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Office of the Press Secretary

For Immediate Release March 22, 1994
                       REMARKS BY THE PRESIDENT
                               Room 450
                    Old Executive Office Building   

10:46 A.M. EST

THE PRESIDENT: Ladies and gentlemen, first let me thank all of you for coming here. We have several members of the United States Congress up here in the front. We're very glad to see all of them and we thank them for their presence. And we have small businesspeople here from all over America, and we thank you for your presence. We're here primarily to hear from the small businesspeople who are here on the panel, and perhaps some other if time permits.

I just want to make a couple of comments. First of all, I very much appreciate the work that Erskine Bowles has done as Director of the Small Business Administration. I am proud of the fact that I was able to appoint someone to this job who was not just someone who had run unsuccessfully for office or was otherwise looking for a patronage appointment. This man has spent 20 years helping to finance small business creations and expansions. And therefore, he has a clearer understanding and grasp of what small businesses are really up against and the difference between the rhetoric of supporting small business and the reality of it than perhaps anyone who has held this job in a very long time.

Secondly, I want to thank my good friend, Congressman LaFalce, for his leadership on small business issues.

Finally, let me say that everybody, I think, understands that one of the reasons that the United States has not succeeded in providing health security for all its people while every other advanced economy has done so is the difficulty posed by the greatest strength of our economy, which is that an inordinate percentage of our workers work for small businesspeople -- very small business -- and increasingly, more and more of the new jobs are created by small businesses.

So that presents us with a dilemma. However, we also know if we look at the real facts that almost all the job creators among small business are making some effort to provide health insurance, and that those that do tend to have more stable work forces and higher productivity and greater success.

Just this week I had a good friend of mine up here with his family. He's a car dealer in my home state and he was talking about how he'd always insured all of his employees and none of his competitors had. And in the last 20 years, three of them had come and gone and he was still there. And one reason was, he never had any employee turnover because he always took care of his employees and their health care problems. But how they struggled to get a bigger pool of insured people so that he could get his insurance cost down was a continuing one for him.

Anyway, that just brings me to this point: This administration could not in good conscience have advocated, and I could not support a plan that I thought would be, on balance, bad for small business. I believe this plan is, on balance, good for small business. If I didn't, I wouldn't be supporting it. And I will not sign any bill passed by the Congress that I do not believe is good for the small business economy because we have to create more jobs in this country.

Our plan builds on the system we have now; guaranteed private insurance. It provides more choices to employees than they now have under most health care plans, at least three a year, every year. It contains real insurance reforms that are very important to small businesses -- no discriminations for preexisting conditions, or based on the age of the work force. It protects Medicare. It does provide for both Medicare people and for the work force and their families, prescriptions benefit and a phased-in, long-term care benefit for service at home, for example, for disabled people or elderly people, as well as in institutional settings. And it does have an employer mandate, but with strong discounts for small businesses with modest payrolls and modest profit margins.

Now, there will be countless discussions about what the proper details of that should be, but it seems to me that that is the only approach that has a reasonable chance of being successful in this environment. And as I said, there are people who will propose variations on it, but that, it seems to me, is what we ought to be doing.

My purpose today is to show that there is a great difference in the rhetorical pronouncements of some organized groups and the real life experiences of a lot of business people. And we have here people who have been affected by the present health conditions, and I am frank to say that while most of the people who are on this panel who are providing health insurance today would actually pay less under our plan. Some would pay more, and they know it. But they also know that for the first time their competitors would as well, putting them on a more even footing.

So let's get in to the panelists, hear their stories, and give them a chance to comment.

Q Thank you, Mr. President. We are a 22-year-old company and through the years, I have sought out the best of the best employees and have competed with majority companies. By that I mean I have covered our employees 100 percent as an attractive package to work with us. However, in the last few years, we've encountered some problems, and the problems are that two of our employees ar uninsurable. Why? One is over the weight scale according to the insurance companies. And I have gotten insurance policies that are -- for six months, renewed them a second time and then at the third time they're dropped. And so, therefore, I have two wonderful employees that are uninsured.

And what's happening, they feel discriminated against. I want to continue insuring them, but how can I do it? Our payroll -- it takes about 15 percent of our payroll, which is a lot for a small company. We want to grow. Where do we get the money? As you all know, small businesses -- the difficulty is getting capitalization for running your company.

So, Mr. President, I feel that this is something that your program would hopefully resolve and would benefit our situation.

MR. BOWLES: Mr. President, Betty Hall is also here, from the Hall Manufacturing Company in New Hampshire. And I think you've experienced some of these similar problems. I think you've also been dropped from your insurance a couple of times.

Betty, would you like to comment on it?

Q Yes, I would. Thank you, Mr. President, for giving us this opportunity. I've been in business for 43 years. When my husband and I started our business we just assumed that we would provide health benefits for our employees and for ourselves. And we, very shortly thereafter, started with Blue Cross-Blue Shield. That's back in the 1960s. And when the Matthew Thornton Health Plan HMO came on board, we also offered that group to our employees.

And then about three years ago, both of those companies decided that they couldn't offer health insurance groups to companies as small as mine. Under 25 employees -- they don't even think you're a business at all. And so, I was very disturbed. I tried to convince them that they should continue to insure my employees because I felt I was willing to pay my share of their insurance and I ought to be allowed to do that.

So Blue Cross-Blue Shield was unmoved, but Matthew Thornton did continue to cover my employees. But some of them don't want to be covered by Matthew Thornton, they wanted to stay with their own doctors. And ultimately, they had to go off of the group plan that was dissolved and go into a nongroup insurance.

And I think it's -- my employees have been around for 43 years with me, and I think one of the reasons they stayed with me so long was because of offering health insurance. And I think that's very, very important to all of us.

So I hope we can resolve this problem, and those of us who want to do it can do it. I think the Clinton health plan will probably cost me less than what I'm paying right now with my Matthew Thornton and helping those nongroup employees to have insurance.

MR. BOWLES: And probably of equal importance, Mrs. Hall, is that your employees will get choice and they'll have choice among many different providers in three different types of plans. And they'll be able to follow their doctor and the hospital they go to, to the plan that they belong to. So that this will really bring the doctor and the patient closer together. And many, many people have said that.

I think we also have here today Spence Putnam, who, Mr. President, is head of the Vermont Teddy Bear Company up in Vermont. He was the 1993 winner of the NFIB award for company of the year.

THE PRESIDENT: I hope they don't take it back from him. (Laughter and applause.)

MR. BOWLES: Spence, I think you've experienced some of the same problems of rising cost and lack of real market muscle out there.

Q Yes, we have. And, Mr. President, one of the reasons that we received that award is that every Vermont teddy bear comes with a lifetime health plan. (Laughter.) We operate America's only teddy bear hospital, and should any Vermont teddy bear need rehabilitation, we do it free of charge. (Laughter.) There is only one insurance company. There is no paperwork. If it looks like our teddy bear we will replace limbs, replace eyes -- doesn't matter how old you are. We truly have universal access for teddy bears. And it's frustrating that we have difficulty providing that for our employees.

Our company was a struggling company only four -- a little over four years ago. We had less than two dozen employees, and at that time, I would say the most vexing business problems was how to provide coverage for our employees. We now have over 200 employees, and the most vexing business problem we have today, is how to provide coverage for our employees.

We feel that health care is a national problem and it needs a national solution. And that's why Vermont Teddy Bear is supportive of the Clinton plan. (Applause.)

THE PRESIDENT: Thank you very much.

Let me just try to emphasize a couple of the points that were made here. First of all -- because they are different issues. Mr. Putnam wants to insure all of his employees; today can only insure about two-thirds of them. So he would actually pay more if our plan passed, but he'd get to insure of all of his employees and they would also have more primary and preventive care than they have now and lower deductibles. But he would be, again, on an even scale with his competitors.

Betty Hall talked about -- I wanted to make sure you understand what she meant when she talked about her situation in New Hampshire, because she doesn't have Blue Cross options for her business, but does have the matching Thornton option, she has an HMO option. And the HMO has a very good reputation in New Hampshire and throughout New England -- I think everybody would admit that. But the individuals who work for her now don't have the choice that if our plan passed, every year her employees would get to choose either the HMO or one of two other options. And under our plan, she would pay the same no matter what. But if the employee wanted to pay a little more for fee-for-service medicine, the employee would have that right. So that's how that would work.

If you go back to what Mona said about two of her employees being uninsurable, it's important here, I think, to recognize a certain truth about the insurance business itself. While certainly I have been critical of insurance practices of which I do not approve, I think it is also important or us to understand that given the organization of the insurance business today, it is economically impossible for a lot of these health insurance companies to do other than they do because they are dealing with a very small pool of people.

So if you insure, let's say, an employee unit the size of her company and two of them are really sick or they have two kids who have been really sick, then that can double the cost of whatever your annual premiums are in a year which is why we have worked so hard to find a mechanism -- and I'll say more about this in a minute -- to let insurance companies insure people the way groceries stores make money -- a little bit of money on a lot of people. And that's what all this -- and I'm going to say more about this toward the end of the hour because I don't want to interrupt the flow of the people talking -- but that's the dilemma we face about whether there should or should not be a health alliance, a buyer's co-op or something.

You've got to have these folks able to go into big enough pools so that the insurance companies themselves do not go broke. They're in business, too. And the economics have to work out. And the only way the economics can work out is if the risks which all small businesses are subject to, can be widely spread over a bigger pool. So we'll come back to that.

Q As a pawnbroker, I represent one of the most misunderstood industries in the country. (Laughter.)

THE PRESIDENT: Want to come to work up here? (Laughter.)

Q Fortunately, our industry is changing drastically. People don't realize it, but a large percentage of Americans have no credit and have no access to credit, and pawnbrokers are the only source of credit to them. And we try to provide insurance for our employees. And I was one of those people who got a letter from my insurance company that said, we are happy to say we are only going to raise your rates 48 percent. And what we're having to do are things like drastically increase our deductibles, switch companies to find better policies, but the overriding problem is those employees that we have that are not insurable.

And we've got a very valued employee right now, an assistant manager who has preexisting conditions, and we can't get insurance. We've tried everything. And, you know, we don't lose the employee. And we spend so much of our productive time, and he spends so much of his time and our staff spends time just dealing with his health care problems that, you know, if he had insurance, those problems wouldn't be there.

And we've sat down and we've looked at the numbers and with your plan, we would be able to insure all of our people which we can't do now, we don't do, at almost the same cost that we're spending now for half of our employees.

THE PRESIDENT: Same thing -- 81 million Americans have preexisting conditions of some kind or other. This is not a small problem; this is a big problem. Those who are in families that are insured through government or larger employers are okay except that most of them couldn't change jobs and go to work for any of you or couldn't start their own business. You know, a lot of people, that's a lifetime dream -- to start their own business. It takes enough courage, as all of you know, to do that if you don't have to worry about this.

So you've got 81 million Americans, some in the situation of your employee who can't get insurance, others who pay very much higher rates, and millions and millions -- no one knows exactly how many, but literally, tens of millions -- who are locked in the jobs they are now in because they can't afford to give them up and losing coverage. So it's a significant issue. Congressman would you like to say something about any of this. I haven't heard from you since the beginning.

CONGRESSMAN LAFALCE: I think this is so important. I have town meeting after town meeting, and I go before Chambers of Commerce all the time, and I usually ask the businessmen, well how many of you do provide coverage for your employees? And, not to my surprise, but maybe to the public's surprise, a vast majority of small businesses do provide coverage. And the problems they are experiencing are their premiums are going up astronomically. It's been double-digit inflation for the last half dozen years or so with the possible exception of this past year when we had this, sort of, controls over the heads of the insurance companies, drug companies, et cetera.

They're limiting their choices, too. Before, they used to offer three or four options to their employees and now, they don't offer an option they say, we'll cover you, this is it. Or, the costs are getting so great that they're saying, sorry, we can't cover you any more. Very often when they fill job openings, they search for an individual whose spouse gets coverage at a larger place of employment. So those who are disadvantaged who don't have spouses who are employed and covered become more disadvantaged.

The other thing I find that small business is doing in addition to subsidizing through cost shifting, those small businesses that don't provide coverage, is they're shifting the taxation more and more on the employees. Before there used to be an 80-20 split. Then it gets to be 70-30; then 50-50 split. And the employee has no choice but to pick it up. And these small businesses, too, there's no negotiation, there's no bargaining power.

But then there's additional premiums above and beyond the clear premiums that the employees of small businesses have to pay. There is the deductibles that are increasing constantly. Before it used to be $50 per person, and then $100, then $150, then $250 per person. These are enormous. For a family of four they're already at $1,000.

The copayments are increasing. These are the fine prints. Before it used to be, well, we'll cover 85 percent, then 80 percent, then 75 percent. And it's not of whatever the charge is, it's what the UCR is -- what the usual customary regional fee is. And if you look at the fine print of the contracts, the usual customary regional fee has been reduced while the fees have gone up, which means again, your copayment increases astronomically.

And most importantly, you're limiting coverage. Again, this is the fine print of the insurance contract, but your ability to access a mammogram goes down. Your ability to achieve X rays, CAT scans, MRIs even when needed goes down considerably.

I think we're getting less and less health care at greater and greater cost. And the chief casualty of all this is not big business that has a strong union to negotiate on behalf of the employees. The chief casualty of this is both the small businessperson and the employees of the small businessperson.

THE PRESIDENT: We have someone here from your home state, Elaine Stone, of American Aviation in New York, who has gone to extraordinary efforts to cover her employees at very high cost. I'd like to ask her to explain her situation and what the consequences have been.

Q First I would like to thank you, Mr. President, for putting the health care issue right on the front burner of the national agenda and keeping it there, despite the heat.

We are a small business. We export overseas aircraft hardware, small parts and components. We were a fairly substantial sized firm and we have been affected not only by health care but by the recession -- the aerospace industry has been severely affected. But I feel that it is essential for all people to have access to health care coverage.

And in that light, we have done with our increasing costs, done evaluations. We used to be fully insured through the insurance company, and after checking into preferred, into HMOs and into other plans, we decided to take what really is an enormous risk, but based on our experience rating at the time, we felt it would save money, and that was to go into a self-insured plan -- split funding, whereby the company would assume the risk of $5,000 in medical claims before the insurance company kicked in.

Now, that is an enormous risk if you have a great number of people coming down with serious, lengthy, debilitating illnesses. We were lucky in the beginning, and our premiums definitely have been contained. But we don't think in terms of a premium payment, we think in terms of what is it costing us at the end of the year when we count in the claims. And we have had several illnesses that have gone -- fallen over into the insurance company, and, fortunately, they have been spread out over the past few years.

However, we are facing new increases in Blue Cross and in our premiums, and we have to evaluate again whether we can still afford the plan we have. I would be the last one, or I feel my company would be the last one to take a move of reducing the benefits that we have. As it happens, our deductible is very low.

Congressman, you mentioned figures. We only have a $100 per individual, and $300 per family, which in today's marketplace is very good, and we could not replace. We also undertake the 80-20 option, and in today's marketplace, if we were to change our plan, we couldn't -- I mean to other than a Clinton-type plan, health care plan -- we couldn't do it.

So that I feel that we must, we must continue to try to reduce -- or to produce a health care plan that all, all people can afford; that employers -- I also feel it should be done through the workplace because it's something that we are used to. Most of us, from the day we started working, have been covered through the workplace. It's what we're used to. That would be the least dramatic change if there are other changes, and I strongly feel that we should have universal health care operating via the workplace for everyone.

And, again, we are very grateful that you are taking this issue to heart. (Applause.)

THE PRESIDENT: Thank you very much.

Let me say because of the unique, sort of, semi-selfinsured system that Elaine has, and because she's had some significant illnesses in her work force, she would actually, at least based on the last year or two's experience, pay considerably less than she is paying because of the self insurance schemes kicked in. It's works, again, like everything else -- it may work very well for large employers, but for someone with a couple of dozen employees, it a very high-risk strategy that can work real well until it doesn't anymore.

I'd like to now talk about people who are kind of the other side of that equation -- people who like to cover all their employees but can't, and therefore, only cover a portion of them, or have had to give up coverage. And I'd like to begin with Judith Wicks who owns the White Dog Cafe in Philadelphia. Because, as I'm sure all of you know, the people in the restaurant business have been among those most concerned about this health care plan because there are so many people who work for restaurants and delis and other eating establishments who are young, who are single, who don't have health insurance, and who are still willing workers there. But there are an awful lot of people who want to cover folks.

And the press will remember, we were in a establishment in Columbus, Ohio, just a couple of weeks ago, where by accident --we didn't plan to go there for health care, but where we had a whole health care seminar because only half the employees were covered, and the person covering them wanted to cover them all.

So, Judith, why don't you talk a little bit about your situation?

Q Thank you, Mr. President, for giving me this opportunity. I've been a little surprised at the reaction from the restaurant community against the health care reform plan because I'm very much in favor of it. The White Dog Cafe is a very laborintensive restaurant. We also have a little shop next door called the Black Cat, and that's our logo over there. (Laughter.) And we buy directly from local farmers, so we have a lot of people in the kitchen picking little leaves off fresh herbs, and making our own desserts and our own ice creams.

So we employ 96 people, considering part-time people -- that's the equivalent of 75 full-time employees. We cannot afford to provide health insurance for all those employees. It would be impossible for us to do so. We do provide health insurance for around 15 employees.

The thing that really excites me about the health care plan is that under that plan we would be able to provide for all of our employees without that much of an increase. My health care costs would double, but I am very happy about that because if you look at the whole picture, we would only have to raise our prices no more than around two percent to make up that difference because of the cap that this program puts on the percentage of payroll that we would have to pay that protects businesses such as restaurants that are very labor-intensive, that hire so many people, especially entrylevel positions.

So the way I figure it, if all the restaurants together raise their prices about two percent, we're not an industry that's going to lose our customers to Mexico. (Laughter.) So I think this is a grand opportunity. I think the restaurant business in general is one that's been undervalued by our economy. I think that we don't really now charge the general population what it really costs to run a restaurant, which should include covering health insurance for every worker. I don't see why health insurance is not available to restaurant workers where it is available to most other industries.

So this is a great chance for the restaurant industry to really be in competition with others. So I thank the President for coming up with this. I think it's a great idea. (Applause.)

CONGRESSMAN LAFALCE: I'd like to just interject a few comments. What you had to say, Judy, was music to my ears. It shows that you're socially conscious in addition to being economically conscious.

I think the two chief opponents to health care reform for the business community have been the NFIB and the National Restaurant Association. We were able to talk quite reasonably for a while with the National Association of Manufacturers, the United States Chamber of Commerce, et cetera. I mean, they changed their rhetoric totally -- they talked about shared responsibility of all, including all employers. And then when push came to shove, they had their own political considerations dealing with other business associations, there was some backtracking.

But I have the greatest respect for the NFIB, but you have to understand, they not only opposed an increase in minimum wage, they opposed the concept of a minimum wage. They'd like to see the minimum wage repealed. And when it comes to the National Restaurant Association, again I have nothing but the highest regard for them. But the fact of the matter is, is that what this law would do is put all restaurants in the United States in the same competitive position. And right now the good guys are disadvantaged. The good guys are trying so hard, as you are doing, to provide for as many of your employees as you can. Others are not as socially conscious.

And a restaurant would only be competing against another restaurant on equal terms. All restaurants would have to provide the exact same benefits; there would be no disadvantage. And with this cap on what you'd have to pay, most restaurants, I believe, would wind up paying less or not much more. And the increase that those would experience who do get an increase would be considerably less than a cost of living increase in the minimum wage would be, and we haven't witnessed that for about three years now.

THE PRESIDENT: Do you think he feels strongly about that? (Laughter.) Thank you.

MR. BOWLES: Mr. President, we also have another restauranteur here -- who runs the Burrito Brothers chain here. They're three Mexican fast food restaurants. Eric's also experienced some of these same problems that small businesses face in trying to provide health care coverage. And, Eric, you might want to comment on how you would react if it was a level playing field and you could provide reasonable coverage at reasonable cost.

Q First let me say that, what Judy said notwithstanding, I hope jobs are lost to Mexican food. (Laughter.)

THE PRESIDENT: Well, if I'm setting the pace, you've got a good chance of achieving that objective. (Laughter.)

Q I should first mention that the restaurant industry has very small profit margins. It makes it very difficult for us to afford to insure our employees fully. We desperately want to do that because it's good for business and because it's the right thing to do. Currently, we offer insurance to our employees, but we can only afford to pay about 50 percent of the premiums. That means that most of them can't afford to go on the plan at all. Only about a third of our employees are insured at this point.

We want our employees to be insured and the reason they say it's good for business is that employees who are on health care and have health care insurance miss fewer days of work, they are more productive when they are at work, and also, if their families are insured, that's even more so the case. They miss fewer days of work and they are more productive when they are at work because they are not worrying about family members who can't get treatment.

I would just add that the issue of rhetoric versus employment. I can assure you that there's not going to be a single job lost if the insurance plan that you are proposing goes into effect. The fact is we will pay more. And we're willing to do that because we want our employees insured. But under the plan you're proposing, we'd still be paying half of what it would cost right now to fully insure our employees.

THE PRESIDENT: Thank you. I just want to say that Eric and Judy represent an interesting thing that we have seen basically around the country with people who really are trying to do the right thing by their employees. If you are in the restaurant business and you insure part of your employees, you are in the worst of all worlds. You're still at a competitive disadvantage to people who don't insure anybody, and you feel terrible that you can't insure everybody. That's basically what they face.

MR. BOWLES: Mr. President, unfortunately, some of the small businesses in this country have experienced such absolutely skyrocketing costs and the cost of health care experiencing these 20 to 50 percent annual rises in health care, that they simply just no longer can afford it. Garth Sheriff is here from Los Angeles. I know he has had to drop his coverage a couple of years ago when the cost just went so high you couldn't afford it.

Q One point before -- in the food industry, chances are your average wage per employee is going to be about $12,000 or lower. And you would qualify for the maximum subsidy. So you would probably have a cap of around 3.5 percent of payroll, and that is an unbelievable bargain and probably less than you are paying now if you are covering even a third of your employees.

Q I'm an architect in Los Angeles, and I've had my business for 19 years. And, Mr. President, for 16 of those 19 years, I covered every one of my employees and their spouses 100 percent through thick and thin. The last three years as the recession took over in Los Angeles, costs averaged 30 percent inflation per year until at the end of that, my payroll percentage exceeded 13 percent as my employees went from 12 to 6 and threatened to go lower in the depths of the recession. And in 1991 I was faced with the following choice: do I drop one more employee or health insurance? Do I let one family stay employed and have food on their table or do I provide health care for the other five.

So I kept my employee, and I dropped health insurance. And it hurt me deeply because I think that's a responsibility in this country and I deeply am appreciative the support you've showed small business because we provide much of the engine that drives job creation in this country.

But we have a preexisting condition. It's a silent preexisting condition. It's not talked about in the media, and it's seldom talked about in the corridors of power. And my friends here from the American Institute of Architects and Architects, Designers, Planners for Social Responsibility can tell you that it's age. We have exactly the high technical, high-skilled kind of positions that you, President Clinton, and the Vice President have talked about are so critical for the 21st century, but with it comes experience and age and the technical skills to do a job like rebuilding after the Los Angeles earthquake or after Hurricane Andrew in Florida.

The average age of my staff over the years has been between 35 and 60 -- the range of my staff -- and the average is over 40. The actuarial tables are like a laser beam in the insurance industry. They show no mercy, and when it got to over 13 percent of my payroll, I had no choice.

I would be delighted to have the Clinton health care plan in effect. It would cap my costs at 7.9 percent. And 7.9 percent is not the figure I think of. Like Judy, I would like to talk about a new figure, and it's my two cents worth, because most service professionals' salary is one-third of their gross receipts. And one third of 7.9 percent is really two percent of gross and a little bit more.

So this is my two cents worth in endorsing the Clinton health security act, and my group feels the same way. We are 3,000 businesspeople strong, and last night the board of directors voted to unanimously endorse the Clinton health act. (Applause.)

THE PRESIDENT: Thank you. Thank you very much.

I'd like to, first of all, thank you and thank your group and thank you for sharing your painful experience with us. I'd like to go on and sort of pursue this theme a little more and call on Brian McCarthy, who owns the McCarthy Flowers, a large florist in Scranton, and ask him to tell us a little about his situation.


Q Thank you, Mr. President. I thank you for the opportunity to be here today. The floral business attracts a great number of unskilled workers in our economy, and our particular metropolitan area where I hail from in the Scranton-Wilkes-Barre, Pennsylvania, market, just on a March 11th survey on USA Today, ranked fourth highest in the highest percentage of unskilled workers in the United States, behind cities that you might understand like Miami and some other more -- cities that attract more immigrants.

The problem is that if the floral business is to truly attract people and take them from the welfare rolls, especially those that are unskilled, we have to be able to not scare people into thinking they're going to be able to lose benefits to leave the welfare rolls. That's been a significant problem for us. We have families where the heads of the household want to come to work for us. They have three or four lovely children, and their problem that they're constantly facing is, "Brian, I can't come to work for you unless I can have full coverage for my children." And, of course, as many of the other panelists have addressed here today, some of the problems they are facing are preexisting conditions which make matters even worse.

And if we're truly going to be a source of job growth in the future, if the small business sector truly is filled with talented people like I believe we have in this room today -- and as they say, if small businesses are just waiting to be large businesses with great ideas -- we have to be able to get these people to leave the welfare rolls and come with us.

The other problem that seems to be a significant one for ours -- our company has been in a great, great growth position in the retail flower business -- we, too, have recognized the value of becoming bigger to get better buying power. The same principle that President Clinton's plan is advocating today. He's saying let's bond together and make small businesses one group to be able to go out and use some muscle in order to be able to employ better buying power in the marketplace.

One of the problems that we face is that in order for us to grow as we've been growing -- we've grown 500 percent, our company, over the last seven years in particular -- if we're going to continue to grow we have to attract also talented people. And there's a lot of downsizing in this company, as you know, so there's a great deal of management people, very, very skilled, seasoned managers out there, who we can very closely meet the salaries which they left in those previous positions. The greatest problem continues to be the health care issue. Once we finally sit down, we match the dollar for dollar, it comes down to, well, in my last job we were all covered -- we had dental, we had eye glass, we had prescription -- myself, my family. We can't do that.

First of all, we can't discriminate against the rest of our staff to offer it singly to one. And next, it would be absolutely cost-prohibitive for us to try to do that. So a company like ours that's poised for growth -- McCarthy Flowers is poised for growth into the next century -- if we're poised for that type of growth, I think we need to be able to let that health care issue not be a wall between myself and some very, very talented people. And as I said earlier, I don't want it to be a wall between those unskilled workers who are dying to get into the marketplace and make themselves skilled workers.

So I strongly endorse this particular health care security act. In fact, I think the strongest word of the health security act is the word security. Thank you. (Applause.)

THE PRESIDENT: Thank you very much. I just want to emphasize one comment Brian made, and if I might, go back to what our restauranteurs also said there. One of the arguments that the Restaurant Association makes against our doing this is they say, well, we have a lot of young single workers that are healthy, they're strapping. They don't want insurance, or if they do have it, they ought to be able to get it much more cheaply than older workers.

Because young single workers will pay higher per person premiums under our plan. That's what community rating is all about. If you put people in large pools with older people, and with families with a lot of kids and the kids have been sick, you average it out. So they will pay a modestly greater amount, and therefore, the employer contribution for them will be modestly greater.

I'd like to make two arguments in response to that. One is one Brian made. A lot of the young single people we want to be workers in this country are on welfare. They all have health insurance for themselves or their children through the Medicaid program, which is as generous as most health insurance programs. And yet, we want them to move from welfare to work and take jobs in our small businesses and give up health insurance for their children so they can then start paying taxes to pay for the health care of people who made the other decision to stay on welfare.

I mean, it's just a -- we cannot reform this welfare system unless we fix this problem. So there are a lot of young single potential workers out there we cannot even get in the workplace unless we deal with this.

The second point that I'd like to make is that the fastest growing group of people in America are older Americans. And people are going to working later and later and later in their lives. Indeed, the gradual phase-up of the Social Security retirement age starts in a couple of years as a result of the Social Security Reform Act of 1983, raising retirement age by a month a year over several years to go up to 67. And if you don't want discrimination, if we need older people, if we know they're very good employees and they're very reliable, and you don't want discrimination against them in the workplace, one sure way to avoid it is to make sure that their health insurance premiums are not discriminatory.

I see a lot of older people who work in eating establishments, too. So this thing, I think, will balance out and it ultimately fair. I especially thank Brian for his statement because he does cover all his employees today. And it shows you, I think he really is thinking towards the future.

ADMINISTRATOR BOWLES: Mr. President, we also have here Chris Maas, who has experienced some of these same problems of trying to compete for labor with absolutely skyrocketing costs in health care.

Chris, do you want to talk about it a second?

Q We're a small computer consulting firm here in Washington. We do most of our work with Washington area lawyers, and we need professional help. And the one competitive advantage that we have as a little firm -- (laughter.)

THE PRESIDENT: Everyone of you has a one-liner for that, don't you? (Laughter.)

Q We need professional help. (Laughter.) One of the things that we found -- I guess you were mentioning, talking about the older people -- and my four partners and I, we need to be nimble. We need to be able to hire people and get people and put them to work for us. That's our competitive strength. That's our only one, in fact.

A small example, we set out to hire a receptionist a year or so ago, and we met a 60 year old male that we liked. We spent 15 minutes interviewing him, decided we liked him and wanted to hire him; and then we spent about four hours figuring out how to get him covered with the health care plan so it didn't mess up the rest of us. That's not right. And it just shouldn't work that way. We found that our premiums were going to go through the roof. We still hired him anyway, and we love old Bob, but that's got to stop.

On the other end of the spectrum, we're passing up business because we want to grow and there's people we want to hire and we can't hire them. We know a person in particular we'd love to hire who's got a couple of kids; and they've got some congenital birth defects. We cannot talk to this person because we understand that it's going to destroy our ability to have health care for the whole company. And that's not right. That's hurting us and it's hurting our business. And this stuff has got to stop.

Our partners are all over the lot politically. Some of them didn't even vote for you, Mr. President. (Laughter.) And we don't see this as a political issue. We see this as a business issue. And I don't care about this from a political standpoint. I care about getting my business to run. And the quicker, in my mind, that you can get this stuff through the political process and get it back to business where it belongs, and we can get on with our life, and we get health care off the table as an impediment to my ability to do business, the happier I'm going to be and the happier our business is going to be. (Applause.)

THE PRESIDENT: Good for you. Believe you me, nothing would make me happier than to do exactly what you've said. It should not be a partisan political issue. And if you get beyond the fog of rhetoric to the hard facts of what people's actual individual circumstances are, it's very much easier for it not to be a political issue. Thank you very much. That was very impressive.

I want to talk a little bit by giving these folks a chance to talk about how we give small business people the ability to have competitive prices in the insurance market.

Q Thank you, Mr. President. And I'd like to start out by saying that having been in business for about 37 years, I've stood on a couple of shoulders, and I'd like to acknowledge and say hello to you from my parents -- which I am a second generation business.

We started, and as a child, I grew up watching employees. We were not always in the medical field, we were not always a durable medical equipment company, we were in the janitorial business when we started out. And we grew into that business to where at sometime we had up to 150 employees. One hundred percent of them were not insured. Probably most of them were teeter-tottering between staying on welfare and working 20 -- less than 40 hours per week.

It wasn't until about, I want to say about 10 years ago, that we started developing our company to the degree that we were able to provide health insurance and at that point in time is when we started to see a change in the type of people that we were able to attract as a business. And until that took place, until we were able to offer benefits, we were not able to get people that would stay. We were not able to get quality people. And our business just became more and more competitive as we were able to provide these types of insurance.

Now today, out of the 10 full-time people that we have that we provide insurance, our insurance is running us over 14 percent of our payroll. And in addition to that, workers' comp is about 4.5 percent, but that could be as high as seven percent in our state. And I know how hard it is for me to meet that insurance premium every month, that if we had the opportunity to keep those employees and provide them the number one deterrent right now being health insurance -- and I can't say enough that welfare reform and health insurance is so tied together when you look at part-time people being able to leave one thing and go to the other -- I really feel that we are going to be able to be more competitive because my costs are going to reduce under this health care plan. And I see it. And at the same time, I am going to be able to give better coverage to coverage to my employees and be able to attract better employees.

And I really applaud you for looking at the big picture and not just being narrow and just keeping on surface things that really don't make a difference in people's like myself's lives and my community, the African American community, the people that I see that are doing without health insurance all over this country.

Thank you. (Applause.)

THE PRESIDENT: I'd like to now to go to a small family business.

Q Thank you, President Clinton, and it's good to be here in Washington, D.C. today.

There have been so many important things said this morning and what I would guess all of us up here are doing are being sponges. We're kind of soaking in all this information, these comments from all the various participants and I really am amazed that there's two florists here, the very big and the very small. Brian and I just met this morning, and he has an outstanding business and was able to do something we're not and that's offer health care insurance for employees. At one time we did. At the time we had to drop our benefit for our employees -- we have less than 10 employees -- it was approximately 20 percent of payroll. Obviously, we couldn't compete in the flower market at that rate.

The Small Business Administration has been very proactive in the health care debate. And I think, from our viewpoint, what we see as a massive education problem to really inform and educate small business people because, as I get out and visit with other people, I use the Small Business Administration form that was developed for Congress, and when people can sit down and crunch their own numbers -- most small businesses are like ours, there are maybe 8 or 10 employees -- they will find, I am sure, what we found, that our family insurance policy right now is less than $400 per month. We could insure all of our families with the Clinton plan -- all families in our business for less than $400 a month with the cap and because of the lower income and the smaller number of employees.

So I would encourage people who have questions to contact an SBA office, to contact their congressional office and to work the numbers because I really feel that when they work the numbers they will see that this is a win-win situation for small business.

Beyond that, what we personally appreciate and why we have worked so hard is the Clinton reform legislation will do away with lifetime maximum benefits. And we happen to be a family who has a child with a lifetime illness, and we can actually anticipate the point where we will meet our lifetime maximum benefit and our child will not be an adult at that time. So this is something that is of great concern to all families. If your financial future is threatened because of the way you are treated in the health care system, you will really be wanting to see this piece of legislation passed.

There's two kinds of people, I figured out, that don't want to change. And those are people who have someone else paying the whole bill for them, and people who have never been sick. Otherwise, pretty much across the board, people want change. (Applause.)

THE PRESIDENT: Yesterday when I was in Miami, I met, as I often do when I'm traveling around the country, with some children and their families from these Make-A-Wish programs, where the kids are desperately ill and one of the things they want to do is meet the President. And I met with a family, a very impressive family of three children -- two sons and a daughter -- where both sons had a very rare and apparently genetically-transmitted propensity to have a very rare form of cancer. And this family has a lifetime limit on their policy, as three out of four Americans do. Three out of four Americans have lifetime limits.

And they're in a real pickle. Because they are going to run up against the limit long before the second child -- assuming that both the boys survive, and they've done pretty well so far, but if they do both survive their illness and they're plugging along -- then they'll run up against their limit long before the second child is out of the house. And then they have a third youngest child and, thank goodness, the child so far has not contracted the disease, and of course, they hope she won't. But if she does, then you can just double whatever their problem is.

Again, I would say -- I want to emphasize, though, the only way this works with the private health insurance business is that you have to find a way not to bankrupt private health insurance. And a lot of these things -- I've had a lot of employers -- I had a restaurant owner I mentioned in Columbus, Ohio, who was very complimentary of her personal health insurers. She said, these people are doing the best they can for me under the circumstances given the way their business is organized and the way the market is organized. That's why you have to reorganize the market and put people into larger units and insure people on a community basis.

One of the most controversial things -- I just want to mention this -- one of the most controversial aspects of our plan has been the provision for small and medium-sized businesses to be in these big buying alliances. People have treated it as if it were some big new government bureaucracy.

I have seen it, quite the contrary, as a way of enforcing community rating. That is, you can -- there are some states -- New York State has a law mandating community rating. But if you don't have the system within which the little guys can buy together, the law itself won't guarantee community rating.

And yesterday -- I just want to read you something -- yesterday in The Los Angeles Times, there is this article, "State Alliance Gives Workers Health Clout. Forty thousand workers at small California businesses will get an extraordinary piece of good news on Tuesday" -- that's today. "At a time when health insurance costs in the country are climbing at six to eight percent a year, their premiums will actually be reduced, starting July 1st. These fortunate few are members of the state's unheralded health alliance, a purchasing agency that gives companies with between five and 50 workers an opportunity to band together to achieve the same buying clout the health care market gives to giant corporations.

"Even as President Clinton's proposal for alliances is being denounced in Washington as a blueprint for a menacing new bureaucracy, a staff of just 13 state workers in Sacramento has put together a working alliance, the first in the nation, and the customers seem delighted."

And in Florida they've got now buying pools of small businesses -- Congressman Gibbons is here. And the Governor told me last night that most small businesses had experienced -- that joined these alliances -- had experienced declines in premium costs of between five and 40 percent.

So I say this not to be combative, but just to ask this question: As this bill moves through the Congress, if they don't like the way we structured the alliances, you've got to find some ways to give the little guys big buying power.

MR. BOWLES: Mr. President, all these buying groups do -- and I wish to goodness we'd called them buying groups instead of alliances, but all these buying groups do --

THE PRESIDENT: I do, too. They liked it when we called NATO an alliance. (Laughter.)

MR. BOWLES: -- is, truly, they shift the power of the marketplace. They change that supply and demand equation from favoring the supplier of health care to favoring us, the consumer and the small business owner. It's just identical to what Mr. McCarthy was here saying about what happens in the flower business. It gives us, the small business owner, some market muscle so that we can cut a good deal for our employees. That's what it does.

Q Could I ask a question? One of the big arguments that I have heard in talking to other businesses is that everybody is concerned about the quality of health care, what's going to happen. They're afraid -- right now they may have choices, they have certain choices, and that's sort of the unknown out there. What is the --how is the quality of health care going to change.

THE PRESIDENT: I think there are two concerns about the quality of health care that I've heard. One is, are you going to cut down on how much you spend on health care so much that there won't be enough for medical research, for technology, for things to progress? The other is, if you deprive people of choices, isn't that a backdoor way of undermining quality?

I mean, people -- in America I think people equate -- we all like to make our own decisions. So people equate choice with quality. To that I would respond in two ways: Number one, if you don't do anything, if we just let this alone, if we walk away from here and don't do anything, you will see dramatic reductions in choice. And many of you in this room will contribute to that because you will have no choice.

That's what happened to our friend from New Hampshire here. She wished to give her employees the choice between being in the HMO or insuring with fee-for-service medicine through Blue Cross. Now she has only the HMO option. She is now in the majority of employers in America who cover their employees. Now, a slight majority does not provide any choice for the employee but, in fact, makes the choice for the employee because they have no choice. You know, one of our panelists here, if he were able to get back into the health insurance market, would have -- probably would have to just make the best deal he could and the employees would have to take it or leave it.

So on the question of quality in terms of choice, under our plan, again because of marketing power, we would give your obligation as an employer would be constant. You would pay the same no matter what. But your employees every year, because of the cooperative buying power, would be able to choose from among at least three programs.

And we estimate that in most places they would always have access to an HMO. And as I said, many of them are very good, but they'll be better if they have competitive pressure. Then, probably there would be a PPO -- that is a professional group where doctors get together and they organize health care delivery, and normally those have many more doctors and sometimes let people in who are willing to provide the service for an approved price, so you get even more choice -- and the fee-for-service medicine. And that would come up every year. So that's my answer.

And the second thing is, if you do nothing, you will continue to see a squeeze on the quality of medicine in terms of what goes into the teaching hospitals and medical research. Why do I say that? I was in Boston last week, and I met with the heads of all the teaching hospitals after which they came out and endorsed our plan. And they said -- every one of them said, if we don't do anything, we're going to get less and less money because the people who come into our hospitals are increasingly in managed care plans where they put the squeeze on us and they cut down on the money we get for patient care. So under our plan, we increase medical research, we increase support for teaching hospitals, and that's what we have to do.

So my argument is quality will suffer if we do nothing. Choice will be restricted if we do nothing. If we move, we can increase quality and choice in a fair and balanced way.

I know we got to wrap up. We have one more person to hear from, and the Congressman wants to make a comment.

CONGRESSMAN LAFALCE: I just want to add to what you said, Mr. President, about the quality of care. Not only would you have far more choice under the President's proposal, but I think you would have much better quality care. I don't thing we have a health care system right now, I think we have a sick care system. Our primary deficiency, it seems to me, is we don't have primary care. We don't have preventive medicine. And the emphasis of the President's proposal is on preventive medicine.

If you look to the state of Hawaii, which about 20 years ago, mandated the health care benefits for all employees, you'll see that businesses flourished in Hawaii. You'll also see that health outcomes flourished, too. By virtually any health statistic you could point to, Hawaii is doing better than most any other state. This is not because of the climate out there, too, because you could compare Hawaii's climate to Florida's, to Puerto Rico's, et cetera, et cetera. But when you look to birth statistics, weight statistics, life expectancies, et cetera, the preventive care that they're able to get in Hawaii because of the fact that all employers must provide coverage for their employees has increased the quality of health care immeasurably.

THE PRESIDENT: I'd like to hammer that home because a lot of people say, well, Bill, everybody goes to Hawaii on vacation. It's a rich state. Hawaii has a very, very large percentage of people in its health care system who are low income people -- native islanders, people come in from surrounding islands -- about a 20 percent load there, quite a high load. So the health outcomes for Hawaii include a very large number of people who have to be paid for in traditional ways who aren't even in the employment system. So you just can't make that argument. I'm just trying to reinforce what he said.

Our last speaker is John Sorenson, from the Weco Supply Company, in Fresno, California. He wrote to me about one of his employees. And I thought it would be good to kind of let him close because of the concern that this employer had for his employee, and how it affected his business.

Q Well, first I'd like to thank you for inviting me, and thank you for caring. I was invited here because of an employee I have by the name of Randy Walker. But before I talk about him, I wanted to thank the health care industry and the insurance industry.

Four years ago this month, we discovered my father had a brain tumor about size of a baked potato, and it didn't look good. In fact, if you've ever had anybody in your life like that, you'd know how scary that was. About a month or so after we discovered it, they performed the operation, and he's fine. A year later, they had to do it all over again, and he was fine again. Insurance paid for all of it, and Dr. Brian Claig in Fresno was absolutely a marvelous surgeon.

And with that in mind, when this situation happened with Randy Walker, I was just angry. And what happened was that, as a salesman for my company, he was married, had two children, and one of the children was born prematurely, and the insurance bills were 30- some thousand dollars. And they occurred right at the time where he had left his previous employer and come to work for my company, and he thought he had a 60-day grace period that it was going to pay for the coverage. It didn't, and we all advised him to seek advice. And it came up that the best solution was to file bankruptcy.

And two years after the second child was born, a third child came along and we had just started a new insurance plan. And the new insurance plan -- because of the cost of insurance, and because of the complaints I get every time somebody at my company has a health problem -- they come to me as if I wrote the policy -- I advise them to see the insurance man. And in this case I said, well, I'm not going to step in the middle of this one -- we're going to pick it collectively.

So the employees picked the insurance plan, and we voted on it. And I represented just one of -- at the time, I think it was 18 votes. I told them that unless three-fourths of us agreed to it, we weren't going to pass it. So the employees were real curious; they asked a lot of questions; they wanted to make sure it would cover certain situations.

Randy didn't have the money to go to the doctor, but apparently his wife was already barely pregnant. And they hadn't been to the doctor to find out, although I'm sure they probably suspected it. Well, the baby was born about five months after the coverage had started. The insurance had taken the premiums. The insurance company had said, yes, it's covered. They paid for, I believe, some of the doctor visits. But when the baby was born premature by two months, it incurred $150,000 in medical bills; and he was just devastated. He was trying to focus on a new baby that was barely alive. He was trying to focus on the rest of his family, and try to do a job for me and avoid creditors. And it made it virtually impossible.

So, about a year ago at this time, we tried to go buy him a vehicle. And his credit was so bad that the only way he could get one was with somebody's help. And I decided that I probably stood the biggest chance of helping him of anybody in his life -- I was his boss. So we went out to a car dealership to try to buy him a car with the idea that I would co-sign on it because my credit was okay. We picked it out, and we got all the niceties out of the way at the car dealership; and then they looked at his credit report. And his credit report said everything terrible that you could imagine -- and every single one of them was a health care expense that he couldn't begin to pay. We had told them that ahead of time.

They treated us like we had AIDS. And I had never been treated that way. I've never been poor. I went home that night and I was just angry; I knew I couldn't help this guy. I've always been able to help anybody that I really set forth to try to help. So about 11 p.m. at night, I started to write a letter to Hillary. (Laughter.)

THE PRESIDENT: I've done that myself a time or two. (Laughter and applause.)

Q It took me about three hours to write it, and I sent the first draft off to 1600 Pennsylvania Avenue without a zip code, figuring I'd probably never hear anything. And I was almost embarrassed that I'd written it because it sounded a little corny. I talked about everything I've talked about today and then some; it was about three pages. By the time it was done, I felt that I just had to at least show Randy that I'd written the letter. I thought, at least I wanted to show him I was trying. I figured I couldn't do much, but I could try. And he made me a batch of cookies the next morning, so I guess I touched him.

When I heard from the White House and actually heard that it had been read, I was saddened because he had already quit. He had been chased by people trying to collect from him. And they had attached his wages, and we had tried to dodge that bullet by calling him a self-employed salesman and everything we could think of to try to retain his income. And he finally couldn't take it, and I can't say I blame him.

So, when the White House called, he was off in a place where no one could find him, avoiding creditors. And one of the guys that works for me was still friends with him and did contact him. And Ron Brown from the Commerce Department came out and met me about a month and a half ago. And we got Randy on the phone that evening, and about 20 minutes before we had that conference, I got a call from Randy's wife. And I thought it was icing on the cake of this story -- she said, are you aware that we've split up? And I thought that we did everything possible to try to make this event work. We had health care coverage. We had -- we did everything we thought possible, and it still failed. And I thought that preexisting conditions was the whole cause.


Q And if you can accomplish that, you've got my vote for the next 20 times. (Laughter.)

THE PRESIDENT: Well, let me tell you what the votes -- the votes that really matter here. First of all, let's give him a hand. I think that was quite a moving -- (applause).

I wanted to end with that because I was so moved by the letter that he wrote to Hillary. And it seemed to sort of capture so many of these things that we talk about in kind of esoteric terms -- preexisting conditions; people falling in between the gaps; why you can't change jobs; all that kind of stuff. And you hear a story and you realize that this is the business of America.

But the votes that really matter here are the votes of the members of Congress. So before we leave, I'd like to ask the members of Congress who sat through this entire panel to please stand and be recognized. I see Congresswoman DeLauro there and Congresswoman Eshoo there, who are standing, so they can't stand; and Congressman Serrano's in the back. Would all the members of Congress who are here please stand so you can see them. (Applause.)

Thank you, Mr. Bowles. Thank you, Congressman. And that you most of all to these fine members of our small business family in America.

Thank you. We're adjourned. (Applause.)

END12:00 Noon EST