For Immediate Release
Office of the Press Secretary
February 11, 2002
Press Briefing by Council of Economic Advisors
Medical College of Wisconsin
Milwaukee, Wisconsin
3:35 P.M. CST
MR. SCOTT McCLELLAN: All right, is everybody
ready? We'll start the -- again, this is an off-camera,
on-the-record briefing, and I don't have anything to say at the
beginning, other than just to introduce my older, smaller brother,
Mark. (Laughter.) And with that, he'll go over
the health care initiatives the President just outlined.
DR. McCLELLAN: Thanks, my larger brother. I
don't have much in the way of remarks to open this with. I
just want to highlight that the President laid out a clear agenda for
action on health care this year that includes over $300 billion in new
proposals in his budget to implement the key ideas that he talked about
in the speech. This is an important time for action in
health care, the President believes. Health care costs are
up. Uninsurance rates are threatening to go up, and it's
time for Congress to act on proposals ranging from improving insurance,
through health credits and improved health accounts for all Americans,
to improving Medicare, making much broader choices available.
And the President also spent a good deal of time talking about the
need to improve the environment for medical practice, so that we have a
health care system that helps and encourages doctors to provide
high-quality care, and he laid out a number of proposals to do that.
So I'm happy to answer any questions about the speech or about the
health care proposals.
Q How are the proposals different from last
year's?
DR. McCLELLAN: The President, in his budget this year,
includes over $300 billion in health care initiatives. This
includes well over $100 billion in initiatives to improve access to
affordable health care coverage. That includes an improved
version of a health credit for people who don't have insurance through
their work, and it also includes a proposal that passed the House of
Representatives and has bipartisan support in the Senate to provide
direct assistance to workers who have lost their jobs with their health
care costs. Those are all new proposals.
Q There's two or three new proposals?
DR. McCLELLAN: Right. And they make up the
President's package on initiatives to address the critical problem of
uninsurance today, with uninsurance -- with concerns about uninsurance
rising and health care costs up.
So there is a major proposal on health accounts -- that is, to
improve and expand what have been known as medical savings accounts, to
tax-favored health accounts that could be available to all Americans to
help them with their high, out-of-pocket costs. As you all
know, there have been recent trends towards health insurance plans
requiring more payments out of pocket by patients, especially if they
want to choose their own doctor and avoid the red tape of managed
care.
The President has also proposed health credits which would enable
people without health insurance coverage to buy it. He had a
health credit in his budget last year. This is an improved
version of that. For example, it's worth up to $3,000 per
family. And it has a specific implementation mechanism so
that it can be available to people when they're actually paying their
premium. They don't have to wait until the end of the year,
it does not matter how much taxes they owe, they get the money up
front, goes directly to their insurance company. So it gives
people, as he said in the speech, help when they need it with buying
their health insurance.
And, in addition, the health -- this is also part of health credits
-- but the President has supported legislation that has passed the
House of Representatives, was crafted by a bipartisan group of centrist
senators as part of the economic stimulus package to provide direct
health care assistance to workers who have lost their
jobs. In particular, they would get 60 percent of their
health care costs covered for continuing their health
insurance. That's a new proposal, as well.
The President also laid out an agenda for moving forwards quickly
on the patients' bill of rights. That's something that he's
been working on for a long time, but we continue to work closely with
members of both parties in Congress to help get a bill to the
President's desk that he can sign. He made clear that he
wants Congress to take action to protect patients from genetic
discrimination, and he also laid out a strong agenda for research this
year.
He had, in the campaign, been committed to doubling the NIH
budget. His 2003 budget does that. It also includes
additional funding for bioterrorism research as part of a real and new
effort and urgent effort to strengthen our public health infrastructure
to protect against attacks.
Q Mark, on MSAs, haven't they been shown in
the experimental programs around the country, that they only help the
young and healthy?
DR. McCLELLAN: There have been some studies that suggest
that they might be attractive only to healthy people. But
those are mainly done of the MSA plans that are in the law
today. And the President pointed out, I think, a number of
reasons why those versions of MSAs don't work. They have
very high deductibles, over $3,000 for a family policy, which is far
more than most families feel comfortable with. They are
limited to employers that have fewer than 50 employees, and they are
capped at the number that can be made available.
All of that provides a real disincentive for health plans to
develop ways to make the health accounts work. What we've
seen in recent years, and especially in the past year, is an increase
in the amount that people have to pay out of pocket for their health
care, especially if they don't want an HMO plan that restricts the
doctors they can see and the kinds of treatments that they can
receive.
If they want more control over the doctors they see, if they want
to avoid red tape, they often have to pay more out of pocket for it, in
a point of service plan or a PPO plan or something like
that. Those plans require substantial out of pocket payments
and, right now, families get very little or no assistance with those
costs.
Many families are starting to choose those kinds of plans, but they
don't qualify for the kind of health account that the President has
favored. What the President wants to do is to make health
care that people control as attractive as health care that the managed
care plans control. And right now, tax subsidies are only available
through health plans, through premium payments, the amount that you pay
for your premium out of your employment-provided health insurance is
subsidized as a worker benefit.
But if you pay out-of-pocket costs for health care, that's not
subsidized through the tax system. And the President wants
to correct that inequity to give patients more control over their
health care and easier ability to pay for the out-of-pocket costs that
they often have to face in the plans that give them the options of
getting the kinds of care they want.
Q So a lot fewer restrictions?
DR. McCLELLAN: Fewer restrictions, lower deductibles,
preventive care -- he didn't mention this in the speech. But
in his budget, he proposes that preventive care should be covered in
these health account plans. That makes it much more
attractive to families, to people with ongoing chronic
illnesses. So there are a lot of features that are different
than MSAs in law today that would make it more attractive to people
right now who are having to pay a lot of money out of pocket for health
care that they want.
Q Can you explain how the health premium
credits will work? The President mentioned that the people
who don't use all of their money or don't need this money could get it
back somehow. How would that work?
DR. McCLELLAN: This is the health -- the health savings
account proposal, or the improved MSA proposal. And what
happens is, you sign up for an insurance plan that requires you to pay
a significant amount of money out of pocket, for example in a
deductible, if you want to see a doctor who's not in a network of care
or something like that. And in order -- when you sign up for
that plan, you would also set up a health account, and you can make
tax-free contributions to that account that you would have otherwise
had to spend on a health insurance premium for a much more
comprehensive insurance plan. Because you're paying for a
plan that has a significant deductible that requires you to make
significant out-of-pocket payments, the premium is going to be
lower. So you can put that money into the health account
instead. If you need to use health care, then it comes out
of your health account.
Right now, if you need to use health care and your plan doesn't
cover it, you've got to pay it out of your pocket, after you've paid
taxes on it, which makes it even more expensive. This way,
you don't have to pay the taxes on the plan if you use
care. And also if you don't use care in a year, you can keep
the money in the health account. You can build up a balance
in your health account to protect -- to provide even more protection in
the event of a serious illness.
Q What's the difference between that and a
flexible savings account? And how would they work together
--
DR. McCLELLAN: A flexible spending account -- that's a
good question. A flexible spending account is a benefit that is
available to many employees, not just people in small firms and not
just with all these restrictions like MSAs have today, that they can
use for out-of-pocket health care costs.
The problem with a flexible spending account is that it has a
use-it-or-lose-it requirement, so if you put money into it and don't
spend it at the end of the year, it's gone; it's not
yours. So that's why a lot of people who have flexible
spending account through their employers only use them for eyeglasses
or medications that they know they're going to need to take, and that's
why there's a run on eyeglasses at the end of the year in many of these
employer plans.
What the President has proposed to do is let you roll over some of
that money, even to keep it in a flexible spending account for next
year, to protect you against expenses that you might have down the
road; or to use in your 401(k) plan as a retirement
benefit. Again, to provide better protection for you down
the road for health care and other costs that you might have in your
retirement years.
Q Is there any ceiling on how much you can
--
DR. McCLELLAN: The flexible spending account proposal is
limited to a $500 roll-over. The health account proposal
would not have a limit on it.
Q How are you defining low- and
middle-income American families for the health credits?
DR. McCLELLAN: The health credit phase-out for
individuals who use them, beginning at an income level of $15,000, and
they fully phase-out at $30,000. For families, the health
credits, which can be up to $3,000, begin phasing-out at an income
level of $25,000 and they fully phase-out at $60,000.
So even if you're a family of four making over $40,000, you're
going to get significant help through this proposal, over $1,000 a year
in assistance. And, again, this is direct assistance that
you get when you're paying your health insurance
premiums. It doesn't depend on the taxes you owe, you don't
have to wait until the end of the year to use it. It makes
health insurance cheaper when you're choosing your health insurance
plan and when you're paying your premiums.
Q Mark, the Families U.S.A. Group, they cite
an example of the President's plan, saying that right now a 25 year old
woman pays an average of $4,700 for health insurance, a standard health
plan. They say that's above the $1,000 tax credit being
offered. Is that a --
DR. McCLELLAN: I don't think the Families U.S.A. numbers
are representative of the policies that are available to most people in
the health insurance market. We've seen a number of studies
done and we're going to have more data this week showing that the vast
majority of people would get help towards most of the cost, much or
most of the cost of their health insurance plans with this credit.
I think $4,700 for a 25 year old woman is just plain
wrong. That might be the cost of a comprehensive
first-dollar insurance plan, but as you know, if you talk to people
today, that's not a kind of coverage that many people can afford or
even want. You know, they might want more control over their
health care by being willing to spend some out of pocket when they get
sick.
So for a good PPO plan with $1,000 deductible, or a good HMO
network plan, the costs are far lower than $4,700. We've
seen numbers -- I think you can go to websites, like
ehealthinsurance.com, and get quotes quickly that are much lower than
that. So I don't think that's a representative
price. I think the bottom line for showing how much of a
difference this proposal makes is that the technical analysis of it
suggests that 6 million people who otherwise would have gone without
coverage for some or all of the year, would get coverage under this
proposal. That's 6 million new people with health insurance
as a result of this proposal. So that's clearly -- clearly
means that we're providing significant help that makes the difference
between getting health insurance and not.
Q Can you distinguish, please, between -- of
the things that the President talked about today, those things that
require congressional approval and those things that the administration
is implementing without need for congressional approval?
DR. McCLELLAN: Most of the things that the President
talked about today will require action by Congress. All the
things with significant dollar numbers attached to them, for example.
The President did spend a good bit of time talking about improving
the environment for medical practice, to make it more friendly to the
doctor-patient relationship, to make it more conducive to improving the
quality of care. And the administration is taking some steps
to help doctors and help health care organizations that are trying to
work together to improve quality and improve safety.
The administration is also taking steps to make better information
available to patients about the quality of care that they
receive. We're doing some of this on our own, through the
Medicare program; we're doing some of this in collaboration with other
private groups. But most of the proposals that he laid out
today do require congressional action and we're hoping that Congress
can act on them soon. These are important problems.
Q Can I ask just a political
question? I mean, Senator Kennedy, as you speak, his staff
is sending out e-mail saying, as you can imagine, this is completely
inadequate at $190 billion. Actually, even people today, I
talked to them afterwards, said that $190 billion over 10 years for
Medicaid is --
DR. McCLELLAN: For Medicare.
Q For Medicare, excuse me -- is completely
inadequate. I mean, how do you answer that?
DR. McCLELLAN: Well, the President has -- we've done a
lot of work internally on the cost requirements of improving the
Medicare program. The President believes that $190 billion
based on that analysis is a sufficient amount. But,
obviously, we're going to work closely with Congress. I
think what the President made clear is that he wants to try to take
action this year to strengthen the Medicare program for the short and
the long term.
In addition to laying out a framework for Medicare reform with $190
billion in budgetary commitment to it, the President also suggested
some specific short-term steps that should be part of that
legislation. And, obviously, we're going to work closely
with Congress on implementing that.
There have been other numbers floating around. You know,
the congressional budget resolution last year was $300
billion. If you talk to some of the members of Congress,
that's not attached to any particular plan. And I think
we'll know more and we'll see more as this legislative process unfolds
about exactly what amounts would be involved.
Q Is he willing to go up?
DR. McCLELLAN: What the President is willing to do is to
take action to strengthen Medicare. And the focus should be
on achieving a plan that meets his principles, and he thinks that that
can be done within the $190 billion that he laid out. And,
obviously, we're going to work closely with Congress to try to get that
done.
Q You said they were close to agreement or
nearing agreement in Congress on the --
DR. McCLELLAN: Patients' bill of rights?
Q -- liability, patients' bill of
rights. How close are they?
DR. McCLELLAN: Well, we remain
optimistic. We're continuing to have ongoing discussions
with members of Congress from both political parties in both Houses
about that legislation and the President would very much like to see a
patients' bill of rights get to him as soon as possible this year. So
we think it can be done this year and we think it can be done soon.
Q Mark, on the improved tax credits, how has
that changed from the year before? What's improved in the
tax credit package?
DR. McCLELLAN: Improved in terms of the amounts that
we're putting into it, up to $3,000 per family. Improved in
the last year, I think the maximum was $2,000 per
family. Improved in the mechanism for delivering it.
There were some concerns last year that unless people had the money
available to them, the credit available to them when they're actually
writing their health insurance premium check, that it wouldn't be
helpful. They need the money right then to make their health insurance
premiums. They can't wait until the end of the year, and we fixed that
problem. This is a credit that would be available when
people are buying insurance. It's a credit that is worth the
same regardless of what, if any, income tax they owe. It's
money they can use up front to purchase the health insurance plan that
they prefer.
Q Is there some projection of if the
President's various principles are adopted, how quickly that number of
40-plus billion of uninsured would --
DR. McCLELLAN: Forty million? We think pretty
quickly. The one advantage of this proposal is that, unlike
some other proposals for addressing the problem of uninsurance, it
doesn't require further legislation and appropriation by states; it
just requires the federal money. And we think that can begin
to be operational next year and make a significant dent in that number
by next year.
The health insurance proposal that the President supported as part
of the economic stimulus bill, the assistance for displaced workers,
could be implemented within three months of enactment or less, and
because it also would provide help at the end of the year for people
who have already incurred significant health insurance costs after they
lost their job and trying to keep their health insurance
plans. They would know that they are getting that money
later, and so they would get help as well.
But that proposal, too, is something that, as soon as it's enacted,
within three months, would give people direct assistance when they're
buying their health insurance. And that's an important
feature of all of our credit proposals, is that they provide money
right when people are paying for their health insurance premiums, when
they need it.
So we think this could make a significant dent this year and next
year in the number of uninsured.
Q The 40 million you're referring to,
please, just refresh me, was in reference to --
DR. McCLELLAN: That's the rough estimate of the number
of people in this country who are uninsured for a significant period of
time.
Q Thank you.
MR. SCOTT McCLELLAN: Thank you all.
END 3:55 P.M. CST
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