everyday, and it is free. >> which is a wonderful program, but as senator warner and gov. kaine would agree, we cannot have a system that is relied on three days of free care at 362 days in which people to not have health care. that does not make any sense. thank you for sharing your story. we appreciate it. [applause] . >> how can health care reform help us?

>> as somebody with two daughters, i am a sucker for anybody that uses daughters and a video. [laughter] my staff probably knew that. small business owners are those who are being, in some cases, hardest hit by the rising cost of health care. in some cases, they cannot afford to provide health insurance to their employees and that is frustrating but they are operating on two small margin or they do that have enough employees to have leverage to negotiate with insurance companies. the offers that insurance companies give them for the cost of coverage per person and up being way higher than they would be for big companies that have more consumer power. in some cases, it has gotten so bad that small businesses cannot even provide insurance for themselves.

a lot of small businesses, a huge percentage, are so proprietorships, maybe it is a family business. they are consultants out there or self-employed individuals. they cannot get a good deal. this is an example of where this health-care exchange could be helpful. cbyreating a health care exchange, part of what we want to do is to allow small businesses, as well as people who are self-employed, individuals whose companies do not provide coverage, to come to this exchange, take a look at a menu of plans that are available, join one of these plans -- you may qualify for a subsidy from the federal government's -- and you then become part of a big pool but gives you some leverage over the drug companies and insurance companies to drive down costs.

that is part of the way that health care reform can provide direct savings to american families right now, by giving them more leverage. i am very pleased that the drug companies decided to cough up $80 billion to close this fall. i have to be honest -- we are not for the prospect of serious health care reform. i wanted that would have given up that money. that is my guest. [applause] -- that is my guest. these same principles apply when it comes to setting up this health-care exchange. if we do it effectively, then not only will families be able to make some clear choices and small business owners can make good choices about the best plan for us that the terror needs, they will also be part of a broader group that can apply leverage in the system. that is essentially what federal health care employees do.

mark warner has a plan that all members of congress and federal employees have. it is not cadillac care. it good, solid, decent care with a range of options. part of the reason why is it a good program is because there are so many federal employees. we should provide that some kind of leverage for the small- business owner who right now is too small on their own to be able to get the best possible deal on the insurance market. that is what we want to provide in a skilled care reform package. all right? good. >> we are ready to go back to the audit. >> it is the guy's turn now. please, keep your hands down. this young man, right here. if we can get a microphone. >> what is your name? >> jason.

>> i work for a group called health care america now. >> he knows something about health care. [laughter] >> i read the news and i have been hearing about the price tag of health reform and people are very concerned that it will cost $1 trillion. i am most concerned about making it affordable to folks like me. like you said, you are committed to making this deficit neutral. i hope you can talk about affordability and what your plans are for that. >> good. look, the first thing that is important for people to do is to understand the cost of doing nothing. because sometimes the opponents of health-care reform pretend as if we have this great thing going and the obama administration wants to completely up and it because i

don't have enough to do prepared [laughter] i keep trying to explain to people that i have a war in afghanistan, we have not gotten the troops out of iraq, we have north korea, and i ran -- iran, h one in one flew --h1n1 flow, if the health-care system was working i would be happy to leave it alone. understand where we are at. we do not do anything, the cost will keep rising. some employers see their costs going up 8, 9, 10% per year. families have seen the health care costs double over the last nine years. you project out nine years from now, your wages or incomes are not going up that fast. this means that a bigger bite is being taken out of your

paycheck, even if you have health insurance. more and more employers are saying they can afford to do more. you have health insurance. your employer has increased deductibles. they increased premiums creek your out-of-pocket costs have gone up by 62%. they will keep rising. the cost of medicare and medicaid, because they attract these other costs, they will keep skyrocketing. our deficit will be completely out of control. do not let people pool you with this notion that somehow the reason for our deficit has to do with, for example, the recovery act. the recovery act was designed to make sure that local school district did not lay off teachers and firefighters and police officers and it has done its job. it is building the kind of infrastructure that we need to be competitive in the future.

it is a tiny fraction of the long-term deficit projection. almost all of the long-term deficit projections come from increases in medicare and medicaid. the reason i say all this is because the costs will be there if we do not do anything. the deficit will grow if we do not do anything. our debt will grow what we do not do anything. what i am trying to do is figure out how do we bend the curve up costs so that we are getting more and more efficient care, higher quality care, at less cost per person. how do we eliminate the thousand dollars per family that is coming of your pocket in subsidized care, uncompensated care at hospitals that is going on right now. if we can do that, a, we can cover more people with the savings and b, we have more leverage over the insurance companies and the drug companies

so that they give a better deal. that is what we are trying to do. i do think that we cannot add to the deficit. we should five ways to honestly pay for whatever reforms we propose. i already gave you indications that we would do. about 2/3 of it would come from reallocating money that is currently in the system, you are already paying for, this is not new money can add your pocket. this is money that is being spent by the federal government but not spent wisely in awaited me to help here. that is 2/3 of it. once last three of it, because we have to make initial investment up front and a lot of the savings -- are not score of all, we have to raise additional revenue. we want to provide help to families who have health insurance but are starting to struggle. i think the best way for us to pay for it is capping the itemized deductions that people

make -- making over $250,000 per year, people like myself, it used to be valerie was mcmahon but she is working for the federal government, now. [laughter] she would not be affected by this. capping of itemized deductions, we can raise enough money to pay for a good high-quality health care reform proposal that will provide health care security for everybody. as i said before, many of you may be satisfied with your health care now. you have to project if you will be happy with your health care five years from now. will you have health care five years from now? many people here, if you change jobs now, and you have a pre- existing condition, and just let anything can recall that, you have trouble signing up for health care the next time around

because you changed a job. set aside the situation where you lose a job. one of the things we did in the recovery act was to help people. the problem is that premiums are so high that most people, when you lose your job, you cannot afford it. the last thing you can afford as $1,000 or $59 in premiums. we subsidized their health insurance longer, cutting those cobra costs. i think that was a smart thing to do. that was the right thing to do. we cannot just do that indefinitely. we can do patchwork pieces through a recovery act. what we need is a permanent solution that insures the when you lose your job, or change jobs, you can still have health

care. if you are self-employed, you still have health care. every nation on earth that is as wealthy as ours is able to do that. they do not do it perfectly. we have to find a uniquely american solution. don't tell me that we cannot get this done. for those who say," this is something that is very complicated are we shouldn't rush into a." that is what happens in congress all the time. they have hearings, they write white papers and then suddenly, the lobbyists and special interest start going at it and the next thing you know, another 10 years have gone by and we still have not done anything. that is not what will happen this time. i will keep on pressing until we get this done this year. [applause] >> all right, mr. president.

right now, on face book and on twitter, many people are talking about the proposal to tax health care benefits. for example, rob on twitter said," does it make sense to tax, health care coverage daxe?" >> i have stood on it in the past and i'll tell you what is being debated in congress. part of the reason that employers provide health care to most americans is because they get a big tax exclusion. they do not pay taxes on -- and you don't pay taxes -- on the health care benefits you receive. it is a huge subsidy that is provided through the tax code for employers to provide coverage. up until, let's say, a

generation ago, this worked reasonably well. it is starting to break down because even with the tax exclusion, the costs for employers out of pocket is getting more expensive. some people have said that what we should do is eliminate this tax exclusion so that the federal government is not indirectly subsidizing employers providing care and that we could take that money and give everybody a tax break individually and they could go out and shop for their own health care. this was essentially john mccain's proposal during the campaign. i want to be fair to it. the idea was that to eliminate the exclusion, the billions of dollars that comes back into the treasury is given out to each person in the form of a $5,000 or $7,000 tax credit and then you go out and buy your own

insurance. the thinking is that if you do it that way, each of you will be more discriminating consumers and you are going to go out and get the best possible deal and you will not be over using the health-care system. you will not be going to the doctor unnecessarily or taking drugs that you don't really need. you will essentially engaged in self-rationing. that is the concept behind this idea. in fairness, the other notion is that if you do not have your health care tied to employers, that you will not be as worried about losing your health insurance if you change or just because the money follows you, as opposed to being with the employer. that is the concept. i opposed this during the campaign. i opposed it for a couple of reasons. number one, if you completely eliminated the exclusion, there is no doubt that what would happen is that many employers would stop providing health care.

many people currently get health care through their employers would not be able to get it. the second thing -- remember what took you earlier about how, if you are on your own shopping for health care, you have no leverage with the insurance companies. the problem is is that if you suddenly get a tax credit for $7,000, you try to go buy health insurance for your family, it costs $14,000, you are worse off than you would have been. you are out of luck. you have no leverage. they have no incentive to give you a lower price because you are on your own. the other problem is that when you were not part of a pool, the insurance companies have every incentive to make sure that if you are older or sicker that they do not cover you. they want to cover the young, healthy folks like mark warner. [laughter] that's who they want.

if you are older or sicker, you are more likely to be excluded from coverage or they jack up the rates. we were part of a pool, they will take everybody. for all those reasons, i oppose the proposal that was put forward. essentially, it would be, for the first time, taxing health care benefits that were provided by employers. nobody at this point or not many folks are talking about taxing benefits or completely eliminating the exclusion. what they are calling for non congress is to cap the exclusion so that people who have very high-priced health-care, at a certain point, they can only get a deduction up to a certain point. let's say that the average health care cost per family

costs $13,000. what they would say is, the employer and employe get an exclusion of to $13,000 but if you get some cadillac plan costs $70,000, you will have -- cost $17,000, you have to pay the difference. the idea that is being debated in congress is is that a good way to ensure that people do not have these big cadillac plans but instead have more sensible plans? by the way, that also raises money. this has been offered as an alternative way to pay for the extra 1/3 of health care that we are not able to pay for through reallocating money. i think the better way to do it remains the proposal i have to cap itemized deductions. i think that as a way we can ensure that people who currently have health care are not

suddenly seeing their costs go up to pay for other people's costs going down. instead, everybody costs and then effectively. this is something that will be debated in the house and the senate. mark warner will weigh in on it. we will always on it. my bottom line is, if you have health insurance right now, you should not suddenly see your costs go up as part of health care reform. ok? good. >> i think we are to upper and other video question. >> i know the cost of defensive medicine drives metal costs up. you said to want to find out what works. in my home state of texas, we know what works for it our medical justice act as judge on that. we recently told the ama that you were opposed to capping damages, a state like mine has proven that it does work will you reaffirm your commitment to

find out what works and ask congress to help? >> i want to make sure everybody understands the question. many doctors have argued, and in some cases they are justified, that their costs for medical malpractice insurance, the threat of a lawsuit, if something goes wrong with a patient, even if it is not their fault, it is so high that not only is it increasing their out- of-pocket costs but they're also engaging in defensive medicine. they have to order five tests when one is enough just to make sure that they are covered so of something goes wrong, it is not their fault later and they could say they did everything possible. the argument is, if you cap the pain and suffering or the

liability that is awarded as a consequence of you being heard in the hospital or by a doctor, that that would drive down everybody's costs. what i have said is that i do not like the idea of an artificial cap on somebody the doctor or hospital really was negligible. -- negligence. in some cases, they are. there are cases where people with a sponge in your gut and so you back up and after a while, you are feeling worse than when you went in. in some cases, that can cause severe damage. i want to make sure that pain suffering, out of pocket expenses, those are covered. i do not like that give an artificial cap. i want to work with doctors to find ways that we can reduce

their liability when they have not done anything wrong. in situations where they have performed effectively. are there ways that we can reduce the constant threat of lawsuits that doctors and hospitals experience. i think that causes defensive medicine. i have committed to working with the ama to find ways we can reduce some of these litigation costs and malpractice rates. one point that i have to dispute with the gentleman who asked me the question -- he says he's from texas and we have capt. texas. we have seen what works. well, the fact is, there is a recent article or they had the highest health care costs in a town in texas. that was down by the border. even though they have kept their, in mccallum, texas, they spent about three times as much per person -- they spent about

30% more per person than they do in el paso, texas, which is operating under caps. what that tells me is that the problem of rising costs does not simply have to do with whether or not liability is capped. what has to do with is the incentives that are operating various communities. there are some places, like the mayo clinic, that provides outstanding care. people fly in from everywhere to go to the mayo clinic to get treatment. it turns out, they provide care much more cheaply than many other health systems. part of the reason is they do some things that are common sense but we do not do them in the health-care system. for example, instead of you going to your primary-care physician who has to do but to test and refers to a specialist who does a bunch of tests, may be good with our specialists, more tests, go to the hospital,

and a read-test you, what they do with the mayo clinic, when you meet with memory physician, he calls and all the specialists at the same time he has a team that evaluates you and does the tests there. you are not duplicating a whole bunch of stuff and that court medicare drives down costs tremendously. that is the kind of common sense approach that we will have to take one of the things we will need to do in the health reform we are proposing is to incentivize those kinds of smart practices, coordinating care, as opposed to what we do right now which is we paid you the more services you provide and the more we pay you. this gives doctors and hospitals a strong incentive to test to five times instead of one time. i am not saying they do it consciously but right now, we are preventing them from coordinating any smart fashion because of the way we

reimbursed. that has to be part of the reform we initiate. >> all right, mr. president, one more question from our audience. >> it is a girls turn, is it? >> i think so. this young lady right here. >> hi, mr. president i matter of -- and a member of sciu. i am working on changes that workers what can i do, as a member of the union to help you with your reform bill? >> i appreciate the question. [laughter] the most important thing i think the american people can do now is to be informed. tell your friends, tell your neighbors, tell them to get informed about what is happening in health care system now. it is very complicated.

i do not expect everyone to be an expert. i want everybody to be well enough informed that the scare tactics of those who supported -- oppose reform would not work for it when you hear somebody saying," this is -- obama's proposing a takeover healthcare." that is an old argument that has been used for years. i want to be clear. if you have a health care plan that you get through your employer or some other private plan, i want you to keep it i actually think reforming the system is the most likely way for you to keep on health care you have. i do not want to take it over. i think it is great that you can't keep the care you got. all i said is i want to make sure that those things the taxpayers are paying for, that

we're getting our money's worth. i do not want to provide $177 billion in subsidies to insurance companies. i do not want to reimburse for five tests when the evidence shows that you get in one test will be better for you because that means that the taxpayers are setting money and i can use that to lower your costs. i couldn't help somebody who has no health care. i think we should have a public plan to compete with the private plan. these private insurance companies are always telling me what a great deal that they get to the american consumer. if it is such a great deal, wire they worry about competing against a public plan? [applause] they will tell you that we are trying to take over health care. i do not want to take over health care. they will tell you that we are trying to ration the system. we don't want to get between you

and your doctor. what we do believe is that there is good evidence out there that shows the best way to treat your bill must to get to the blue pill and instead, right now, you are getting prescribe to the red pill the cost was as much, i think you and your doctor, having that information, are probably going to decide to go with the cheaper pill but does as good a job. that will save you money. that is not rationing. that is being sensible. whenever you start hearing these arguments about socialized medicine, government takeover, rationing, canada-style health care -- what i need you to do and everybody here to do and everybody was watching to do, is to actually pay attention to the argument. do not let people scare you out of reforming a system that we

know is not working. one of the great things about this country is, we have a system that is sometimes kind of hard to change. congress gets bogged down. part of that is because of the way the constitution is designed. it served us well because it keeps a stable. we do not have coups and government collapsing. the disadvantage is that it is hard for us to make big, bold steps. the great thing about the system is that every once in awhile, when we had a point where things are not working at all, we are able to generate the political will to finally get things done. that is how we got social security. at the great depression, nobody had any passions or protection