The third principle is savings. Reform must produce
savings in this health care system. It has to. We're spending over
14 percent of our income on health care -- Canada's at 10; nobody
else is over nine. We're competing with all these people for the
future. And the other major countries, they cover everybody and they
cover them with services as generous as the best company policies
here in this country.


Rampant medical inflation is eating away at our wages,
our savings, our investment capital, our ability to create new jobs
in the private sector and this public Treasury. You know the budget
we just adopted had steep cuts in defense, a five-year freeze on the
discretionary spending, so critical to reeducating America and
investing in jobs and helping us to convert from a defense to a
domestic economy. But we passed a budget which has Medicaid
increases of between 16 and 11 percent a year over the next five
years, and Medicare increases of between 11 and 9 percent in an
environment where we assume inflation will be at 4 percent or less.

We cannot continue to do this. Our competitiveness, our
whole economy, the integrity of the way the government works and,
ultimately, our living standards depend upon our ability to achieve
savings without harming the quality of health care.

Unless we do this, our workers will lose $655 in income
each year by the end of the decade. Small businesses will continue
to face skyrocketing premiums. And a full third of small businesses
now covering their employees say they will be forced to drop their
insurance. Large corporations will bear vivid disadvantages in
global competition. And health care costs will devour more and more
and more of our budget. Pretty soon all of you or the people who
succeed you will be showing up here, and writing out checks for
health care and interest on the debt and worrying about whether we've
got enough defense, and that will be it, unless we have the courage
to achieve the saving that are plainly there before us. Every state
and local government will continue to cut back on everything from
education to law enforcement to pay more and more for the same health
care.

These rising costs are a special nightmare for our small
businesses -- the engine of our entrepreneurship and our job creation
in America today. Health care premiums for small businesses are 35
percent higher than those of large corporations today. And they will
keep rising at double-digit rates unless we act.

So how will we achieve these savings? Rather than
looking at price control, or looking away as the price spiral
continues; rather than using the heavy hand of government to try to
control what's happening, or continuing to ignore what's happening,
we believe there is a third way to achieve these savings. First, to
give groups of consumers and small businesses the same market
bargaining power that large corporations and large groups of public
employees now have. We want to let market forces enable plans to
compete. We want to force these plans to compete on the basis of
price and quality, not simply to allow them to continue making money
by turning people away who are sick or old or performing mountains of
unnecessary procedures. But we also believe we should back this
system up with limits on how much plans can raise their premiums year
in and year out, forcing people, again, to continue to pay more for
the same health care, without regard to inflation or the rising
population needs.

We want to create what has been missing in this system
for too long, and what every successful nation who has dealt with
this problem has already had to do: to have a combination of private
market forces and a sound public policy that will support that
competition, but limit the rate at which prices can exceed the rate
of inflation and population growth, if the competition doesn't work,
especially in the early going.

The second thing I want to say is that unless everybody
is covered -- and this is a very important thing -- unless everybody
is covered, we will never be able to fully put the breaks on health
care inflation. Why is that? Because when people don't have any
health insurance, they still get health care, but they get it when
it's too late, when it's too expensive, often from the most expensive

place of all, the emergency room. Usually by the time they show up,
their illnesses are more severe and their mortality rates are much
higher in our hospitals than those who have insurance. So they cost
us more.

And what else happens? Since they get the care but they
don't pay, who does pay? All the rest of us. We pay in higher
hospital bills and higher insurance premiums. This cost shifting is
a major problem.

The third thing we can do to save money is simply by
simplifying the system -- what we've already discussed. Freeing the
health care providers from these costly and unnecessary paperwork and
administrative decisions will save tens of billions of dollars. We
spend twice as much as any other major country does on paperwork. We
spend at least a dime on the dollar more than any other major
country. That is a stunning statistic. It is something that every
Republican and every Democrat ought to be able to say, we agree that
we're going to squeeze this out. We cannot tolerate this. This has
nothing to do with keeping people well or helping them when they're
sick. We should invest the money in something else.

We also have to crack down on fraud and abuse in the
system. That drains billions of dollars a year. It is a very large
figure, according to every health care expert I've ever spoken with.
So I believe we can achieve large savings. And that large savings
can be used to cover the unemployed uninsured, and will be used for
people who realize those savings in the private sector to increase
their ability to invest and grow, to hire new workers or to give
their workers pay raises, many of them for the first time in years.

Now, nobody has to take my word for this. You can ask
Dr. Koop. He's up here with us tonight, and I thank him for being
here. (Applause.) Since he left his distinguished tenure as our
Surgeon General, he has spent an enormous amount of time studying our
health care system, how it operates, what's right and wrong with it.
He says we could spend $200 billion every year, more than 20 percent
of the total budget, without sacrificing the high quality of American
medicine.

Ask the public employees in California, who have held
their own premiums down by adopting the same strategy that I want
every American to be able to adopt -- bargaining within the limits of
a strict budget. Ask Xerox, which saved an estimated $1,000 per
worker on their health insurance premium. Ask the staff of the Mayo
Clinic, who we all agree provides some of the finest health care in
the world. They are holding their cost increases to less than half
the national average. Ask the people of Hawaii, the only state that
covers virtually all of their citizens and has still been able to
keep costs below the national average.

People may disagree over the best way to fix this
system. We may all disagree about how quickly we can do what -- the
thing that we have to do. But we cannot disagree that we can find
tens of billions of dollars in savings in what is clearly the most
costly and the most bureaucratic system in the entire world. And we
have to do something about that, and we have to do it now.
(Applause.)

The fourth principle is choice. Americans believe
they ought to be able to choose their own health care plan and keep
their own doctors. And I think all of us agree. Under any plan we
pass, they ought to have that right. But today, under our broken
health care system, in spite of the rhetoric of choice, the fact is
that that power is slipping away for more and more Americans.

Of course, it is usually the employer, not the employee,
who makes the initial choice of what health care plan the employee

will be in. And if your employer offers only one plan, as nearly
three-quarters of small or medium-sized firms do today, you're stuck
with that plan, and the doctors that it covers.

We propose to give every American a choice among high-
quality plans. You can stay with your current doctor, join a network
of doctors and hospitals, or join a health maintenance organization.
If you don't like your plan, every year you'll have the chance to
choose a new one. The choice will be left to the American citizen,
the worker -- not the boss, and certainly not some government
bureaucrat.

We also believe that doctors should have a choice as to
what plans they practice in. Otherwise, citizens may have their own
choices limited. We want to end the discrimination that is now
growing against doctors, and to permit them to practice in several
different plans. Choice is important for doctors, and it is
absolutely critical for our consumers. We've got to have it in
whatever plan we pass. (Applause.)

The fifth principle is quality. If we reformed
everything else in health care, but failed to preserve and enhance
the high quality of our medical care, we will have taken a step
backward, not forward. Quality is something that we simply can't
leave to chance. When you board an airplane, you feel better knowing
that the plane had to meet standards designed to protect your safety.
And we can't ask any less of our health care system.

Our proposal will create report cards on health plans,
so that consumers can choose the highest quality health care
providers and reward them with their business. At the same time, our
plan will track quality indicators, so that doctors can make better
and smarter choices of the kind of care they provide. We have
evidence that more efficient delivery of health care doesn't decrease
quality. In fact, it may enhance it.

Let me just give you one example of one commonly
performed procedure, the coronary bypass operation. Pennsylvania
discovered that patients who were charged $21,000 for this surgery
received as good or better care as patients who were charged $84,000
for the same procedure in the same state. High prices simply don't
always equal good quality. Our plan will guarantee that high quality
information is available is available in even the most remote areas
of this country so that we can have high-quality service, linking
rural doctors, for example, with hospitals with high-tech urban
medical centers. And our plan will ensure the quality of continuing
progress on a whole range of issues by speeding the search on
effective prevention and treatment measures for cancer, for AIDS, for
Alzheimer's, for heart disease, and for other chronic diseases. We
have to safeguard the finest medical research establishment in the
entire world. And we will do that with this plan. Indeed, we will
even make it better. (Applause.)

The sixth and final principle is responsibility. We
need to restore a sense that we're all in this together and that we
all have a responsibility to be a part of the solution.
Responsibility has to start with those who profit from the current
system. Responsibility means insurance companies should no longer be
allowed to cast people aside when they get sick. It should apply to
laboratories that submit fraudulent bills, to lawyers who abuse
malpractice claims, to doctors who order unnecessary procedures. It
means drug companies should no longer charge three times more per
prescription drugs made in America here in the United States than
they charge for the same drugs overseas. (Applause.)

In short, responsibility should apply to anybody to
abuses this system and drives up the cost for honest, hard-working

citizens and undermines confidence in the honest, gifted health care
providers we have.

Responsibility also means changing some behaviors in
this country that drive up our costs like crazy. And without
changing it we'll never have the system we ought to have. We will
never.

Let me just mention a few and start with the most
important -- the outrageous cost of violence in this country stem in
large measure from the fact that this is the only country in the
world where teenagers can rout the streets at random with semi-
automatic weapons and be better armed than the police. (Applause.)

But let's not kid ourselves, it's not that simple. We
also have higher rates of AIDS, of smoking and excessive drinking, of
teen pregnancy, of low birth weight babies. And we have the third
worst immunization rate of any nation in the western hemisphere. We
have to change our ways if we ever really want to be healthy as a
people and have an affordable health care system. And no one can
deny that. (Applause.)

But let me say this -- and I hope every American will
listen, because this is not an easy thing to hear -- responsibility
in our health care system isn't just about them, it's about you, it's
about me, it's about each of us. Too many of us have not taken
responsibility for our own health care and for our own relations to
the health care system. Many of us who have had fully paid health
care plans have used the system whether we needed it or not without
thinking what the costs were. Many people who use this system don't
pay a
whether we needed it or not without thinking what the costs were.
Many people who use this system don't pay a penny for their care even
though they can afford to. I think those who don't have any health
insurance should be responsible for paying a portion of their new
coverage. There can't be any something for nothing, and we have to
demonstrate that to people. This is not a free system. (Applause.)
Even small contributions, as small as the $10-copayment when you
visit a doctor, illustrates that this is something of value. There
is a cost to it. It is not free.

And I want to tell you that I believe that all of us
should have insurance. Why should the rest of us pick up the tab
when a guy who doesn't think he needs insurance or says he can't
afford it gets in an accident, winds up in an emergency room, gets
good care, and everybody else pays? Why should the small
businesspeople who are struggling to keep afloat and take care of
their employees have to pay to maintain this wonderful health care
infrastructure for those who refuse to do anything?

If we're going to produce a better health care system
for every one of us, every one of us is going to have to do our part.
There cannot be any such thing as a free ride. We have to pay for
it. We have to pay for it.

Tonight I want to say plainly how I think we should do
that. Most of the money we will -- will come under my way of
thinking, as it does today, from premiums paid by employers and
individuals. That's the way it happens today. But under this health
care security plan, every employer and every individual will be asked
to contribute something to health care.

This concept was first conveyed to the Congress about 20
years ago by President Nixon. And today, a lot of people agree with
the concept of shared responsibility between employers and employees,
and that the best thing to do is to ask every employer and every
employee to share that. The Chamber of Commerce has said that, and

they're not in the business of hurting small business. The American
Medical Association has said that.

Some call it an employer mandate, but I think it's the
fairest way to achieve responsibility in the health care system. And
it's the easiest for ordinary Americans to understand, because it
builds on what we already have and what already works for so many
Americans. It is the reform that is not only easiest to understand,
but easiest to implement in a way that is fair to small business,
because we can give a discount to help struggling small businesses
meet the cost of covering their employees. We should require the
least bureaucracy or disruption, and create the cooperation we need
to make the system cost-conscious, even as we expand coverage. And
we should do it in a way that does not cripple small businesses and
low-wage workers.

Every employer should provide coverage, just as three-
quarters do now. Those that pay are picking up the tab for those who
don't today. I don't think that's right. To finance the rest of
reform, we can achieve new savings, as I have outlined, in both the
federal government and the private sector, through better decision-
making and increased competition. And we will impose new taxes on
tobacco. (Applause.)

I don't think that should be the only source of
revenues. I believe we should also ask for a modest contribution
from big employers who opt out of the system to make up for what
those who are in the system pay for medical research, for health
education center, for all the subsidies to small business, for all
the things that everyone else is contributing to. But between those
two things, we believe we can pay for this package of benefits and
universal coverage and a subsidy program that will help small
business.

These sources can cover the cost of the proposal that I
have described tonight. We subjected the numbers in our proposal to
the scrutiny of not only all the major agencies in government -- I
know a lot of people don't trust them, but it would be interesting
for the American people to know that this was the first time that the
financial experts on health care in all of the different government
agencies have ever been required to sit in the room together and
agree on numbers. It had never happened before.

But, obviously, that's not enough. So then we gave
these numbers to actuaries from major accounting firms and major
Fortune 500 companies who have no stake in this other than to see
that our efforts succeed. So I believe our numbers are good and
achievable.

Now, what does this mean to an individual American
citizen? Some will be asked to pay more. If you're an employer and
you aren't insuring your workers at all, you'll have to pay more.
But if you're a small business with fewer than 50 employees, you'll
get a subsidy. If you're a firm that provides only very limited
coverage, you may have to pay more. But some firms will pay the same
or less for more coverage.

If you're a young, single person in your 20s and you're
already insured, your rates may go up somewhat because you're going
to go into a big pool with middle-aged people and older people, and
we want to enable people to keep their insurance even when someone in
their family gets sick. But I think that's fair because when the
young get older, they will benefit from it, first, and secondly, even
those who pay a little more today will benefit four, five, six, seven
years from now by our bringing health care costs closer to inflation.
Over the long run, we can all win. But some will have
to pay more in the short run. Nevertheless, the vast majority of the

Americans watching this tonight will pay the same or less for health
care coverage that will be the same or better than the coverage they
have tonight. That is the central reality. (Applause.)

If you currently get your health insurance through your
job, under our plan you still will. And for the first time,
everybody will get to choose from among at least three plans to
belong to. If you're a small business owner who wants to provide
health insurance to you family and your employees, but you can't
afford it because the system is stacked against you, this plan will
give you a discount that will finally make insurance affordable. If
you're already providing insurance, your rates may well drop because
we'll help you as a small business person join thousands of others to
get the same benefits big corporations get at the same price they get
those benefits. If you're self-employed, you'll pay less; and you
will get to deduct from your taxes 100 percent of your health care
premiums. (Applause.)

If you're a large employer, your health care costs won't
go up as fast, so that you will have more money to put into higher
wages and new jobs and to put into the work of being competitive in
this tough global economy.

Now, these, my fellow Americans, are the principles on
which I think we should base our efforts: security, simplicity,
savings, choice, quality and responsibility. These are the guiding
stars that we should follow on our journey toward health care reform.

Over the coming months, you'll be bombarded with
information from all kinds of sources. There will be some who will
stoutly disagree with what I have proposed -- and with all other
plans in the Congress, for that matter. And some of the arguments
will be genuinely sincere and enlightening. Others may simply be
scare tactics by those who are motivated by the self-interest they
have in the waste the system now generates, because that waste is
providing jobs, incomes and money for some people.

I ask you only to think of this when you hear all of
these arguments: Ask yourself whether the cost of staying on this
same course isn't greater than the cost of change. And ask yourself
when you hear the arguments whether the arguments are in your
interest or someone else's. This is something we have got to try to
do together.

I want also to say to the representatives in Congress,
you have a special duty to look beyond these arguments. I ask you
instead to look into the eyes of the sick child who needs care; to
think of the face of the woman who's been told not only that her
condition is malignant, but not covered by her insurance. To look
at the bottom lines of the businesses driven to bankruptcy by health
care costs. To look at the "for sale" signs in front of the homes of
families who have lost everything because of their health care costs.

I ask you to remember the kind of people I met over the
last year and a half -- the elderly couple in New Hampshire that
broke down and cried because of their shame at having an empty
refrigerator to pay for their drugs; a woman who lost a $50,000-job
that she used to support her six children because her youngest child
was so ill that she couldn't keep health insurance, and the only way
to get care for the child was to get public assistance; a young
couple that had a sick child and could only get insurance from one of
the parents' employers that was a nonprofit corporation with 20
employees, and so they had to face the question of whether to let
this poor person with a sick child go or raise the premiums of every
employee in the firm by $200. And on and on and on.

I know we have differences of opinion, but we are here
tonight in a spirit that is animated by the problems of those people,
and by the sheer knowledge that if we can look into our heart, we

will not be able to say that the greatest nation in the history of
the world is powerless to confront this crisis. (Applause.)

Our history and our heritage tell us that we can meet
this challenge. Everything about America's past tells us we will do
it. So I say to you, let us write that new chapter in the American
story. Let us guarantee every American comprehensive health benefits
that can never be taken away. (Applause.)

In spite of all the work we've done together and all the
progress we've made, there's still a lot of people who say it would
be an outright miracle if we passed health care reform. But my
fellow Americans, in a time of change, you have to have miracles.
And miracles do happen. I mean, just a few days ago we saw a simple
handshake shatter decades of deadlock in the Middle East. We've seen
the walls crumble in Berlin and South Africa. We see the ongoing
brave struggle of the people of Russia to seize freedom and
democracy.

And now, it is our turn to strike a blow for freedom in
this country. The freedom of Americans to live without fear that
their own nation's health care system won't be there for them when
they need it. It's hard to believe that there was once a time in
this century when that kind of fear gripped old age. When retirement
was nearly synonymous with poverty, and older Americans died in the
street. That's unthinkable today, because over a half a century ago
Americans had the courage to change -- to create a Social Security
system that ensures that no Americans will be forgotten in their
later years.

Forty years from now, our grandchildren will also find
it unthinkable that there was a time in this country when hardworking
families lost their homes, their savings, their businesses, lost
everything simply because their children got sick or because they had
to change jobs. Our grandchildren will find such things unthinkable
tomorrow if we have the courage to change today.

This is our chance. This is our journey. And when our
work is done, we will know that we have answered the call of history
and met the challenge of our time.

Thank you very much. And God bless America.
(Applause.)

END10:02 P.M. EDT