generation of americans, our generation, has been called to confront challenges of a magnitude that we have not seen in decades, perhaps unlike anything we have seen in recent history. challenges that few generations of americans are asked to face. in addition to the immediate threats that we face, we have two wars going on at a very deep recession. our economy has also been weakened by problems that have plagued us for decades -- the crushing cost of health care, the state of our schools, are continuing dependence on foreign oil. i know there are some who say that we cannot tackle all of these problems. it is too much. congress cannot handle it. the president is struggling to many things. my administration is taking on too much too soon. we are moving too fast. what i say is that america has waited long enough for action on these issues.

it is not too soon to fix our schools when we know that if our children are not prepared, they're not going to compete in the 21st century. it is not too soon to wean ourselves off of dirty sources of energy so that we can grab hold of a clean energy future. we have been talking about clean energy since richard nixon, and it is time for us to act. i congratulate, but wait, the house of representatives for beginning action this past week. -- for beginning action this past week on a historic energy bill. it is also not too soon to reform our health-care system, which we have been talking about since teddy roosevelt was president. we are in a defining moment for this nation. if we act now, we can rebuild our economy in a way that makes a strong, competitive, sustainable, and prosperous once more. we can lead this century the same way we led the last

century. if we don't act, if we let this moment pass, we could see this economy just sputter along for decades. a slow, steady decline, in which the chances for our children and our grandchildren are few were that the opportunities that were given to us. that is contrary to the history of america. one of our core ideas has always been that we leave the next generation better off than us. that is why we have to act right now. i know that people say the costs of fixing our problems are great, and in some cases, they are. the costs of inaction, of not doing anything, or even greater. they are unacceptable. that is why this town hall and this debate that we are having around health care is so important. let me give you a few statistics. many of you already know the street in the last nine years,

premiums have risen three times faster than wages for the average family. i don't need to tell you this because you have seen it in your own lives. even if you have got health insurance, and 46 million people don't, but if you have health insurance, you have seen your costs double. they have gone up three times faster than wages. if we do nothing, then those costs are going to keep on going higher and higher. in recent years, over 1/3 of the small businesses have reduced benefits, and many have dropped coverage altogether since the early 1990's, not because small business owners do not want to provide benefits to their workers, but they just simply cannot afford it. they don't have the money. if we don't act, that means that more people are going to lose coverage, and more people are going to lose their jobs because those businesses are not going to be competitive. unless we act within a decade, one out of every $5 we earn will

be spent on health care, and for those who rightly worry about deficits, the amount our government spends on medicare and medicaid will eventually grow larger than what our government spends today on everything else combined. everything else combined. the congressional budget office just did a study that showed that when you look at the rising cost of entitlement, 90% of it is medicare and medicaid, not social security. 90% of it comes from the federal share of health care costs. if we want to control our deficits, the only way for us to do it is to control health-care costs. those are all abstractions. those are numbers. but many of you know that this translation -- this translates into the pain and heartache in a very personal way for families all across america. i know because during the two years i campaign for president, every town hall meeting i had, people would raise horrible

stories about their experiences in the medical system. and now that i'm president, i am hearing those same stories. i get fan letters a day out of the 40,000 or so that the white house receives. my staff slots can for me to read every single day. at least half of them relate to a story of somebody who has been denied coverage because of pre- existing conditions, or somebody who finds out that what they thought was going to be a $500 bill and of being a $25,000 bill. i was at town hall meeting in green bay, wisconsin, met a young woman, 36 years old, as best cancer that has metastasized, two small children, she and her husband are both employed with health insurance, and yet she still has 50,000 less worth of debt. all she is thinking about right now -- $50,000 worth of debt. at all she is thinking about is

that "if i don't survive this, my legacy to my children may be another $50,000 worth of debt." everybody here knows stories like that. some of you have experienced them personally. this is a problem we cannot wait to fix. it is not something we are going to keep on putting off indefinitely. this is about who we are as a country. that is why we are going to pass health care reform, not 10 years from now, not five years from now. we are going to pass it this year. that is my commitment. we are going to get it done. [applause] we have already started to see some progress. those who said we could not do it, they are already being surprised. as a consequence of us pushing, suddenly the drug companies, the insurance companies, hospitals, all of them are starting to realize that this train is leaving the station and we

better get on board. just a few weeks ago, the pharmaceutical industry agreed to $80 billion in spending reductions that we can use to close the so-called don't hold with some of you know what it all is, where senior citizens who are on the senior drug plan for medicaid get their drugs reimbursed up to a certain point, and then suddenly there is a gap, until it reaches thousands of dollars in out-of- pocket costs. we have struck a deal with the drug companies. they are willing to cut those costs for seniors in half. already we are seeing that when we put pressure to reform the system, these industries are going to have to respond. last month, doctors and hospitals, labor and business, insurers and drug companies, all came together and agreed to decrease the annual rate of health care growth by 1.5%. that would translate into $2

trillion or more of savings over the next decade. that would mean lower costs for everybody, of ordinary families. in the past two weeks, a committee in the senate led by senator kennedy and senator dodd have made tremendous progress on a plan to hold up costs and improve patient care ensure that you will not lose your coverage even if you lose your job or change your job or have a pre- existing medical condition. but now we need to finish the job. there is no doubt that we have to preserve what is best in the health-care system, and that means allowing americans who like their doctor and like their health care plan to keep their plan. that is going to be a priority for us. [applause] but we also have to fix what is broken up out of the system. that means permanently bringing down costs and giving more choice for everyone. to do this, we have to do a couple of things. we have to build on investments

we have paid in electronic medical records. we already made those investments in the recovery act, because when everything is digitalized, all your records, your privacy is protected, but your records are on a digital form, that reduces medical errors. it means that nurses do not have to read the scrawl of doctors when they are trying to figure out what treatments to apply. that saves lives, that saves money, and it will still ensure privacy. we need to invest in prevention and wellness that help americans live longer, healthier lives. we know this saves money. if we can help somebody control obesity, they are less likely to get diabetes, and if they are less likely to get diabetes, that means that we are going to be saving a whole lot of money in hospital costs. the biggest thing we can do to hold down costs is to change the incentives of the health care system that automatically equates expensive care with good care. this is an important concept, so

i want everybody to really focus on this. we have been under the illusion that the more health care we get, the healthier we become. it turns out that every study shows that the question is are you getting the right care? are you getting the best care, the high quality care, rather than are you having a whole bunch of tests ordered that are unnecessary, getting a bunch of treatments that are unnecessary, staying at the hospital longer than may be necessary. all of which drives up your costs. but does not make you better. we have to ask ourselves why there are places like the health care systems in rural pennsylvania or intermountain health in salt lake city that offer high quality health care at costs that are well below average, in some cases 30% lower than in other communities. if they can do it, there is no reason why all of america shouldn't do that but we have to identify the best practice, the

best practices across the country, learn from those successes, and then have to replicate those successes elsewhere. and we should change the work incentives that reward doctors and hospitals based on how many tests and procedures they prescribe, even if those tests and procedures are not shown to actually make people better, or if they result in medical mistakes. doctors across this country did not get into the profession just to beat beantown pearse or paper pushers, -- just to be been counters or paper pushers, but more and more time is spent on administration and how they deal with how they are reimbursed. we have to create a simplified, more effective system where they are reimbursed for quality care, as opposed to having to distort their practices in ways that don't actually make their patients better. it is also time to provide americans who can afford health insurance with more affordable options. i believe this is a moral

imperative, an economic imperative. [applause] it is a moral imperative because in a country as wealthy as ours, if people are working and holding up their responsibilities, they should not be bankrupted just because they get sick. on the other hand, it is an economic imperative because every single one of us who do have health insurance, our families on average pay an extra $1,000 in premiums for uncompensated care. hospitals and doctors are adding this costs to your premiums, insurance companies are adding those costs to your premiums, even if you don't know it, and if we can get a system in which people are getting regular checkups, mammograms, all the things that we know prevent disease from occurring over the long term, or at least allow us to catch those diseases early,

that will allow us to drive down costs for everybody. what we have been working on is the creation of something called the health insurance exchange. this will be a market place that allows you to one-stop shop for health care plans and compare benefits and prices in a simple, easy to understand language, and then choose the best plan for you. and none of these plans would be able to deny coverage on the basis of a pre-existing condition. all of them would include an affordable, basic benefit package. if you could not afford these plants, we could provide you if the but of help so that you can afford them. i also strongly believe that one of the options in the exchange should be a public option. in order for us to create some competition for the private insurers to keep them honest. if they are giving good service and providing high-quality coverage, then that is where people will want to go.

but there should be a benchmark to their -- a benchmark to their of a public plan, non-for-profit plan that focuses on keeping costs low and providing good service but you should make a decision of the deal would be better for you and your family. i know what the biggest question on everybody's mind is how do we pay for this, how we finance reform. i have made a commitment, because our deficit is a genuine problem, that whatever we do, we have to pay for it. this cannot add to our deficits. it has got to be deficit-neutral over the next 10 years. here is the good news. about 2/3 of the costs of the reforms that we are proposing will come from reallocating money that is already being spent in the health-care system, but is not being spent wisely. it does not involve more spending, it is involves smarter spending. a lot of the money that is being spent in the health-care system

now adds nothing to the quality of patient care. i will give you one example. we spend right now -- over the next 10 years, we will spend $177 billion, 107 $7 billion, over the next decade in unwarranted subsidies to insurance companies under something called medicated vantage. medicare and interpret -- medicare advantage. this does not make people healthier. seniors sign up to not get any better care than those who are not. the subsidies do not go to the patients, they go to the insurance companies. think of if we took that $177 billion and helped families so that they could have insurance, and that we could have preventive care. about 2/3 of the costs of the reforms we are proposing is to reallocating money that is already in the system.

1/3 of it we are going to have to pay for by increased revenues. what i have proposed is that if we capture the itemized -- if we capped the itemized deductions that the very wealthy people to, so that they are getting the same tactics as the rebels as opposed to getting higher tax breaks because they have -- same tax breaks as everybody else as opposed to getting higher tax breaks because they have a bigger house, we can get reform. we have identified $150 billion over 10 years in order to pay for reported 2/3 of it reallocating money, 1/3 of it with increased revenues. that is a sensible investment for us to make in solving an intractable problem that has been dragging down the family finances, businesses, and the federal government for far too long. now, keep in mind, by the way, what we have identified as paying for the system does not

include the savings we will get from prevention or getit, -- or health it, because using congressional jargon, which i am not supposed to do because nobody understands it, it is not supportable. the congressional budget office cannot identify exactly how much you would save, even though everybody believes it will end up sitting a lot of money, -- even though it will end up saving a lot of money, we cannot put a hard number on it. we will get additional savings that will drive down costs. in the meantime, the costs of reform will be paid for with our dollars the we have identified. here's the bottom line -- i am almost done here, but this is a complicated topic. i hope you forgive me. we are starting to make progress on capitol hill, identifying ways not only to reform the system and make it smarter and more efficient, more user- friendly, better for american families, but also ways to pay for it in a way that does not

blow to our deficit. but the hardest part is yet to come. everybody here knows that the easiest thing to do when you are looking at big policy questions like health care is just to say that it cannot be done. the naysayers are already starting to line up and fighting every excuse and scare tactic in the book for white reform is not going to happen. this is going on as -- for why reform is not what happened. this is going on as we speak did what i say to the critics is what is your alternative? is your alternative to stand pat watch more families whose health care, more out of pocket costs for less insurance, businesses who are not able to compete internationally, a medicare and medicaid system that has run amok? is that your alternative? what you said all those families who cannot pay their medical bills -- what do you say to all

those families who cannot pay their medical bills, to the businesses who have to choose between closing doors or eliminating benefits for workers, to every taxpayer who sellers are propping up a system that does not work and is driving us into debt? this is not just about americans without health care. it is about every american. if we do not act to bring down costs, everybody's health care will be in jeopardy. if you lose your job or have a pre-existing condition, you don't know that your family is going to be secure. all of us are in this together. when it comes to energy, when it comes to improving our schools, and when it comes to health care, i don't accept the status quo. and you should not either. and i don't think the american people want to just stand pat they know that change isn't easy, they note there are going to be setbacks and false starts. but they also know this, that we are in one of those rare moments where everybody is ready to move

into the future. we just cannot be scared. we have got to stop clinging to a broken system that does not work, and we have got to have the courage to reach out for a feature that is going to be better for our children and our grandchildren. i believe we can accomplish in this year, but in order to make it happen, i am going to need ordinary americans to stand up and say now is the time. you are what are going to drive this process forward, because if congress thinks that the american people don't want to see change, frankly, the lobbyists and special interests will end up winning the day. but when the american people decide something needs to happen, nothing can stop us. i hope you'll join me. thank you very much, everybody. thank you. [applause] all right.

now, if i am not mistaken, the way this is going to work, valerie, you are going to be in charge -- you a traffic cop. >> i am going to be in charge. thank you very much, mr. president. in my opening remarks, i mentioned that when you released your youtube video over the weekend, we received hundreds of questions all across the country. your staff have selected a cross section that represents, a broad section of the questions that came up. i want to emphasize that the president has not seen the questions ahead of time. absolutely not. we are going to begin with a video question, mr. president, if you look at the screen. >> all right. >> hi, i am in new york, my question for the president is why are we considering a health care plan which maintains the private insurance companies with their high overhead costs, instead of a single payer plan which would eliminate the high overhead costs, saving the

american taxpayer hundreds of billions of dollars while covering every one in the country? thank you. >> well, it is a terrific question. i'm not sure everybody could hear it, but the gist of the question is why have we not looking at a single payer plan as the way to go? as many of you know, in many countries, most industrialized, advanced countries, they have some version of what is called a single payer plan. what that means is, essentially, the government' is the insurer. the government may not necessarily higher the doctors or the hospitals. a lot of those may still be privately operated. but the government is the insurer for everybody. medicare is actually a single payer plan that we have in place, but we only have it in place for our older americans.

now, in a lot of those countries, a single pair plan works pretty well. you eliminate, as scott, i think it was, said, you eliminate private insurers, you do not have the administrative costs and bureaucracy and so forth. here's the problem -- the way our healthcare system evolves in the united states, it evolved based on employers providing health insurance to their employees through private insurers. that is still the way that the vast majority of you get your insurance. for us to transition completely from an employer-based system of private insurance to a single payer system could be hugely disruptive. my attitude has been that we should be able to find a way to create a uniquely american

solution to this problem that controls costs but preserves the innovation that is introduced in part with a free-market system. i think that we can regulate the insurance companies effectively, make sure that they are not playing games with people because of pre-existing conditions, that they are not charging wildly different rates to people based on where they live or what their age is, that they are not dropping people for coverage on necessarily, that we have a public option that is available to provide competition and choice to the american people and to keep the insurer's honest, and that we can provide a system in which we are over the long term and driving down administrative costs and making sure that people are getting the best possible care at a lower price. but i recognize that there are a lot of people who are passionate

-- they look at france or some of these other systems and they say, "well, why can we just do that -- i cannot be to -- as do the why can we not just do that ?" we cannot just completely up and the system. we have to work with what works in the system and fix what is broken in the system. that is what congress is committed to doing and i am committed to working with them to make it happen. >> how about a question from the audience? please, a show of hands. >> what i always do is go girl, boy, girl, boy, so i do not get into trouble. [laughter] someone was pointing at you. do we have a microphone for folks in the audience so that everybody in the question? ok, i think there is somebody coming from this direction. you can just had hurt the microphone. -- you can just hand her the microphone. >> good afternoon, mr.

president. i will try not to cry. [laughter] i am trying to figure out what i can do currently. i had a condition in 1998 that was rated -- cradiated. i did radiation procedures to kill the tumor them. i had insurance and everything was paid for that. but because the damage the radiation did, i am able to work, and i have no health insurance -- i am no longer able to work. i have no health insurance. i have a new tumor and i am not able to pay for it. i can get checked into a hospital and with their engineer program they will run tests and released me, but that costs a lot of money. currently, i basically -- social security will not give me disability because it is no longer a qualifying factor of

social security, currently. i cannot get medicaid in virginia because you have to be considered disabled through social security to qualify for medicaid in the state of virginia, because i have no dependent children at home. it's just me. i get food stamps, but that is it. i'm just trying to figure out how i'm going to make it nine years till i am qualified to get regular social security but now that i have no tumor and nowhere to turn. >> come on over here. first of all, we are going to find out -- we will get your information and see what we can do to help. i don't want you to feel all alone on this. [applause] you know, without knowing all the details, i'm not going to give you an answer right now but exactly how we can help -- we are going to find out what we can do within existing law.

what was your name again? >> debbie. >> debbi is a perfect example of somebody that we should, in a country as wealthy, be able to provide coverage for her health care problems. what we don't want is a situation where debbie gets worse and worse because she's not getting treatment, and ends up having to get to the emergency room. all of you will pay for it anyway. it is said that you will pay for it in terms of a hidden subsidy. she is not getting the best care and we are actually paying more than we would have if she right now was getting treated on a regular basis by a physician who knew her history. you are exhibit a, and we appreciate you sharing your story. we are going to try to find ways to help you immediately. but the long term problem here

is going to be how do we create a system in which she is getting the preventive care that she needs and is able to get regular checkups, is able to get treatment in a way that is much more cost-efficient than the one we have got right now. i'm going to make a commitment that you get that done this year. all right? [applause] [unintelligible] >> it is where anybody who needs medical treatment can get free treatment for those three days, the 20 but, 25, at 26 -- >> 24, 25, a 26 -- >> i think governor warner and kaine can say how long,ut