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Sen. Jon Kyl makes remarks on

CQ Transcriptions
Thursday, February 25, 2010; 1:08 PM

BOEHNER (?): Mr. President, can we turn to Jon...

(CROSSTALK)

OBAMA: I'm sorry. You had Jon?

We're going to go to Jon, and then we're going to go to Jim Clyburn. And then I think we're going to take a break because we've run out of time.

So, Jon?

KYL: Thank you, Mr. President. I think you framed the issue very well just a moment ago, because there are some fundamental differences between us here that we cannot paper over.

And, Mr. President, when you said that this is a philosophical debate and it's a legitimate debate, I agree with that.

We do not agree about the fundamental question of who should be mostly in charge. And you identified this question -- do you trust the states or Washington? Do you trust patient and doctors making a decision or do you trust Washington?

Now, there's a mix of both, of course, in health care. But there is a big difference between our approaches, and there is so much in the bills that you've supported that puts control in Washington that we have a very difficult time supporting those provisions.

And it's not a matter of just saying we all agree on the goal of reducing waste, fraud and abuse. We all do, of course. It's how you do it.

Now, let me give you a couple of examples. Dave Camp, I think, pointed out the answer to the dispute that you and Lamar Alexander had a moment ago, and he was exactly right.

Let me quote from the Congressional Budget Office letter, this is from Doug Elmendorf to Evan Bayh November 30th, 2009: Quote, CBO and Joint Tax Committee estimate that the average premium per person covered, including dependents, for new nongroup policies would be about 10 percent to 13 percent higher in 2016 than the average premium for nongroup coverage in the same year under current law.

Oliver Wyman, a very respected third-party group, says it's even more, about 54 percent. In my state of Arizona, a 72 percent increase.

Why is it so? For a variety of reasons, but one of which both you and Dave Camp agreed on. It is a richer benefit.

How did it get that way? Because the federal government would mandate it under your legislation in the insurance exchanges, and, as a result, there would be a higher cost.

How does this happen? There is an actuarial requirement of 60 percent actuarial value in the exchange for the least costly plan, but the average in the country today of a high deductible plan is 48 percent. The range today is 40 percent to 80 percent. And the average is between 55 percent and 60 percent.

So what the government is doing here is saying we're going to mandate that the insurance cover more things than it does right now and, therefore, the cost is going to go up.

Second example, you say, "How can we help small businesses?" Well, we know one way you don't help small businesses is by raising the payroll -- the Medicare payroll tax on them, which is what this legislation does. Besides that, it's a job killer. Look at the taxes on beneficiaries as well.

This is a third example. You don't cut costs when you raise taxes on medical devices that help us, when you raise taxes on pharmaceutical products, when you raise taxes on insurance premiums themselves. Quote, "these fees on insurers, medical devices and pharmaceuticals would increase costs for the affected firms, which would be passed on to purchasers and would ultimately raise insurance premiums by a corresponding amount," Congressional Budget Office.

So when you raise these taxes and all of the different fees that are in this legislation, it inevitably increases the costs on the consumer.

And why do you have to raise all of this money? Because of the expenses of the legislation that underlie all of this.

That's why Republicans would rather start not by having to raise a lot of money in order to pay the high cost of this bill, but to start a piece at a time, directing solutions to specific problems.

That way, you don't incur all of the costs upfront, which require you to raise the taxes.

A last quick point: One of the worst things about this is for people that have catastrophic medical expenses today, after you've spent 7.5 percent of your adjusted gross income, you can -- you can deduct that.

This bill would raise that to 10 percent. Who does that hurt? The very people you promised, Mr. President, that you wouldn't allow taxes to be raised on. Average age, 45. Average income, $69,000. These are not wealthy people.

Just another example of why because the bill has to raise so much money, it ends up hurting the very people that we want to help.

OBAMA: OK. Jon -- I'm going to go to you, Jim, but I -- you know, since, as has tended to happen here, we end up talking about criticisms of the existing bill as opposed to where we might find agreement, I feel obliged just to go through a couple of points that you raised.

Just to go back to the original argument that Lamar and I had, and we've now chased around for quite some time, look, if I'm a self- employed person who right now can't get coverage or can only buy the equivalent of Acme Insurance that I had for my car, so I have some sort of high-deductible plan, it's basically not health insurance. It's house insurance.

I'm going to -- I'm buying that to protect me from some catastrophic situation; otherwise, I'm just paying out of pocket. I don't go to the doctor. I don't get preventive care. There are a whole bunch of things I just do without. But if I get hit by a truck, maybe I don't go bankrupt. All right? So that's what I'm purchasing right now.

What the Congressional Budget Office is saying is that if I now have the opportunity to actually buy a decent package inside the exchange that costs me about 10 percent to 13 percent more, but is actually real insurance, then there are going to be a bunch of people who take advantage of that.

So, yes, I'm paying 10 percent to 13 percent more because instead of buying an apple, I'm getting an orange. They're two different things.

Now, you can still -- you still have an option -- no, no. Let me finish. The way that this bill is structured uses a high cost pool, a catastrophic pool for people who can't afford to buy that better insurance. But, overall, for a basic package, which, by the way, is a lot less generous than we give ourselves in Congress -- so, you know, I'm amused when people say, let -- let people have this not-so-good plan. But let them have a high deductible. But there would be a riot in Congress if we suddenly said "let's have Congress have a high- deductible plan" because we all think it's pretty important to -- to buy coverage for our families.

And the federal health insurance program has a minimum benefit that all of us take advantage of. And I haven't seen any Republicans or Democrats in Congress suddenly say, "You know what? We should have more choices and not have to have this minimum benefit."

So what we're basically saying is we're going to do the same thing for these other folks that we do for ourselves -- on the taxpayer's dime, by the way.

Now, there is a legitimate philosophical difference around that. But I think it's just very important for us to remember that saying there's a baseline of coverage that people should be able to get if they're participating in this big pool is not some radical idea.

And it's an idea that a lot of states -- you know, we were talking earlier about what states do. And a lot of states already do it.

This, by the way, goes to the other difference that we have when it comes to interstate purchase of insurance. Actually, this is a Republican idea, been championed by the Republicans. We actually agree with the idea that maybe if you get more regional markets and national markets as opposed to just state-by-state markets, you might get more choice and competition. People might be able to say, "Gosh, there's a great insurance company in Nevada, and I live in New York, and maybe I can purchase it."

That's actually something that we find attractive. So do you guys.

But, again, the one difference, as I understand it, and the reason you're not supporting the approach that we take is what we say is there should be sort of a minimum baseline benefit, because, if not, what ends up happening is you get a company set up in Nevada -- let's assume there were no rules there, there are no protections for the woman who's got breast cancer. They go into New York. They offer pretty cheap insurance to everybody who's healthy.

OBAMA: They don't offer the same insurance to people who aren't so healthy or have pre-existing conditions. They drain from New York all the healthy people who are getting cheaper rates. But now, suddenly, everybody left in New York be who doesn't qualify for that cheaper plan is in a pool that's sicker, older, and their premiums go up.

So what we've said is, well, if we can set a baseline, then you can have interstate competition but it's not a race to the bottom. Rather, everybody's got some -- some basic care.

Now, these are legitimate arguments to have, but I just want to point out that this issue of government regulation, which we're going to also be talking about with respect to insurance, is very different than the way this has been framed during the course of the debate over the last year, which is government takeover of insurance.

This is not a government takeover of insurance. What it is, is saying let's set up some baselines and then use market principles, the private sector and pooling, in order to make sure that people get a better deal.

So, Jim, and then what we're going to do is we're just going to move on to the next topic, but anybody who wants to pick up on what we've just talked about, obviously, can return to that as well.

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