THE WHITE HOUSE

Office of the Press Secretary

         REMARKS OF THE PRESIDENT, GOVERNOR WAIHEE OF HAWAII
           AND SMALL BUSINESS ADMINISTRATOR ERSKINE BOWLES

The Roosevelt Room

10:45 A.M. EDT

THE PRESIDENT: I'd like to make a brief statement and then ask Governor Waihee and Mr. Bowles to say a thing or two.

This is a very important week for our country. You know, it's the first time in our history that we've ever had a debate on the floor of either House of the Congress on the question of health care coverage for all Americans, something that in other advanced nations people take for granted. We've never even been able to debate on the floor of our Congress. And I'm very hopeful that in both Houses they'll be able to work out enough of a consensus to pass a bill that will enable us to go to conference and come out and ultimately have legislation that does provide universal coverage.

We wanted to ask you here today to talk about Hawaii for a couple of reasons: first of all, because so much of this debate -- I think way too much -- has turned on the question of the requirement that employers share the cost of buying private insurance with their employees. And a lot of very dramatic claims, dire claims have been made about that.

Hawaii has been doing it for 20 years; it works. Business have thrived. Jobs have not been lost. And the most important thing is that you can see that in addition to having lower cost for small business premiums, the closer you get to full coverage, the closer you get to the other goals of health care --cost control, better health care outcomes. These are the things, it seems to me, that cannot be refuted by the people on the other side of this argument.

What it ultimately boils down to is they're saying, well, we have this evidence in Hawaii, or we have evidence in Germany, but we don't want to deal with it. We still don't want to pay. And it just seems to me that -- there's another issue I want to bring up that I keep talking about that's very important. Health coverage for people under 65 has dropped from 88 to 83 percent in the last 10 years. There are five million Americans today who had coverage five years ago who don't have it today. Almost all of them are working people and their children.

I do not think that Congress ought to send a message to the country that it is fine with us if this deplorable development continues, if we just see a continuing erosion of the health care system in America, more and more people without coverage.

So I'm looking forward to the week and next week and the months ahead in the hopes that we can really get something done. And I think that this example of Hawaii is important because it is not refutable, it actually happened. And it's not like Germany; they can't say, well, it didn't happen here. It actually happened in the United States.

John.

GOVERNOR WAIHEE: Thank you, Mr. President. In Hawaii, we are doing what the President hopes to achieve nationally with a system designed to achieve 100 percent universal coverage. We have achieved about 96 to 98 percent universal coverage with our people so far.

Hawaii's system can be characterized as a 20-year demonstration project of the employer mandate. This demonstration project has proven that it is possible to have quality health care at low costs while minimizing cost shifting and keeping a healthy business climate.

Let's take these four points individually. First, quality care. Universal access and a focus on primary and preventive care means Hawaii residents benefit from early or earlier medical treatment. What this means -- as an example of what this means, we have the same instances of cancer, heart disease, diabetes as the rest of the country, but among the lowest morbidity rates in the nation for these same conditions. We have higher rates for tuberculosis and smoking, but a morbidity rate one-half of the national average for lung disease.

Second, I think the demonstration shows that we have -- shows the impact on costs. We have lower costs. Universal access and primary care means hospital and emergency room uses are one-third the national average. And this obviously translates to lower costs.

In 1974, when the employer mandate was implemented, the cost of employee health insurance for a typical Hawaii business was about the same as the cost to its California counterpart. Today Hawaii businesses pay about 60 percent of what California businesses pay for comparable coverage. Our health share of the gross state product is between 8 and 9 percent, compared to about 14 percent nationally.

Third, universal access means -- universal coverage means minimizing cost shifting. The fact that all of Hawaii employers must pay means that a business that -- you know, for us this is a very, very critical point -- that a business that provides health insurance isn't subsidizing a business that doesn't. Uncompensated hospital care is well below the national standard, and along, obviously, with preventive and primary care, holds down health care insurance costs and stops cost shifting.

Fourth, universal coverage supports a healthy business climate. I don't think I can make this point often enough. A level playing field is critical and an employer mandate means that everyone shares in the cost and everyone shares in the benefits. The cost of doing business and the cost of living in Hawaii is extremely high, something like 39 percent above the national average. And that's a statistic that the government of Hawaii selects. There are others that select much higher ones. (Laughter.)

So you would think, just assume that our insurance costs and out-of-pocket costs should also be higher. But, in fact, they are lower -- something like 30 to 50 percent lower. As the senior Senator of Hawaii Danny Inouye made very clear on the Senate floor yesterday, this is about the only statistic regarding the cost of living and doing business in Hawaii that is lower than the national average.

Now, over the past 20 years Hawaii has enjoyed a steady rate of positive business growth. In 1974, when we started the employer mandate, we had less than 18,000 employers in the state of Hawaii. Today we have just under 27,000. Our business failure rate is -- well, maybe I should say this: Our business failure rate is consistently lower than the national average. In fact, in 1993, which was the year immediately following Hurricane Iniki, during a period when there was an economic slowdown in Hawaii, our business failure rate was less than one-half of the national average -- something like three percent. I don't know, but it was less than one-half of the national average.

The final point I want to make is that for the past 20 years, the employer mandate has provided us with a lot of experience and we believe, as a result, that national health care reform is essential not only for the nation, but for our own ability to improve our system.

Some amazing statistics for us -- in 1993, a Kaiser Foundation survey of small businesses in Hawaii discovered that in Hawaii 82 percent of small businesses are satisfied with how the employer mandates work; that about 68 percent of these small businesses voluntarily contribute to the cost of dependent coverage, which is not required; while over 45 percent of our small businesses pay full health care costs for this dependent coverage. So not only are they not required to do it, but almost half of them that do pay the entire costs of dependent coverage, which is something much higher than the national average of about 28 percent.

Now, I think these are amazing statistics. But what is even more amazing is the fact that in Hawaii, the entire controversy over health care reform is really not an issue, Mr. President. We think the existence of universal coverage as something that ought to be. And we would like to see that happen for the rest of the country. Thank you very much.

THE PRESIDENT: Erskine.

ADMINISTRATOR BOWLES: Thank you. I think the President said that he hopes we can get something done. If the logic is on our side, we clearly will. The President has had me out travelling around the country meeting with owners of small businesses. I have literally met with thousands of them now, and heard the outcry from small businesses for real health care reform. Don't forget, we are the people experiencing annual increases in the cost of health care of 10 to 50 percent a year. We're the ones who have very poor coverage today -- bare bones coverage. We're the ones subjected to every abuse in the health care system. And we're the ones with absolutely no market muscle today to hold down the cost of health care.

And as I've traveled around the country, I've tried, as everyone else has tried, to look at the various states which have served as laboratories to try to see what works and what doesn't work. And Hawaii clearly has been in the forefront of real health care reform. Now, in Hawaii, don't forget, 94 percent of the businesses in Hawaii are small, okay? And the Governor used a great statistic a minute ago -- he said that 82 percent of these small businesses are satisfied with how the employer mandate works.

Now, let me tell you why they're satisfied. You used a couple of these, Governor, but these are the ones that jumped out at me. Hawaii does have one of the highest cost of living -- you just said, 39 percent above the national average. But it has absolutely one of the lowest cost of health care -- 30 percent below the national average. Health care premiums in Hawaii are a fraction of what they are in other states. Let me give you an example -- if you have a Blue Shield/Blue Cross standard plan, okay, and you live in Hawaii, you will pay 200 percent less if you're a single person than you would pay for that same plan in Kansas, and 114 percent less if you're a family payer. Now, I think that's phenomenal for the same coverage.

And business failures in Hawaii are less than half the national average. And business creation has been very high. I think you have a chart on business failures and you also have a chart on business creations. But business creations have been growing at over a rate of over 200 percent since this plan went through. And people in this town are always talking about, what are we going to do about that little small business that just flat can't afford health care coverage, what are we going to do? Well, Hawaii addressed that situation -- they set up a rainy day fund. Now, this has been in existence for 20 years, and you know how many times it's been used in 20 years? Five, five times in 20 years; the total amount tapped -- $85,000. So that is a myth.

And the Governor said as for what's it been like for the state of Hawaii to live with. It's been terrific, Hawaii spends 8.1 percent of its state GDP on health care. The average in the states is 11.1 percent -- that's 37 percent more.

The uninsured in Hawaii, since this plan went through, has dropped from 17 percent to 4 percent, while in the rest of the country we've been growing to where we now have 15.3 percent uninsured. It works.

Now, I'm glad that business reporters are here because you're the guys that are always asking me, why don't more small businesses actually support real health care reform, universal coverage and shared responsibility? And I always say, they do. And I cite the 626,000 small businesses that came here with us to visit with the President, the representatives from them, that said they were for universal coverage and for shared responsibility. I've cited the new Wayne State study, which I'll share with you, that says a large, large percentage of small businesses favor an employer mandate.

But I have also said that there is just plain a lot of gross misinformation out there. And yesterday I visited with the Governor, and I showed him a press release that had facts in it about the state of Hawaii. And I can't help myself but read a few of them if that's okay, Mr. President.

It says in here -- these are facts from a trade organization -- it is significant that Hawaii led the nation in job loss in 1993, and in 1992 the number of business failures in that state increased by 290 percent. The truth is, in 1992, we had Hurricane Iniki in the state of Hawaii, which caused massive disruption to the small business populace in 1992 and 1993. But even with that, business failures in Hawaii were actually below the national average. And the trend has been -- we have a chart on that -- it's been less than half the national average, and business creation has been extraordinary -- going from 18,000 employers to 27,000. Misinformation -- that's why the small businesses are confused.

The same thing says -- again, it drives me crazy -- it says the state health insurance failed and was dissolved. It didn't fail; it wasn't' dissolved. It was merged into a private managed care program that has been extraordinarily successful.

It says that that 90 percent of Hawaiians were covered prior to the enactment of this mandate. It's not true; there were 17 percent uninsured before this. It says costs haven't slowed. Gosh, the rate of increase of health care costs for small businesses in Hawaii have grown at about 5 to 10 percent last year. And I think for the Blues last year, they were up 0 percent; and for the HMOs, about 8 percent. Arthur Anderson came out with a report just this week that said for small businesses everywhere else, their costs were up 14 percent last year. But they were really up more than that because the co-pays were raised, the deductibles were raised and the benefits were reduced.

Hawaii's small businesses pay $400 a year, on average, less than the average small business throughout this country. And it also says that the Kaiser report had serious consequences for business. It fails to say that the Kaiser report says 82 percent are satisfied with how the employer mandate works.

I think the employer mandate does work. I think it is one of the real ways we can get to universal coverage. I think it proves the state of Hawaii has been a real laboratory; that businesses thrive; that jobs are not lost; and that premiums are lower for businesses and for everyone else. Thank you.

Q Mr. President, the employer mandate aside, there seems to be an increasing frustration among some members of the business community about the way the health care reform bills are shaping up on Capitol Hill. Specifically, there's concerns that employers may lose control of ability to negotiate with insurance companies and therefore, control their costs. This is directed specifically at the Mitchell bill, although they have problems with the Gephardt bill, as well.

Are there some changes that you would be willing to accept to meet some of the concerns being expressed now by the business community?

THE PRESIDENT: I hope they'll get in there and make these concerns known in the whole debate.

My bottom line is what it has always been -- I think we have to have a system that, over a period of time, will lead to universal coverage. Because I do not believe, number one, that you can do right by the American people without it; and number two, that you can achieve the other goals we have, which are cost control -- cost containment, maybe, is a better word -- and better health care. Those are my principle goals.

There are a lot of members of the business community that I would urge to get into this debate with both feet. One of the reasons that the bills are in the position that they're in today is that the people who were against this from the beginning, and wanted to wreck it over the mandate, were out there focused like a laser beam on beating it.

I think one of them was quoted in the press today talking about how great they were getting votes against things. Whereas all the people who were for it and knew it had to be done took a more wait-and-see attitude, hoping that this little change or that little change might make it a better bill. Now that it's actually on the floor -- I think it's incumbent on everybody to get in there and participate in the debate.

I do believe that the more you move to universal coverage, the more all the objectives of these employers who do cover their employees will be met, because it will stop cost shifting -- they won't have to bear the burden of anybody else's cost. ANd it will have more employers, even the small business groups, in there negotiating to keep health care costs down, which I think will help them very much.

Q Mr. President, how do you feel the debate is going so far? And do you have any feeling on when you think it will come to a vote in the Senate?

THE PRESIDENT: I think it's going pretty well. It may take a few more days to start having critical votes depending on what happens in the House on the crime bill. I just don't know enough about the timing of the bodies to be sure but we're going to try to resolve the crime bill in the House this week and move it over there and so they may take a little longer. I think they still want to go on their August break at the end of the following week, so, I hope we'll have some action before then.

Q Are you disappointed that more members of the business community who you feel favor your ideas and proposals have not gotten involved in this debate and come to your defense because, as you know, the Washington Post reported this morning that several large business groups are now coming together to jointly oppose the Mitchell bill, the Gephardt bill? Are you disappointed that these people haven't spoken out?

THE PRESIDENT: I met yesterday with a dozen or more business leaders who went outside the White House and once again reaffirmed their support for universal coverage. And if you read between the lines in the -- at least my reading to go back to Donna's question, my reading of The Washington Post story today is that a lot of those people disagree with the NFIB, think they're dead wrong, want a requirement that employers and employees provide for health care through private insurance. And they're worried that the necessary changes that Senator Mitchell has made to try to get the bill through the Senate may not meet their needs.

Well, the answer to them is to come in and try to fix the bill and stay with universal coverage. That would be my counsel. The business leaders -- I met with several yesterday -- told me they were terribly worried that if we passed up this opportunity to have universal coverage we would continue to see what has happened so dramatically in the last five years where you've lost -- you know, five million don't have coverage who had it five years ago, more and more businesses are dropping their coverage. All those costs are being shifted on to the employers who are taking care of their employees, which makes the small businesses even more vulnerable and the big businesses even less competitive in the global economy which will mean further aggravation.

That's one thing that I think that Congress has got to come to grips with. We just can't allow the kind of disinformation that Mr. Bowles talked about and the intense, almost hysterical fear that's been bred in some of the small business community and has been, therefore, felt by the Congress to ignore the fact that we have a system that is breaking up. We're losing ground on the coverage. We've got millions more people without coverage and millions more at risk of losing it than we had just a few years ago. So, we're going in reverse.

That seems to me is a great argument for the Hawaii system. You've got something you know will work, you know won't hurt business and you know won't go in reverse. And we can build on it and move to full coverage.

Q Have you been disappointed with the lack of support in the business community to date --

Q But you're asking them now to come forward at this critical time. Where were they before and aren't you disappointed?

THE PRESIDENT: First of all, we had a press conference here and announced 600,000 small businesses had joined our coalition. That's more members than NFIB has. We put this coalition together around health care. Therefore, unlike the NFIB they don't have the mailing lists, the political action committees, the way of putting pressure on people at the local level. But we've shown business strength.

We've also had very large numbers of large businesses supporting our position. Do I wish they had come out stronger earlier. Of course I do. But this is nothing new. The AARP has now come out strongly in favor of what we're doing but they ran ads for a long time which said don't support a health care plan that doesn't have prescription drugs and long-term care. Our plan did but somebody -- not we but somebody else did research that showed that people thought well, why didn't Bill Clinton's plan have prescription drugs and long-term care.

So this is what always happens. Some of you may have heard me quote this before. Machiavelli said 500 years ago that there is nothing so difficult in all of human affairs than to change the established order of things because people who are afraid they're going to lose fight you like crazy and people who will win are always uncertain of the result until the very end. And in that vacuum the antis, even if they're less numerous than the pros, can acquire a strategic advantage. That's plainly what happened in the last four months, five months in the House and in the Senate where there was just this kill it, kill it, kill it, kill it drumbeat coming out of the ones who were negative. But there are more American citizens, more American businesses who know we ought to have universal coverage and who support it. It's not too late to rescue that. That's why we have a debate.

And I would remind you. In spite of all that this is the first time in history we ever even got bills to the floor of both Houses of Congress. Truman couldn't do it. President Nixon couldn't do it. Nobody who's tried to do it has ever been able to do it. So, I feel good about where we are and I think now the public voices of reason from the business community and elsewhere have a chance to be heard.

ADMINISTRATOR BOWLES: The Governor and I will stay for questions. The President is going to have one more question and then he has to leave.

Q We're getting very close to a vote on a bill that would restructure 15 percent of the national economy yet Wall Street seems to be completely ignoring the debate right now. Why do you think that is?

THE PRESIDENT: You would have to ask them. I think partly because they know it wouldn't fully restructure 15 percent of the economy. It would simply build on what we have. The things the government's doing wouldn't change except we would be more efficient in the management of the Medicare and Medicaid programs. But that would stay there. We would still fund Medicare. We would still fund Medicaid. Almost all the people in the country today who are providing health insurance would have the decision, the freedom just to keep doing what they're doing now.

Only the most limited and inadequate plans would have to be substantially changed so they could go into a different plan or stay in the one they've got. That's why this plan shouldn't bother Wall Street very much because under all the scenarios we've been discussing what we're basically trying to do is to close that gap of people who work but don't have coverage and people who don't work but are above the poverty line and don't have coverage. That's basically what we're trying to do. The whole rest of the system will stay intact and a lot of the structural changes which are occurring for the better enabling a better cost control for some will now be available for all.

I think it's important to point out -- Erskine pointed out that the small business rates went up 14 percent last year, health care costs went up 4.8 percent last year. So, what we're trying to do is to make this available for all, the cost containment as well as the coverage.

Q Your wife yesterday seemed to suggest that she thought the Gephardt bill might have a better chance of producing the results you want. Do you have a similar feeling of that?

THE PRESIDENT: I don't know. I haven't talked to her about it and I read a couple of stories and one seemed to suggest that and one didn't. I can't comment on it. All I can tell you is the device for achieving universal coverage in both bills meets the criteria that I have. And I think it's quite interesting that the CBO thinks that Senator Mitchell could get to 95 percent by 1997, which is a very rapid uptake and would indicate that we could go on then and cover everybody.

Q Mr. President, what do you think of about the Starr --

THE PRESIDENT: Everybody else has talked about that. I'll cooperate with whoever's picked. I just want to get it done.

Q Mr. President, which of the two plans, the Mitchell or the Gephardt plan, most closely resembles the Hawaiian model?

THE PRESIDENT: Ask Governor Waihee, he's an expert on that.

Q Thank you, Mr. President.

THE PRESIDENT: They both resemble it in different ways, that's my read. They're both different and they both have things in common.

THE PRESS: Thank you, sir.

Q Governor, may I ask which of the two plans --

GOVERNOR WAIHEE: I think like the President says, they both have elements of the Hawaiian model. They both talk about the employer mandate and how it will be used. Erskine, you're more familiar -- we've been using the statistic that says that Hawaii has about four percent uninsured in this population. And that is a statistic derived on the most conservative possible surveys and estimates, and based on the survey by the GAO and with some clarification. We think, our own survey show that we have achieved something closer to 98 percent, so that when -- if people back home ever read these statistics, they will know at least the Governor believes that we are better at this than the GAO does. (Laughter.)

You want to talk about the two plans?

ADMINISTRATOR BOWLES: I think the Hawaii plan is principally built around an employer mandate. The Gephardt plan has an employer mandate in it that goes into effect for small businesses at least in 1999. And, of course, in the Mitchell plan, if, in fact, we don't get to 95 percent nationwide, which, of course, the CBO now says they believe we will -- and if, in fact, the Congress doesn't take other actions, then a 50-50 employer mandate would go into effect. So both of them have some similarities in that regard.

One of the things I would like to point out is the President mentioned the CBO study today that did say that it believed that we would get to 95 percent. And that means if we get to 95 percent this employer mandate is just all a theoretical discussion that we're having.

In addition, for the smallest businesses, those with 25 or fewer employees, they will never be subjected to an employer mandate under the Mitchell bill. And don't forget, those businesses over 25 employees -- 90 percent of those between 25 and 100 employers today offer health care insurance. And those are the ones that are experiencing annual increases in the cost of health care of 20 to 50 percent a year, who most want to see some real health care reform.

Q I don't understand why the smallest employers, those under 25, would be exempt when they're the biggest part of the problem. That's the group of small employers that are not now insuring their employees. So what's the justification for exempting them should a mandate go into effect under the Mitchell bill?

ADMINISTRATOR BOWLES: Well, I think that's one of the things you'll have to talk to Senator Mitchell about. We obviously had a different approach in the way that we approached it. We had enormous subsidies going to small businesses so they could afford it both today and tomorrow. We also had cost control mechanisms so that the costs wouldn't continue to grow with 20 to 50 percent a year.

Senator Mitchell took a different approach to it, but an approach that does work. The arithmetic works and it does get to 95 percent coverage. And then we can move on to full coverage for everybody.

Q Do you think you've focused perhaps on small business? Because everybody is out there bidding for the small business support, and it doesn't seem to be for sale, at least not from the NFIB and the organized groups; whereas you're costing yourself big business support because they see you locking in cost shifting, locking it in and institutionalizing it. As someone said, small businesses are going to get Fortune 500 coverage and the Fortune 500 are going to pay for it.

ADMINISTRATOR BOWLES: My business as SBA Administrator is to focus on small business, so I don't think I've spent too much time focusing on it, to say the least. Two, I think there is enormous small business support for real health care reform -- for universal coverage and for shared responsibility. I think that's clearly the case.

But it's not just small businesses that have said they support it. This Wayne State study that I said a few minutes ago, it says roughly in there -- this was done for businesses of fewer than 50 employees -- for those from one to 24, it showed about 42 percent favor a mandate, 46 percent are opposed. So, roughly even. And for those from 26 to 50 employees, it showed 56 percent favor a mandate and 36 percent opposed. So a big swing there.

But again, any number of large -- those large businesses that visited the President yesterday -- that was Archer Daniel, Shell Oil, Eastman Kodak, Unilever, Warner Lambert, Monsanto, Federal Express, Texas Instruments, Chemical Bank. I mean, there's plenty of big business support. It hasn't gotten the same press, but there is enormous support from big business.

Q So that's 20 Fortune 500 out of Fortune 500, and a lot of these coalitions and groups that represent a lot of other members of the Fortune 500 companies are either on the sidelines or in opposition.

ADMINISTRATOR BOWLES: There is strong support from both big business -- I just named some -- as well as any number of small businesses. We brought 600 to 26,000 of them here, which is more members than there are in the entire NFIB, to say that they supported universal coverage and shared responsibility. And that's even in light of all the misinformation that's out there.

GOVERNOR WAIHEE: For those of us in Hawaii, this whole debate is so much deja vu. In 1973 and '74, the same kind of forces were at issue -- I mean, the same kinds of disputes were seen. We had the same type of business concerns, we have the same kind of labor considerations, and as a result of all of that embarked the employer mandate.

I support anything that moves us through universal coverage. But the employer mandate in Hawaii was implemented with no exceptions. We didn't have an exception carved out for small business. We didn't have any subsidies. And we just -- we implemented a system that said that everybody pays their fair share. And it works. And I think that whatever plan passes, the employer mandate is not something that really ought to be of that much concern -- ought to be the same concern to businesses as they were back in 1974, because experience has shown that most of the arguments, which are the same arguments that were used back then, haven't, in fact, proved out.

Q One of the concerns, though, for merging, even among those businesses that support some kind of an employer mandate is the way the purchasing cooperatives and some of the red tape in the bills up on Capitol Hill. And that's what they're expressing deep concern about, so much so that some of them are now talking about whether or not they should try to pull the plug on --

ADMINISTRATOR BOWLES: I think Senator Mitchell was very forthright yesterday in saying he looks forward to hearing from people as to way to improve the plan. What Senator Mitchell is interested in is the same thing the President is, and that is getting to universal coverage.

Q Perhaps the Governor could explain to us how it works in terms of purchasing cooperatives in Hawaii.

GOVERNOR WAIHEE: Well, the concept of purchasing cooperatives were actually one of the things that we saw in the President's initiative as a possible improvement on our system -- the idea of putting together large purchasing pools. And we have actually begun what we call the second generation of health care reform in Hawaii, going beyond universal coverage and trying to improve the delivery system by taking our state health insurance program, our general assistance program, and our Medicaid program and combining it into 100,000-client purchasing pool, and privatizing the entire program.

And we have just -- that program has just been implemented on August 1st. And as a result of using the purchasing pool concept, I think for the first time we are predicting and actually seeing a decrease in the increase of Medicaid costs and an expansion of coverage.

Now, having said all of that, I think every piece of legislation has its own inherent problems. One of the things I've learned as Governor is that we generally set our goals, we know where we want to go, and then we have to deal with legislators. We have to deal with perspective interests. And in the course of negotiation, we try to pursue certain kinds of objectives. What -- in terms of a purchasing pool, obviously, the people in my state and myself would like to see something that has the least amount of bureaucracy as possible.

Q Voluntary or mandatory?

GOVERNOR WAIHEE: Well, in our case, we combined all of the programs together. I think we can have a voluntary program because we already have a preexisting employer mandate. The preexisting employer mandate makes voluntary purchasing cooperatives more feasible than a situation where you don't have an employer mandate and attempt to provide universal coverage. If you don't have an employer mandate, then it would be very difficult, if not impossible, to have voluntary purchasing pools, I think.

Q Mr. Bowles, isn't there a political -- it seems to me, a political risk in holding up Hawaii as a model which suggests that a state independently can create a type of health care system that this administration wants without federal initiative or leadership?

ADMINISTRATOR BOWLES: I think the Governor can probably address that, too, but I think what we hold Hawaii up as is as a laboratory. Here is somewhere where they have had employer mandates in existence for over 20 years. And what has happened? Insurance premiums are lower for everybody. There's been no job loss. And businesses have continued to grow and expand, and everyone has won. It has been a true win-win situation.

So what we would like to do is get people to look at Hawaii, look at the results, and I think those that do, they will see the kind of system that we think can really help the small business community and the people who work for the small businesses.

GOVERNOR WAIHEE: Let me add on to that and explain why, in spite of the fact that we have, we think, a system for universal coverage, why Hawaii would want to see national health care reform, what a state that has already achieved what others would want to achieve can achieve by having a national system.

I think one of the problems we have in Hawaii is the fact that there are businesses that are larger than their operations in the state of Hawaii. It would be nice to have, for those businesses, a benefit package that was consistent throughout the country, that there would be something that you could count on in terms of business operations that would not vary from state to state. There would be a basic benefit package.

It's also important, that same kind of -- not only is that important to businesses, but it would also help the citizens of one state in their ability to transfer employment between states. The portability of insurance would only be really feasible, I think, on a national level with a national policy.

And thirdly, despite the progress we have made, Hawaii has been frozen into its 1974 experience. Without the existence of some kind of national health care reform, we can't make improvements in our system that 20 years of experience have shown us ought to be done. And that I think is the major reason why I have been so supportive of it.

Q Governor, does your program obligate the state to provide any kind of subsidies to a large segment of your population?

GOVERNOR WAIHEE: No.

Q And why wouldn't that be a good idea for a federal fund?

GOVERNOR WAIHEE: Let me just say, we don't -- the cornerstone of our system is employer mandate. The employer mandate does not subsidize any businesses. It does, however, provide a rainy day fund for any business that can demonstrate that as a result of its mandated medical coverage it will go out of business. In addition to that, we have a number of government assistance programs for those that are unable to either be employed or unable to secure health care insurance because they don't fall within employer mandate. And there is some state assistance for that program.

And as I said, we have just begun what we call the second generation of health care reform by taking what is essentially our government assistance program and privatizing it and turning it over to private citizens.

Q Isn't that a large difference, though, between Hawaii and -- you're talking about subsidizing.

ADMINISTRATOR BOWLES: We are talking about some subsidies, and we're talking about also a much, much longer phase-in. The Hawaii program was very successful, there was no phase-in and there were no subsidies. And I think that proves the fact -- I think that proves our point.

GOVERNOR WAIHEE: Yes, you've got subsidies, you've got a longer phase-in, and you've got even a threshold that says that you may not need an employer mandate. You have more safeguards than we had in 1974.

My thing is this -- I don't know, something -- there might be something out there that may work as well, maybe be better than employer mandate. I just don't know what it is, and no one has ever demonstrated to me that it existed. Because the employer mandate essentially builds on the existing system. But the bills before Congress -- at least the Mitchell bill does provide for the possibility that something might exist. And if you can achieve universal coverage without employer mandate, you may not need it.

ADMINISTRATOR BOWLES: I think that is what the President has always said. He wants to have a system that gets to universal coverage. He has always felt that building upon our present system of private sector health care, building upon our present system of employer-based coverage where there is shared responsibility between the employer and employee, and building upon our present system of high quality American health care and choice of doctors and plans is the right way to go.

However, he's been very clear from the first day saying that if there are other ways to get to universal coverage other than shared responsibility, then he's very willing to consider those. And we're looking at some variance off of that.

Thank you very much.

THE PRESS: Thank you.

END11:40 A.M. EDT