Ted Simons: Good evening, and welcome to "Horizon," I'm Ted Simons. Governor Jan Brewer says she is sticking with the plan for sending a tax increase to the ballot. Speaking to the Arizona association of school business officials, the governor today said she is committed to getting a temporary one cent sales tax increase on the ballot to offset future cuts to education. The governor hopes to get the measure to voters early next year. President Barack Obama's speech on healthcare reform had a little of everything last night, standing ovations, derive laughter and a South Carolina republican Congressman heckling the president. That Congressman has since apologized and apology accepted by President Obama. There was substance alongside the theatrics, first, what the president had to say about the best way to reform healthcare.
Pres. Obama: There are those on the left who believe that the only way to fix the system is through a single payer system like Canada, where we would -- where we would severely restrict the private insurance market and have the government provide coverage for everybody. On the right there are those who argue that we should end employer based systems and leave individuals to buy health insurance on their own. I said I have to say that there are arguments to be made for both these approaches. But either one would represent a radical shift that would disrupt the healthcare most people currently have. Since healthcare represents one sixth of our economy, I believe it makes more sense to build on what works and fix what doesn't, rather than try to build an entirely new system from scratch.
Ted Simons: Here now to talk about the president's speech and issue of healthcare, Roger Hughes, executive director of St. Luke's health initiatives and Dr. Eric Novack, orthopedic surgeon. Thank you both for being on "Horizon".
Eric Novack and Roger Hughes: Thank you. Pleased to be here.
Ted Simons: Doctor, your impressions with the speech.
Eric Novack: I did watch the whole thing and I think at the end of the day it won't move the ball or move the needle much. I think that folks on the left who want a robust public option based upon Medicare are going to come away disappointed. I think the folks who are very conservative didn't get anything out of the speech and I think a lot of the independents and people in the middle are going to be very disappointed as well. Number one, the president broke a couple of campaign promises. It is clear he is going to be raising taxes on people making less than $250,000 a year, and it's true now that he's going to force people to have insurance or make them pay a penalty. So I think as the analysis goes on, most of the American public is not going to have their mind changed and will continue to have concerns with what the president proposed.
Ted Simons: Impressions of the speech.
Roger Hughes: I thought it was a clear, forceful speech. I think Obama's very good at delivering speeches, very good rhetorical person, but I saw it primarily as a political document. I think it was primarily focused on galvanizing the democratic base, trying to speak to both the blue dogs and to the progressives. I think he handed out an olive branch to the republicans with the medical malpractice ideas, but essentially I would agree with Eric, that I don't think it's going to change the fundamental tenor of the debate.
Ted Simons: What made sense to you last night and what didn't make sense?
Roger Hughes: Well, I think what makes sense to me if you're trying to build on the current system and we could kick the idea around whether that's even a good idea to begin with, but if you're trying to do that, I guess I'd preface it by saying as a small business CEO that just had our insurance rates jacked up by 72% in one year, I would like the choice of having another option on the market that would be affordable for my employees. And I think the idea of having some kind of a public plan that is -- can compete fairly is not subsidized, that has to make it on premiums, makes some sense. I don't think it should be a Medicare necessarily like plan. But I don't see that happening politically, and I think that's just the -- I think that's just the reality of it.
Ted Simons: What made sense as far as what the president said last night and what didn't? You already mentioned how to pay for it. We want to get into that further on the program, but just in general.
Eric Novack: Sure, when the president came into office, he said we need to do things for the healthcare system to make it more accessible, more affordable, and to improve quality. And if he took a poll of the country when he said those things, I guarantee you 300 million people raised their hand. But the problem comes that when it comes to healthcare, the details matter. Look, when someone comes in to see me with knee pain, they don't want me to get up on top of the exam table and pontificate about the knee. They come in with specific complaints and they expect specific answers. And the president and his advisors were touting this as his legislative plan. There was no legislative plan that he promoted last night.
Ted Simons: The president did say though that he had some details to offer and he did talk about what he described as details, at times in the speech. Let's take a listen.
Pres. Obama: Here are the details that every American needs to know about this plan. First if you are among the hundreds of millions of Americans who already have health insurance through your job, or Medicare, or Medicaid, or the V.A., nothing in this plan will require you or your employer to change the cover or the doctor you have. Under this plan it would be against the law for insurance companies to deny you coverage because of a pre-existing condition. It will be against the law for insurance companies to drop your coverage when you get sick or water it down when you need it the most.
Ted Simons: These particular ideas, is this a plan, are these details, or again is this a little bit above the fray?
Roger Hughes: It's a little bit above the fray, in my estimation. If we were to pass healthcare reform and particularly health insurance reform is what Obama is talking about, and have no pre-existing conditions guaranteed issues, caps, those would be fundamental changes. And of course the reason the insurance companies are -- some of them are willing to go along with that is they foresee that there's going to be another 40 or 50 potentially million people that are going to be able to insure, but to me those aren't the kinds of details I think that are when the metal hits the road here that are going to cause all the controversy.
Ted Simons: These ideas, no denial of pre-existing conditions, insurance can't drop you when you get sick, insurance companies limited as far as out of pocket charges and required to get into preventive care as well, all mentioned by the president last night. Can these be worked into further details? Is it not a good idea to at least start there and go further?
Eric Novack: Well, I think the question is what can there be general agreement on and no question, being somebody who deals with the insurance industry on a daily basis from different sides, that at times the private health insurance industry has behaved very badly. This issue of people who have been paying their policies who have may have made an innocent mistake and once they get sick having policies revoked, there was a big scandal in California within the last couple of years, and the companies have been punished. Some people would say not punished enough, but they have been punished. So working in a certain kind of insurance reforms are important, but there are basic ones that in fact republicans happen to have been promoting in recent years, including allowing people to buy insurance across state lines. It is true that in many markets there isn't much in the way of competition. The groups that have opposed people buying insurance across state lines have been the Democrats in Congress and the private health insurance industry. The president has often talked that big businesses, those with greater than a thousand employees, get about a 20% discount on premiums compared to small businesses. So it has been a proposal, got to the senate floor frankly in 2005 I believe. That would have allowed small businesses and groups to join together to become big businesses. The groups that oppose that, the big health insurance industry, and Democrats. So there have been very commonsense true more market type reforms that have been proposed in recent years and look, there's no question that republicans have not necessarily led with these kinds of issues, so they're hardly guilt-free. But one thing we did see last night in the speech, what the president dropped the pretense of saying republicans have no other plans. One quick comment on his opening line there, by saying that nothing in our proposal will require you to change what you have, that is a substantive change in the language that he was using. Up until now he has used the language that if you are happy with what you have, nothing will change. It is clear that the proposals, particularly for Medicare recipients, that the plans are all based on effectively eliminating Medicare advantage. I believe it's about 35% of Medicare patients are on Medicare advantage in this state. Those plans will go away. I think there's some agreement they cannot continue to exist if these $160 billion are taken out of it. So I think that again he made some claims that are laudable potentially, but when you get to the details they're just not standing up.
Ted Simons: Can we get to details that will stand up when you start with the idea of pre-existing conditions and making sure out of pocket charges are in some way limit and other ideas like that?
Roger Hughes: Yeah, I think so. But, you know, to me it still doesn't address the fundamental problem that I think that nobody really wants to talk about, and I don't know if we'll get to this later, but it's the problem of how you're going to pay for all this. It's the idea that by making everybody happy you can keep what you want, you can keep your doctors, you'll have affordable premiums, and by the way, we're bringing on another 40, 50 million people, that's just ridiculous. Somebody is going to have to pay for it, and ultimately it's going to be the American taxpayer. So you have to talk about fundamental Medicare reform as well as reforming the private insurance market and that makes a lot of people, especially a lot of seniors, nervous.
Ted Simons: One idea as far as reforming the market, the president mentioned last night, was an insurance exchange. And here's what he said.
Pres. Obama: If you lose your job or you change your job, you'll be able to get coverage. If you strike out on your own and start a small business, you'll be able to get coverage. We'll do this by creating a new insurance exchange, a marketplace where individuals and small businesses will be able to shop for health insurance at competitive prices. Insurance companies will have an incentive to participate in this exchange because it lets them compete for millions of new customers. As one big group these customers will have greater leverage to bargain with the insurance companies for better prices and quality coverage. This is how large companies and government employees get affordable insurance. It's how everyone in this Congress gets affordable insurance and it's time to give every American the same opportunity that we give ourselves.
Ted Simons: Is that a viable idea, an insurance exchange?
Eric Novack: I think people in Arizona can see what the exchange would end up looking like, when run by the federal government. That's called our access program. Which is effectively a government administered program, where private companies now people should be aware Maricopa county some of the biggest national insurers actually own these programs. And look, the plans tend to say the government's accountable, the government says it's up to the plans. Trust me, I've dealt with them in these things, and so what they're really proposing is an idea of creating an access system for everybody in the country. We also have the idea of an exchange going on currently in Massachusetts, with this so-called Massachusetts experiment. The reality is that in spite of the great claims in 2006 when it was passed with the republican governor and very Democrat legislature in Massachusetts, it hasn't materialized to do what it's supposed to. Costs are absolutely out of control. They had to remove services, take people who they promised insurance to off the rolls. They've had inadvertent dropping of 15, 16,000 people at one point they then had to restore. There's not a great deal of confidence that this exchange will do much, other than turn these insurance companies into effectively public utilities that will make profits ad infinitum.
Ted Simons: The president says consumers would be better able to bargain for better prices. You buying it?
Roger Hughes: I'm not buying it totally, but I do want to say something in defense of kind of the Access Program, which I think provides fairly robust set of benefits at a fairly decent cost benefit, you know, for the public investment. The problem of course with these programs like Access and Medicaid generally is the amount of moneys that states have to put in and so if states have some responsibilities, for example, for creating these health insurance exchanges in terms of their own, you know, budget responsibilities, that's going to be a deal breaker. The other thing I think with, you know, health insurance exchanges, if they're not done correctly they turn into high risk pools. They turn into the dumping grounds, you know, for people that can't be covered under any other program and the experience of course with high risk pools that states have had, has generally not been good.
Eric Novack: The idea of having a robust safety net healthcare system for the people who really need it, there's really nobody saying that that shouldn't exist. The answer revolves around trying to come up with solutions so that the safety net system is utilized by people who really need it and we create other reforms to the market. So that, for example, young people who might not be able to afford an insurance plan in New Jersey where rates are ridiculously expensive, could look to a place like Iowa or even Arizona where rates are just a fraction of that. So those people who might be on a Medicaid system in New Jersey would be able to buy their insurance, much cheaper for the whole society than if they were stuck in an exchange.
Ted Simons: It sounded like the president's plan also included requiring everyone to have insurance. Here's what the president had to say about that.
Pres. Obama: That's why under my plan individuals will be required to carry basic health insurance, just as most states require you to carry auto insurance. [Applause] Likewise, likewise businesses will be required to either offer their workers healthcare or chip in to help cover the cost of their workers. There will be a hardship waiver for those individuals who still can't afford coverage, and 95% of all small businesses because of their size and narrow profit margin would be exempt from these requirements.
Ted Simons: Directly addressing small business there, directly addressing you. What do you think?
Roger Hughes: Well, I am in favor of an individual mandate. I think if we're going to have health insurance reform, we need to have everybody in. I personally believe that health insurance form will not get done with an employer based system. I think if we're going to have effective reform, there are really in my estimation two central options. One is a single payer system that the progressives have been talking about for years, where you have a budget and you have a fair amount of regulation and control, but everybody gets a basic benefit package. And the other is what I would call a single pool system, or a series of regional pool systems, where individuals are mandated, that the plans that play in this market are regulated, but you have individual insurance products that are portable, you have the opportunity for innovation, new practice modalities, the other thing I would say in both of these kinds of systems, the thing the president didn't mention that I think should have been stressed is that we need to change the way we pay for healthcare, moving more from a fee for procedure fee for service business to bundle payments and things like this that people are beginning to experiment with, and we need to focus on a system that is built around primary coordinated and preventive care.
Eric Novack: You know who the most eloquent person who has objected to an individual mandate has been over the last few years in the entire country, the single most eloquent person opposing an individual mandate was none other than Barack Obama himself. He recorded radio ads in California saying that if you have an individual mandate what you're going to do is turn honest people into criminals. He said at debates with Hillary Clinton that all that will happen is an individual mandate, again, is you'll end up having a lot of people who are worse off than they were before. Well, he said --
Ted Simons: I was going to ask which Barack Obama do you agree with?
Eric Novack: The problem is one of the main reasons that he won the nomination over Hillary Clinton was on this issue, because if you go back, there really wasn't a piece of paper thickness difference between the two on any policy except for healthcare, and the only place they differed on healthcare was whether or not there was a mandate. There were some wonderful fliers that made it to places like Ohio where he's bashing then Senator Clinton over the head with an individual mandate being bad so the question is, what changed on this issue? This is the heart of the entire she and I think Roger and I would agree even more so than on the public option concept, the idea that the president gets inaugurated the January 20th and it's very clear for the White House records that they reluctantly recently released, that within two or three weeks he had already begun meeting with CEOs of the health insurance industry, and within a few weeks, he completely jettisoned a fundamental campaign promise that got him lots of votes and he -- this is the forever dream of the private health insurance industry, is to have an individual mandate. That's why they're lining up behind this, because you have to force people to buy a product. Look, I'd love if everyone was forced to buy a product I had to sell or be penalized.
Ted Simons: You mentioned the public option concept and so did the president last night. Here's what he had to say.
Pres. Obama: I have no interest in putting insurance companies out of business. They provide a legitimate service and employ a lot of our friends and neighbors. I just want to hold them accountable. The insurance reforms that I've already mentioned would do just that. But an additional step we can take to keep insurance companies honest is by making a not for profit public option available in the insurance exchange. Let me be clear, it would only be an option for those who don't have insurance. No one would be forced to choose it. And it would not impact those of you who already have insurance. I've insisted that like any private insurance company, the public insurance option would have to be self-sufficient and rely on the premiums it collects. But by avoiding some of the overhead that gets eaten up at private companies by profits and excessive administrative costs and executive salaries, it could provide a good deal for consumers. And would also keep pressure on private insurers to keep their policies affordable and treat their customers better. The same way public colleges and universities provide additional choice in competition to students, without in any way inhibiting a vibrant system of private colleges and universities.
Ted Simons: Does that make sense?
Roger Hughes: Well, given what he's talking about, you know, it makes some sense, and particularly in lieu of not having what I think is robust competition on the private insurance side, I think it makes sense. I ultimately don't think it makes sense putting a public plan aside a bunch of other private plans, and then having an employer-based mandate on top of that. I don't think that makes sense. But again, and I come back to the fact that without seeing the details of the public plan, and that's really I think what we need to get into, you know, as a small business person having a place that would have an option and would be competitive and wouldn't be subsidized excessively by the government, I mean, one of my very good friends who recently passed away was part of the V.A. system and he said it was some of the best care he's ever received. So the idea that government can't run an effective and efficient program that meets people's needs I think is a fallacy.
Ted Simons: Is that a fallacy?
Eric Novack: Look, government doesn't do everything badly. But specifically to what the president said, again, we don't have to live in Washington to be able to criticize his statements. Arizona had lived through a public option. Our former governor was the number one proponent of a public option that was self-sustaining and it was called healthcare group. Individuals and small businesses who had trouble getting insurance could buy into the access system and it was guaranteed, it was going to be self-sufficient within two or three years. Well, you may remember that there was probably really a $22 million shortfall but somehow they managed to finagle it down to eight, needed to be bailed out by taxpayers and immediately they changed enrollment requirements and reduced services you got. The second thing, we're on the campus of it right now, I am not sure that the president having jettisoned his U.S. postal service example, wants to jump on the idea of public universities. Because first of all it made not be a big number but all public universities get state dollars and I would challenge somebody to walk out here now and talk to any ASU student who's been here for a few years and say that there's been an ability to keep down costs.
Ted Simons: Leads us to the final topic here, we've only got about a minute or so left so we got to keep it brief. Can this plan the president talked about last night, details that we have, can it be paid for?
Eric Novack: Impossible. I think the president should just junk the whole thing and go back to starting with protecting individuals' rights first along the lines of what we're trying to do here in Arizona with the Arizona healthcare freedom act. But as it is right now, he does not have the votes.
Ted Simons: Can it be paid for?
Roger Hughes: I don't believe it can be paid for. No. But I would disagree that he ought to start with individual rights and protecting individual rights. I really start from the social contract, that we have to find a way because we can't have any individual rights if we're not free from crushing medical debt, not free from ignorance, we're not free from price transparency, so we need to come together to create a ground floor where we can exercise our individual rights. But I think it's disingenuous to say that we're going to find cost savings in the current system and still just continue to feed the beast.
Ted Simons: All right. We have to stop it right there. Great discussion, gentlemen, thank you so much for joining us.
Eric Novack: Thank you so much for having us.
Roger Hughes: Thank you.
Ted Simons: And that is it for now. Thank you for joining us tonight on "Horizon." You have a great evening.