you sure I do, doctor? Is there some other test we could do that may be not so expensive that'll give you the same information?" Number two is where can I get the—an adequate MRI for a lower price?

HINOJOSA: Just the notion that whether or not these families actually can have the wherewithal to go shopping for health care, shopping for the lowest priced MRI. This is a lot of wear and tear on American families.

SENATOR COBURN: Well, you get—you—you get one or two choices. We can have the government run it. And it'll grow at seven to ten percent per year. And we'll charge it to our grandkids and we'll lower their standard of living. Or we'll truly allow markets to allocate scarce resources. And we'll create transparent markets where the insurance industry is really sellin' insurance instead of pre-paid medical expense. The argument about the federal government bein' efficient is absolutely a joke. They're not efficient. They're highly inefficient. You gotta know we got a problem with Medicare and Medicaid.

HINOJOSA: When you see what's been happening in Washington and across the country over the past several months this level of division, hatred at some points, around this issue——what goes on for you?

SENATOR COBURN: Well, I don't's hatred. I—I think it's intensity and angst over the fear. Fear of losing what you have today. Fear of loss of liberty where somebody's gonna tell me what I have to do. Fear of the debt that we're passing on to our kids. We have a worried electorate and we've worried them a great deal.

HINOJOSA: Let me ask you about something that happened at one of your town hall meetings. A woman there told you that her husband—was denied nursing care. He has traumatic brain injury.

WOMAN AT TOWN HALL: We left the nursing home and they told us we are on our own. He left with a feeding tube. I have been working with him, but I'm not a speech pathologist, a professional that takes six years for a master's. And I'm trying to get him to even drink.

SENATOR COBURN: Well, I think, first of all, yes, we'll help. The first thing we will do is see what we can do individually to help you through our office. But the other thing that's missing in this debate is us as neighbors helping people that need our help.

HINOJOSA: You told her to turn to her neighbors for help.

SENATOR COBURN: No, actually what I said is that's unfortunate, but we—what I made the point was is if she couldn't afford insurance and if she couldn't get care, is that the federal government's responsibility or our responsibility as Oklahomans? It is the people of Oklahoma. Now it—for—to be fair, I met with her and her husband afterwards and he shouldn't be in a nursing home by my assessment.

HINOJOSA: Well, you told them to come to your office right?

SENATOR COBURN: They did. I visited with 'em.

HINOJOSA: And some people say, "Well, wait. Senator Coburn says don't turn to the government for help." But you said—


HINOJOSA: —"Come to my office."

SENATOR COBURN: —the point is is we will help you find what's available in Oklahoma.

HINOJOSA: But what about all the people, the people who we met, who need urgent care now to resolve their—health care problems?

SENATOR COBURN: I would say—the same thing. Oklahomans—

HINOJOSA: That they should——go to your to your

SENATOR COBURN: Sure. We'll help anybody. We will attack any problem any citizen's having and try to connect 'em up with the facilities and—and safety nets that are available in this country today. There's a role for the federal government in creating the opportunities for good allocation of resources. But there's also a role for individuals. And when we ship it all to the government we lose somethin'. And here's what we lose. The way to be really happy is to give some of you away to somebody else.

HINOJOSA: And I'm sure this woman will say, "My husband can't swallow. How is my neighbor, who has no health care training, supposed to help him?"

SENATOR COBURN: Well, it—it—it—I can easily train somebody in one hour how to manage a feeding tube. We can manage feeding tubes at home all the time. And we do.

HINOJOSA: If President Obama incorporates some of your ideas into a plan will you support it at that point?

SENATOR COBURN: Depends on what the plan is. It depends on what the plan is. I wanna fix the problem but I don't wanna do it by jeopardizing the future of our kids and grandkids. And every plan that's out there today that, quote, fixes the problem sells our kids and grandkids down the river.

HINOJOSA: Senator Tom Coburn, thank you so much for joining us.

SENATOR COBURN: You're welcome. Good to be with you.

BRANCACCIO: So if it happens, what exactly will health care reform look like? And where do things stand with the various ideas now working their way through congress? We're joined now by a senator who, since the death of Ted Kennedy, has become a point man on the issue for senate democrats. It's Tom Harkin, Senator from Iowa, and the new chairman of the Senate Health, Education Labor and Pensions Committee.

Senator Harkin, thank you very much for doing this.

SEN. TOM HARKIN: Glad to be with you.

BRANCACCIO: So you've taken on the mantle of Ted Kennedy atop this committee. Certainly, big shoes to fill, but are you as convinced as he was that this is the year for fixing health care?

SEN. TOM HARKIN: Well, first of all, let me point out that I'm—succeeding Ted Kennedy. I'm not replacing him. That's something that would be impossible. But I've been on this committee 22 years. And—I'm ready to take it on. And I'm ready to complete the big job and that is to get a health reform bill passed this year. I absolutely believe everything is in place to do it. Powerful forces are against it. I understand that. There are ideological forces against it. And there are powerful moneyed interests against the reform obviously. But I believe the American people realize this is the time to get it done. We have the votes. The momentum is there. We have our President of the United States that, as I say, has put all his chips forward on this one. And the answer is: We will get it done before we go home for Christmas.

BRANCACCIO: What drives you forward on this particular issue though? Why this issue for you?

SEN. TOM HARKIN: Because we can't continue on like we're going. We can't continue to see families, more and more of their disposable income taken up by health care expenditures. A pool getting bigger and bigger every day of people without health care insurance. In my own state of Iowa, 70 people in Iowa on average lose their health insurance every single day of the year. We just can't continue on like this. The waste—that's in the system, and the—the abuses that are in the systems. Businesses are being hurt. Our productivity's being hurt. Our competitive —advantage in the world is being hurt simply because of our dysfunctional health care system.

BRANCACCIO: So many people don't have health insurance, as you point out. But—most Americans do have health care insurance. And I'm sure you've heard from many of those. Some are worried that in the shakeout that this reform would bring that they could lose out. And they're just—they're nervous.

SEN. TOM HARKIN: It is true that most Americans have some form of health insurance, obviously. And many of them are happy with their insurance until you begin to ask them questions. I can't tell you how many times I've had a conversation with a constituent of mine and I have a health insurance program. I like it. I wanna keep it. And then, I ask them, "Does it—cover pre-existing conditions?" Well, a lot of times they don't know. Well, is there a cap? Is there an annual and a lifetime cap? They don't know that either. And I say, "Well, what about this? What if you get really sick, you need a kidney transplant, or God forbid, you have cancer or something, and your policy comes up for renewal. Can your insurance company drop you because you got sick?" Well, they don't know that either. So most people have health insurance they think is really good as long as they're healthy.

BRANCACCIO: But the cost of some of the plans working their way through Congress right now, the cost is staggering. I mean, there's one that's about $1 trillion dollars over ten years. The cheap one is something like $800 billion and change. If you just look at the bottom line number, that's enough to provoke some skepticism among your constituents and the American people.

SEN. TOM HARKIN: Sure. But keep in mind this—we're talking about ten years. Let's say that it comes out at around $1 trillion, $100 billion a year for ten years. In that ten years, the American people will spend about $30 trillion dollars on health care. We believe that by making these changes and these reforms, not only will we make health care more affordable and accessible, but people will be spending less of their own money on health care. That means then over that ten-year period of time, the government invests a trillion, or $100 billion a year. But the American people get to save more money. Therefore, they can use that money to invest, to buy other things, to help our economy grow rather than putting it continually in this health care system.

BRANCACCIO: How do you propose to pay for some of those upfront costs? There's talk, for instance, of a tax on people with really fancy health care plans

SEN. TOM HARKIN: Well, there's all kinds of ideas on how to raise the revenue for this. Much of it can come right out of the health care system itself—by getting rid of some of the waste and the duplication. But the single biggest savings that we will have over ten years will come through a renewed emphasis on wellness and prevention, I've been saying for 18 years that we don't have a health care system in America. We have a sick care system. If you get sick, you get care one way or the other, emergency room, Medicaid, Medicare, health insurance, one way or the other. But we put precious little into keeping you healthy in the first place.

BRANCACCIO: No one's against preventative care, right? I mean, it makes so much sense. It's cheaper to treat someone if you catch the disease early. It's cheaper still if they never do get sick. You'd think we'd have more of this in America now.

SEN. TOM HARKIN: Well, it all comes down to incentives, doesn't it? All of the incentives in our health care system are to take care of you when you get sick. You got to put more incentives upfront. For example, in our bill if you go in for annual physicals, annual checkups, no co-pays, no deductibles. If you want to get a mammogram screening, no co-pays, no deductibles. Colonoscopies, no co-pays, no deductibles. See, in other words, making it easier for people to take care of themselves early on. We're spending so much on diabetes now. But we're doing nothing to help people to keep from getting diabetes.

BRANCACCIO: Yeah, I saw some numbers just about diabetes.


BRANCACCIO: If we leave that unchecked. The costs of just that also start to rack up in comparison to what we might spend to—keep that condition at bay.

SEN. TOM HARKIN: Huge. Well, here's the anomaly. Right now in our system, Medicare, if you're—will pay for you if you're diabetic. They'll pay to amputate your foot. They'll pay for that. But if you're pre-diabetic, and you want to get counseling and nutritional help, and access to someone who can guide and direct you so you don't get diabetes, they don't pay for that. They don't pay for that.

BRANCACCIO: Isn't that interesting.

SEN. TOM HARKIN: Nonsense. Nonsense.

BRANCACCIO: There are people watching us right now who are, let's say that they have a lot of life experience. They are mature Americans. They may be on Medicare. And the President of the United States says, "We are gonna pay for some of these changes to our health care system by wringing dollars by—out of the Medicare system by getting rid of some of the waste." What is the answer to people nervous about these changes, worried that in the effort to fix Medicare, it could hurt the system?

SEN. TOM HARKIN: Look, just in one program alone, Medicare Advantage, we know we're spending billions of dollars every year just to subsidize insurance companies for exactly what people can get under the Medicare system. So why do that? Why—why put all that money into the insurance companies when people can get the same thing right straight through Medicare? Things like that—

BRANCACCIO: You find it wasteful in that situation.

SEN. TOM HARKIN: Terribly wasteful. I mean—I mean, if you're an insurance company, I suppose it's all right. I mean, you get money. You know, you get a lot of subsidies. But it's—it's not good for the—for the health system of this country at all.

BRANCACCIO: Now, here's this controversial one. Do you believe, Senator, that we still should have a government option for people who are shopping for insurance under a new system? The so-called public option. Are you still backing that?

SEN. TOM HARKIN: Well, it's in our bill. The bill that we put through our HELP committee—does have a public option. In fact—I think it's—a well honed public option. And I think it would provide for people—again, a fall back option. They don't have to take it. And I also think it would act as a check on—insurance companies' prices.

BRANCACCIO: Well, you're still for a public option even if could mean that health care reform passes with hardly any, if any Republican votes.

SEN. TOM HARKIN: First, you know, I—I'd like to talk just a little bit about—about this idea of being bipartisan. First of all, the people of this country elected Barack Obama pretty overwhelmingly to be president, and to lead change. They pretty well overwhelmingly elected Democrats to the House and the Senate. Well, to lead is to propose. That's what we Democrats did here in the senate on our HELP committee. We proposed a bill. Now, we didn't block anybody out. We took it to the committee. And we had 13 days of markup sessions with Republicans allowed to offer any amendment they wanted to offer. They offered over 200 amendments. We adopted 161 Republican amendments in our committee over 13 days, 161 Republican amendments adopted. And in the end, not one Republican voted for our bill.

BRANCACCIO: We were just hearing from a Republican senator who is, in fact, a medical doctor, a card carrying M.D. And he is not a fan of any of the big plans making their way through the Congress right now on the ether side, House or Senate. And his big criticism among others is Medicaid, he asserts, a mess. Medicare, a mess. We need to rein in those programs, fix those programs before we can go about expanding other government health care programs. What's your answer to that?

SEN. TOM HARKIN: Well, first of all, I would say Medicare is not a mess. One of the reasons it's in trouble is because so many—health insurance companies and pharmaceutical companies have been ripping off Medicare. I mean, Pfizer was just fined $2.3 billion, the largest—settlement in our nation's history, what, for defrauding Medicare. We've had insurance companies that have settled cases where they had been defrauding Medicare. It's not Medicare that's the problem. It's the people who are ripping off the system. I would also say to my friend, Mr. Coburn, that—that—the Robert Wood Johnson Foundation just did a survey of physicians across the country. Sixty-three percent were for a public option. Another ten percent were for a straight—single payer. So 73 percent of the doctors surveyed by Robert Wood Johnson Foundation were for some form of a public option. So I would say Mr. Coburn is in the 27 percent bracket of the doctors who are opposed to that.

BRANCACCIO: He's very worried though about a top-down approach asserted from Washington on the system. He likes it—he likes instead, for instance, to look at what the states are doing, And embrace those kind of innovations a little bit closer to the ground.

SEN. TOM HARKIN: Some of the states've been doing a pretty good job out there. But they're so limited because the problem is so big, it goes beyond any kind of state borders. That's why it's got to be national. The business sector of this community spills over state lines. People in our country are very mobile. We move all the time around this country. And the healthcare system itself is sort of a national kind of a system. So I think we can take some of the ideas of what some of the states have been doing. The idea of exchanges where each state now—now that the states will have some control under our bill, states will be able to set up and run the exchanges on which the insurance companies can come and—and sell their policies. So states will be heavily involved in this.

BRANCACCIO: He also calls for embracing private sector innovation. There are some wonderful healthcare companies around the country doing stellar work providing great healthcare cheap. And he says that's the laboratory that we should learn from as opposed to sittin' around here in Washington coming up with a plan.

SEN. TOM HARKIN: Look, there is a role for—for health insurance companies I am sure. But they have to be well regulated and—there has to be a lot more competition than there is. I mean, in my state of Iowa, I have a s—I just had a small businessman in Storm Lake, Iowa, Art Cullen.

He has 12 employees. His health insurance went up 100 percent in two years because one of his employees I think had a kidney problem, and another one got cancer. And—his deductible is $5,000. So I said, "Art, why don't you get a different plan?" He said, "I can't. I've only got one offered here. One."

BRANCACCIO: And you're saying not enough competition there.

SEN. TOM HARKIN: He can't go anywhere else. But if we have these exchanges you see in my state, in other states, then Art, and other small business people can go on those exchanges. And that means he's got a lot more choices. And his rates will come down. And he'll have better coverage.

BRANCACCIO: You've told us you're confident that something will get passed by Christmas of this year. But do you worry that we could end up with healthcare reform in name only? How will you judge whether or not what is passed is successful, meets your standards?

SEN. TOM HARKIN: Well, I worry about that, that somehow that—that maybe we'll pass something that will be just a little bit of insurance reform but nothing else. But I believe the momentum is there to have more than that. I guess my marker would be is—is, number one, are we going—in a final end, will the bill make health insurance more affordable to people? Secondly, will it be more accessible to everyone? Third, will it have good coverage with low deductibles and—and co-pays? F—four—will there be broad choices for people to make? Five, if you have an insurance plan that you like, will you be able to keep it without any fear of anybody taking your plan away? And I guess lastly, I should have put this first—does it really do a lot? I mean, a major, major step in putting more incentives in keeping you healthy than in just fixing you up after you get sick. So if it meets those criteria, I think we'll have a good bill.

BRANCACCIO: Well, Senator Tom Harkin, I thank you very much.

SEN. TOM HARKIN: Thank you.

BRANCACCIO: Let me leave you tonight with a reminder that as the debate over health care moves forward, the people who bring you the best of PBS news and public affairs will be here to keep you current on all the latest developments and what they mean for you. For all of us here at PBS, I'm David Brancaccio. Thanks for watching.

PBS Special Report: Health Care Reform

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