My Fellow Americans:
I stand before you a chastened president. I made a mistake. Two mistakes, really. (wild applause from Republican side)
I thought that Congress could do its job and, through the deliberative process, produce a health care reform plan that would win broad support across the aisle and among all of you.
But I’m afraid I was wrong.
Health care is an enormous industry -- maybe the biggest and most powerful industry in the country -- and it has far too much power in this capitol. Literally thousands of lobbyists, carrying tens of billions of dollars in campaign contributions have invaded these halls (and my house!) (relieved laughter) and distorted the process and, in the end, have stymied reform. (some hissing)
Meanwhile, I have realized that the answer has been staring us in the face all along.
And this was my second mistake: I told the American Medical Association that while single-payer medical plans, where the government is the insurer, might work well in other countries, the idea of government running health care was not part of our American tradition.
In fact, it is, and has been since 1965, when President Lyndon Johnson signed into law the Medicare program. Medicare is a classic example of an excellent single-payer program -- one of the largest in the world -- and polls and surveys show it is enormously popular with older and disabled Americans.
Medicare has relieved our parents and grandparents from the fear that they will not get medical care when they stop working, and it has lifted the enormous burden and worry off of younger Americans over how to pay for the care of their elders. It has done this with enormous efficiency, all while allowing recipients to choose their own doctors and hospitals. (applause)
So we really don’t need to re-invent the wheel here. There is no point in members of Congress having to hold endless hearings, and to sit and listen to the pitches of lobbyists from the medical establishment. We can just expand Medicare to cover everyone. (applause)
How much would that cost? Well, we know that 10 percent of the elderly -- the oldest and sickest among us -- account for 50 percent of total Medicare costs, so that means the other 90 percent only cost some $200 billion a year. Even if we assumed that the rest of the population’s medical bills were as high as those 90 percent of older Americans, it would mean that expanding Medicare to cover them would cost less than $1 trillion a year, and probably closer to $750 billion -- because the truth is, the rest of the population is younger and healthier than are their older parents and grandparents. So roughly speaking, we’re talking about adding $750 billion a year to the cost of Medicare.
Now that’s a big number, and I know that some of you -- a lot of you -- worry about higher taxes. But let me assure you, expanding Medicare to cover everyone is going to save you money -- virtually everyone. Let’s look at why that is, and why you cannot just look at the federal tax when you consider those savings.
Today, the United States spends nearly 20 percent of GDP on health care. That is more than double what any other country in the world spends on health care. And you know what? We don’t get our money's worth for all that dough. Not even close. Canadians, who spend half that percentage of their GDP on health care -- and who have what amounts to Medicare for all with their single-payer system (they call it Medicare, too) -- have longer lifespans and better infant mortality statistics than we do. In fact, Cuba and Mexico have better child health statistics than we do!
By the way, I want to introduce, in the gallery, Shirley Jean Douglass, whose father, Tommy Douglass, was the founder of Canada’s Medicare program. We will be consulting closely with experts and administrators of Canada’s Medicare program as we move forward with our own reform. (applause)
Now I've been accused of lecturing (laughs and applause), and I don’t want to sound like a college professor here, but let me just highlight a few reasons why simply expanding Medicare to cover all of us makes not just moral -- but also economic -- sense.
If we were to make that change, we could immediately eliminate the Medicaid program, which as you know is funded by the states, and costs them (and you) about $400 billion a year, mostly to cover low-income families and individuals. Now, that money would not be totally eliminated, because Medicare currently doesn’t cover all health care costs -- just 80 percent. And Medicaid covers the remaining 20 percent for those elderly and disabled people who cannot afford to pay for Medi-Gap private plans. The government would continue to have to subsidize that share for lower-income folks.
Even so, eliminating Medicaid for the poor, who would be switched to Medicare, would save at least $300 billion. We could also eliminate the Veterans Administration -- which, incidentally, is an excellent example of true government health care, with publicly owned hospitals and doctors on salary, and it runs very well and very efficiently.
Something those folks at last month’s town meetings who were saying government can’t do anything right should think about. (wild applause from Democratic side)
Sorry. I just had to say that. (more applause)
Anyhow, eliminating the VA would save another $100 billion, so we’ve already saved more than half the amount that was added to the cost of Medicare in order to cover everyone. (applause)
But there are far more savings.
One of the biggest would be the elimination of about $300 billion that is spent each year by hospitals and doctors to provide care to people with no insurance who end up in hospital emergency rooms. The cost of this “charity care” is factored into higher hospital and physician bills, and ultimately into higher insurance premiums paid by the rest of us. Since all those people would now be covered by Medicare, that expense would vanish.
American companies currently pay about $25 billion a year in workers compensation insurance -- money that ultimately comes out of workers’ paychecks. That would no longer be necessary, because people injured on the job would be covered by Medicare. (smattering of applause, mostly from Republican side)
Car insurance rates would be dramatically lower, because car insurance would no longer have to pay for medical costs following an accident. The same is true for homeowners' insurance, which would no longer have to cover the costs of someone being injured on your property. (applause from Pennsylvania delegation, with among highest car insurance rates in the nation)
And of course, the biggest savings of all -- about $3000 per person, or $12,000 per family, every year -- namely the cost of private insurance premiums paid by you and/or your employer, would be gone. Think about that a minute: no more co-pays, no more annual deductibles, no more employee share of insurance premiums for yourself or your family. And for businesses that currently provide health-care coverage, a huge savings that will make them more competitive in the global marketplace, and will also allow them to pay higher wages to their employees. (prolonged applause)
Oh, and there are other huge, if unquantifiable, savings to consider. If everyone has Medicare, the total cost of health care will go down dramatically, because everyone will be getting timely treatment, instead of having to put of exams and early treatment of illness or injury. And no one will suffer the terrible anxiety of worrying about whether they can pay for health care for themselves and their families.
So yes, your Medicare withholding will be perhaps 25 percent higher if we expand Medicare to cover everyone. That tax is currently set at 2.9 percent for you and 2.9 percent for your employer, so it would go up by about 0.75 percent of your paycheck. For someone earning $600 a week, that would represent an increased deduction of about $4.50 a week. For someone earning $1200 a week, it would be an increased deduction of $9. That's a pretty good deal for not having to pay for insurance coverage anymore; wouldn’t you agree? (applause, plus some boos from largely silent Republican side)
Now for you folks already receiving Medicare, there have been a lot of scare stories out there, some of them being promoted by some irresponsible people right in this chamber (pause for applause and nervous laughter), suggesting that if we expand health care coverage, it will come off of your benefits. Don’t you believe it! (applause)
We live in a democracy, and when a lot of people want something, or benefit from something, they collectively defend that particular thing. In the case of Medicare, if everyone is receiving it, and receiving it in the same manner as everyone else, that creates a huge voting bloc in favor of defending that benefit.
So, by expanding Medicare to all, we would be creating a powerful political force that will defend Medicare from attack, just as the universality of Social Security has made that program bullet-proof (something my predecessor learned when he tried to promote the idea of privatizing it). (wild applause from Democratic side)
So here’s the deal.
I’m admitting it was the wrong move to try to lay it on you poor folks in Congress come up with some completely new, complicated reform our existing health care system -- if you can even call it that. My good friend and former colleague in this building, Chairman John Conyers, had it right all along: We have a great system that we just need to expand to cover everyone.
To get it started, I’m going to send Congress a couple of bills. One would immediately shift everyone eligible for Medicaid over to Medicare. I’m calling this the States' Medical Cost Relief and Medicare Expansion Act. It will not only begin the process of expanding Medicare, but will provide badly needed financial relief to states that are suffering from declining tax revenues and rising health care costs because of the recession. (applause)
I will also send Congress a bill that will expand Medicare coverage to all Americans and to legal residents. (applause, some boos from Republicans)
I am sure that as financially sound as this change is, there will be opposition from the medical industry, so let me add that this is, for me, a moral imperative, too. For too long, this great country has allowed health care to be a matter of whether or not you had a job with health benefits, or enough money to pay for insurance yourself. That is unacceptable. We are our brothers’ and sisters’ keepers, and just as we believe that every child needs an education, we believe that everyone deserves to have access to quality medical care. (loud applause)
So let me add this: If Congress does not pass these two bills by the end of the current session, in time for the holiday recess in December, I will declare a national emergency because of the recession and the huge rise in the uninsured that it has caused, and will issue executive orders implementing both these measures. It’s not the way I would prefer to see things done, but if Congress cannot act, I promise you and the American people, I will. (applause and boos)
Let me also say that this program is a priority for me and for all Americans, and anyone -- Republican or Democrat -- who gets in the way can expect to hear from me, and from the American people, in this coming election year. (applause)
Thank you and good night. (applause)