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Office of the Press Secretary

For Immediate Release January 6, 1998
                         PRESS BRIEFING BY 
                  SECRETARY OF HHS DONNA SHALALA,      

The Briefing Room

12:17 P.M. EST

MR. TOIV: Good afternoon. Welcome to the White House. And to brief today on the President's Medicare proposal are Gene Sperling, the President's Senior Economic Advisor, and Secretary of Health and Human Services Donna Shalala, and Secretary of Labor Alexis Herman.


MR. SPERLING: One of the few briefings I've ever been in this room with where I'm one of the relatively taller people who will be briefing. (Laughter.)

Today is another announcement in this President's step-by-step commitment to provide more health coverage and address more of the health needs of the American people in a careful, but serious and fiscally responsible manner. The people, Americans in the age group of 55 to 64, and particularly those between 62 and 65, face serious and unique health care needs. They are more than twice as likely to go into the individual markets and face denial or exorbitant prices. They are significantly more likely to have trouble finding new jobs if they are displaced, and they are more than twice as likely to have a serious health need. And what we have tried to do, what the President has put forward today is a significant attempt to address those needs in a fiscally responsible manner.

In the last several days you have heard some suggest that this is not enough. You have heard others say this is somehow going to open the floodgates and be too much. If the accusation is that this is a sensible, serious and fiscally responsible plan to provide access to health care for hundreds of thousands of Americans between 55 and 65, we plead guilty. And if the accusation is that we will continue to look at other possibilities for how we can provide more coverage for Americans who have serious health care needs in a way that is fiscally responsible, we plead guilty again.

This is why we're here, to try to address the needs of the American people in a way that is fiscally responsible. And what we're doing today is not only paid for, but is self-financed within the Medicare system so that it in no way sets back the Medicare trust fund or Medicare solvency. And that should be an encouraging sign for those who care about the long-term fiscal solvency of Medicare. If the new way of doing things is to ensure that everything that is done is self-financing within Medicare and paid for, that is the right way to address future health care needs in a way that is sustainable for this country.

I'm going to introduce Secretary of Health and Human Service Donna Shalala, who is going to go through two of the components here. And then Secretary Herman is going to talk about the provisions we have for displaced workers and those who had their promises broken concerning retiree health insurance.

SECRETARY SHALALA: Thank you very much, Gene. As Gene said, this is a targeted, responsible program for thousands of Americans who do not have access to good health insurance because they have a preexisting condition or they're too old and there simply isn't a private sector market.

Let me talk first about what the President described as a centerpiece -- Americans between 62 and 65 to buy into Medicare. There are a million people in this country between 62 and 65 who have no health insurance. They are often women like Mrs. Cain whose husbands have moved into the Medicare program --husband worked all of his life, she stayed at home, she was covered by his policy when he worked. He now moves into Medicare as an individual; she's without insurance. But, just as important, she said that she had a pre-existing condition. She had a heart condition. There was no insurance company out there that would give her insurance.

We will now have a solution for women like her, women whose husbands have moved into Medicare, they're no longer covered; people with pre-existing conditions, women and men, who will be able to buy an insurance policy, an actuarily sound insurance policy. Alexis Herman and I are both trustees of the Medicare system. We are committed -- of course, the President is -- to not increase costs of the Medicare trust fund. They will be able to buy a policy. That policy will cost about $300 a month. Plus, when they reach 65 and enter the Medicare, they'll have to pay a little bit more, depending on when they entered this new Medicare program -- they'll pay a little more every month to pay back the total cost of the premium that was provided for them earlier than 65.

So for people between 62 and 65, they'll be able to buy a good insurance program through the Medicare system. They'll have a choice. If they can find a policy for themselves in the private sector that's cheaper and better, that's their choice. If they can't, many of these people will be people with pre-existing conditions or they live in a part of the country where they can't find insurance for themselves -- they'll be able to buy a program through the Medicare system. It will be paid for by them, first through their premiums and then by an extra charge on their Medicare premium once they enter the Medicare program. So a million people.

There also will be some people who are in the individual insurance market in which it's very expensive for them to pay for their policy that may drop back and do this. But we expect for this program alone that there will be probably 150,000, 160,000 people that will take advantage of this. It won't be everyone, because of the cost.

Second, displaced workers over 55, we want to give them access to Medicare by offering people who have involuntarily lost their jobs -- their company has closed down, they were let go in a downsizing, their health care coverage will be similar to the current Medicare buy-in option that I just described. Again, they will pay for their premium every month until they reach the Medicare age. For this group their premium will be a little higher because they'll be buying in earlier into the program. But, again, they'll get access to health insurance through Medicare. For many of these people, they do find some health insurance if they're healthy, at a reasonable price, depending on where they live in the country. But some of them may not be able to and they will be allowed to buy into the Medicare program, but they will have had to have lost their jobs involuntarily to be able to enter that program.

I'll turn the third issue over to Alexis and then we'll both answer questions.

Q How many are in the second group?

SECRETARY SHALALA: Alexis will do that.

SECRETARY HERMAN: Thank you very much, Secretary Shalala. I'm very pleased that the initiative that the President has proposed today, in my view, certainly takes us a step closer to helping to manage the change and the anxiety that clearly workers experience when they are going through transitions in the work place today through downsizing, through other kinds of adjustment issues in the work place today. And particularly as the proposal relates to retirees who have had their promises broken by their employers, who have actually lost their coverage after they have left the labor market.

Specifically, as it relates to what we see the benefits being for dislocated workers in particular, we know that there are approximately 700,000 dislocated workers between the ages of 55 and 62 over a two-year period who lose their jobs, who would fall into this category. We also know from our own experiences of job search and job assistance to this population, that the older the displaced worker the more difficult it is for you to get that second job experience, particularly job experiences that have health insurance attached to it. It is more likely that they are going to find jobs in smaller firms and that they will not have, oftentimes, the option to get health insurance.

So this proposal for a dislocated workers in particular I think will help to certainly manage the change and the anxiety that goes along with being downsized, with being dislocated from your job. When we look at the retiree population, those individuals who will be affected by what we call broken promises by employers. While it is a small population, it is a very significant population. You are talking about approximately 1.5 individuals in this category that are retired workers that have health insurance -- 1.5 million that have health insurance that has been promised to them by their employers and they will no longer, because of perhaps promises being broken, be eligible for this insurance should you have the experience, for instance, of what has happened with some companies in this country today of actually cancelling those benefits. We know that the trend is towards declining benefits for this population. We've seen it go more recently from 37 percent now to approximately 27 percent for just this population alone. So we think this will clearly provide greater options in particular to retirees.

I would just say in conclusion, as Secretary Shalala has already indicated and Gene Sperling, this obviously is not a policy that everyone will take advantage of. But clearly it is a policy that puts in place options for individuals to know that it is there as a real safety net. I liken it to a fire hydrant, you know -- not all of us will take advantage, hopefully, of the fire hydrant being there, but we sure feel a heck of a lot better knowing that it's there. And I clearly see this policy as having that kind of impact for dislocated workers and for retirees.

SECRETARY SHALALA: Let me give you one number, Alexis. We expect 300,000 people across all three of these programs to take up this option. So out of the millions that would be eligible, we expect 300,000 people. That is what the actuaries are estimating. And that is because people have to pay for it, obviously.

Q I'm trying to understand the logic of this then, because Secretary Herman just talked about this as a safety net, you said for the retirees or near-retirees, 62 and 64, between 150,000-160,000 would participate. That's about one in five. The people least able to afford it, the ones presumably most needing the help aren't going to get it.

SECRETARY SHALALA: Well, one could not listen to Mrs. Cain and not believe that she also needed help. This administration has addressed different aspects of the health care system -- this massive public-private system we have -- with a variety of different strategies targeted for different populations. Last year we did children's health insurance. In that case, it was a subsidy to make sure that working parents could get access to health insurance for their children.

This year, as one part of the President's overall budget message, we are targeting a group of people who can afford a decent plan if they had access to that plan. This strategy is about access; it is not addressing the financial problems of every individual. It's about access to health insurance, and therefore, it focuses on access and makes itself finance it.

Q But the people who are advocating for this say that Mrs. Cain's example -- I mean, there are a lot of people with preexisting medical conditions, but most of the uninsured are poor and minorities. That's the numbers, and they can't afford this.

SECRETARY SHALALA: There are large numbers of people who don't have health insurance in this country who have preexisting conditions. We address their issue in Kennedy-Kassebaum -- part of their issue -- but we didn't address the issue of ratings, and that is how insurance companies made adjustments so that someone with a preexisting condition simply couldn't get access to health insurance, or got health insurance that eliminated the disease that they needed help on taking care of.

That's why we describe this as targeted and limited, because it addresses a real problem for real people in this country, but it doesn't solve every health insurance problem that's left. Each year we're trying to add more people to the health insurance roles. In these cases, it's displaced workers, it's people that are pushed out of their jobs, and it's people who are 62 that need access to the market.

MR. SPERLING: I just wanted to add one thing. One of the issues that you do face is that when you do go to subsidization, you then do create a lot of other incentives that have to be dealt with, and sometimes we try to carefully deal with them and target them. But this is a plan that would not create those kinds of disincentives. And we were doing this very mindful of the fact that we have a very serious long-term Medicare situation and things we have to do have to be fiscally responsible. And so we said, here is a group of people, hundreds of thousands, who have a very serious problem. We could help them without burdening the Medicare trust fund a penny by essentially allowing them to buy into Medicare to essentially take a loan on the extra premium they have so they could buy a reasonable health care plan and spread that out.

And the question that this needs to be weighed on is, is this a good policy, does this help people and is it fiscally responsible. And if it meets those tests we should support it. And then if there's questions of could we do more, more like we did for the five million children of 24 billion, then we should come back and look at that -- look at what the costs are, look at how we can do subsidies without creating negative disincentives in the market for people that drop coverage, and judge that on its merits. But don't look bad on a program that can help 300,000 people a year with serious problems and fiscally responsible just because there's more to do. We agree there's more to do, we have no argument with that. And we should continue as we're here to find fiscally responsible ways to address more health care needs.

SECRETARY HERMAN: And I don't want to beat a dead horse, but I do want to say -- since you said I used the term "safety net," I used that on purpose, because while the actual numbers we're talking about is approximately 300,000, the reality is you have millions more, hundreds of thousands of more, who just knowing that the possibility of this kind of an initiative is in place, in my view does help to manage the anxiety that many workers feel when they're going through the kinds of transitions and changes that are part of dislocation and downsizing in the work place.

Q Okay. Is there any reason to think that by offering this program it will create an incentive or a trigger for employers to cut back on benefits if there is no alternative? And is this then 100 percent subsidy free and --

SECRETARY HERMAN: I don't think that there's any indication in the policy that this is an incentive for employers to cut back. Because, first of all, you have to realize that what we're doing is extending the option to continue COBRA payments, and we're doing it at a cost that, quite frankly, is not at a cost to the employer. It simply really puts the option there for that retiree to continue that COBRA benefit that they would have been entitled to anyway as a part of the employer's insurance program.

Also, as I indicated earlier, this is really a small population when you look at the retiree population, of approximately 1.5 million. And, ultimately, I also believe that smart employers today recognize that the whole question of being competitive today in the work place also includes what we're doing more broadly, not just with pay, but also with benefits.

SECRETARY SHALALA: The answer to the question is it's a hundred percent paid for.


SECRETARY SHALALA: A combination of the premiums. And if there's any other costs, we've identified savings in the Medicare program to take care of. But it's all paid for.

SECRETARY HERMAN: And you've got to recognize that right now it's like 102 percent, even for COBRA payments. And because we recognize that this population is an older population and therefore could be viewed at a higher risk, then we're looking at a rate slightly higher than the 102 percent of the existing COBRA payment now.

Q Which is what?

SECRETARY HERMAN: Somewhere around 120, 125 percent.

Q How do you make sure that this whole program is self-financing? For instance, if the cost is raised -- as they often have been in the past -- would the additional premiums that people after 65, would that be increased? I mean, is there some sort of safety valve here to make sure that this continues to be self-financed?

SECRETARY SHALALA: The answer is yes. And that's what the actuaries do. We've made a commitment to make sure it's self-financing. Congress will want it to be self-financing. And we'll make appropriate adjustments.

Q So you will continually adjust the premium as necessary?

SECRETARY SHALALA: Well, yes. But the point is that we've done these projections with our actuaries, so we have a pretty good -- we do that now in the Medicare system, where we make appropriate adjustments.

Q Isn't this all the health program for the United States beginning to look like a Christmas tree? I mean, a little bit here, a little bit there, and everything, when you could have taken a whole universal --

SECRETARY SHALALA: We tried that, Helen.

Q I know you did. (Laughter.)

SECRETARY SHALALA: I agree with you.

Q You did try it, but you didn't try it hard enough. I mean, you didn't --

MR. SPERLING: Boy, of all the criticisms.

Q You didn't have a program that really covered everybody. So now why don't you make the employers accountable and the insurance companies amenable and so forth?

SECRETARY SHALALA: I think that, you know, this is strategy, too. And that is that we are taking deliberate, strategic steps to fill in the gaps of where the health care system -- the public/private system that we have is weak. And this is a clear place where we have identified a problem and developed a strategy that is self-financing for thousands of Americans who are outside the health care system.

It's in all of our interests to bring more people into the health insurance system, whether it's in the private system or in the public system.

Q On the access premium that then gets paid after 65, that continues in perpetuity, even if the person lives until they're 95?

SECRETARY SHALALA: Yes. Yes, it does.

Q On that question, how do you know at this point -- or how would anyone know how much they would be paying when they get to, say, age 70 --

SECRETARY SHALALA: That's what actuaries do.

MR. SPERLING: They're told up front what it will be.

SECRETARY SHALALA: They're told up front what it will be, so that no one is surprised when they enter the system what they're going to end up --

Q So they'll be okay because they will have a cap on the amount that they will pay. But then, if, in fact, you only get the sickest people to enroll in this program, isn't it possible that the cost to the government would somehow rise exorbitantly and Medicare will pay?

SECRETARY SHALALA: We will, in this total package, identify savings to make sure that we are not adding cost to the trust fund. That is the commitment that the President has made as we send these recommendations up to Congress.

Q I have two questions. One about not providing an incentive for employees to continue the trend of dropping current retirees. I mean, if you're extending COBRA at no cost to the employer, why isn't that an incentive for employers to say I'm going to drop all the early retirees on my roles now. I mean, why isn't that an incentive for them to do that? And what will you do if this trend suddenly takes off?

SECRETARY HERMAN: Well, I don't think it's an incentive, as I said earlier, because enlightened employers today are looking at the total package, first of all, of what it takes to keep their own work forces competitive.

Q We're not talking about enlightened -- (laughter.)

SECRETARY HERMAN: Yes, I know. And that's why this policy really speaks to what we call the bad actors, who have made a good-faith promise to their workers and who have chosen to break that promise.

Q It's for bad actors?

SECRETARY HERMAN: That's who we're targeting, those who have broken their --

Q But the question is, what about marginal bad actors who right now aren't doing it, but under your plan could do it, and so their employee is protected?

SECRETARY HERMAN: But the reality is they are already providing COBRA support anyway.

Q I know, but it doesn't cost them anything. They cancel the health insurance -- the employee turns 55, they say, you're now covered under President Clinton's plan, hence we're canceling and all of our employer costs go away.

SECRETARY HERMAN: Well, yes -- I mean, clearly that's a possibility that could occur. They could do that now. I mean, there's nothing --

MS. BERG: pay for it and pay more. So there already are incentives in the system for people who -- drop it, they've been doing it.

Q But this does not change those incentives.

MS. BERG: No, this does not change those incentives. But what it does do is ensure is that people that does this happen to will have --

SECRETARY HERMAN: That's Olena Berg, who is our Assistant Secretary for Pensions at the Department of Labor.

Q I have another question about Kennedy-Kassebaum. Secretary Shalala just said that Kennedy-Kassebaum allowed people with preexisting conditions to get insurance, but not for that preexisting condition. Isn't that an admission that it isn't working?

SECRETARY SHALALA: No. Kennedy-Kassebaum allowed people to get insurance. What it didn't do was deal with the rating issue. And that is, you can get access to insurance, but the insurance company can run up the price and that's been the problem for people. What we do here is we give people, even those that are sick, access to a pool in which they get a price that simply is a better price. What Kennedy-Kassebaum never did was protect us against the ratings -- protect individuals against the ratings issue.

Q They can get, they just have to pay a lot; this makes it more affordable? That's all you're saying?

SECRETARY SHALALA: Yes, exactly. Exactly. Well, or she was describing a different kind of insurance

Q She said she couldn't get it.

SECRETARY SHALALA: Well, she could get insurance. What she couldn't do was get insurance for that particular preexisting condition. She probably actually could now get insurance for that particular condition, but it would be so expensive she wouldn't be able to do it.

The point here is -- particularly for this group between 62 and 65, a lot of women in that group -- a number of people with a preexisting condition, as was described here, who just don't have access to the insurance market. What we're attempting here is to give them access to a reasonable premium that they will pay for, and give them access to a wider pool. So we're putting some order into the market.

Q In terms of the long-term solvency of the Medicare system, there's been a lot of discussion about conforming the Medicare eligibility age to the Social Security eligibility age, which is slated to rise to 67. In conjunction with that discussion, there has been talk about a program like this that allows a Medicare buy-in. Are you -- with the cost of this program you presented so high, are you setting a precedent that if there is this increase in the eligibility age, everyone in this below 67 or 68 age group will have to pay these high premiums every month?

SECRETARY SHALALA: Well, first of all, the Social Security program allows you to begin the program at 62. In many ways we're making the Medicare program consistent with what the Social Security program is. If you want to take early retirement you could take early Social Security at 62. This allows you to take early Medicare at 62, but you pay for it. And again, we are not running up the cost of the trust fund. I think it's extremely important, as the Medicare commission begins to meet that we continue to make improvements in health care in the United States where we see issues. We do not see this as interfering with the commission's decision-making in any way. It doesn't run up cost in the trust fund.

Q One of the concerns that critics express about this plan is that some programs can start out being self-financing or with controlled costs and they tend to grow. For instance, you put this program into place and there may be political pressures to have a government subsidy so it's available to people with low income. Do you have any concerns about that, that over the long haul this may cost the government maybe something substantial?

MR. SPERLING: I think that in the past there have been entitlement commitments that in the past were made where people underestimated what the true cost of those would be, and so, therefore, whatever the pay-for was there didn't meet that and it grew. What's different about this is that if more people come into that, each of them is essentially individually taking essentially a loan from the Medicare system and paying that back. It's not all that inconsistent with early retirement Social Security. If you want to go in and get some of the benefits early, you get less benefits from them on after you turn 65.

This allows -- for those people who feel this option is important to them -- and you saw today that it is for some --it allows them to take this option. So this is very different. I don't see how these costs can explode because each person essentially has a self-financing policy.

So will more people come into this? Certainly the demographics compel that. Today there are 22 million people between the age of 55 and 64. By the year 2010, there will be 35 million. But that means that all of the problems you hear today will go up 66 percent in the number of people that will be affected.

But what's important and why people who care about constraint on the budget should like what we're doing is we're putting in a system that has built-in constraints. And that is different from the type of entitlement explosions that you might have seen over the last 20 or 30 years.

Q But out in the driveway -- said the White House is eager and willing for people like her to push for subsidies, that you -- she's with the Older Women's League, someone who wants subsidies.

MR. SPERLING: Mara, there's two different issues. One issue is, do you put in a commitment by the government to cover a certain group of people and underestimate the cost, and then the cost gets larger. What I've described to you is why this doesn't fit that model.

A second issue is, might we ever want to come back more later and do more on health care for people who are poorer in the way that we affected, helped poorer children. And the question there is, if there are programs that help people that don't have overriding negative incentives in the market and are fiscally responsible and being paid for, who would be against that?

Q May I ask one question about the cost, the premium? You said $300 a month -- what do you estimate it would be for the displaced worker group that you talked about --


Q About $400 a month? And then people -- these are for individuals, right?

SECRETARY SHALALA: They're not being loaned. They're in a different situation than the 62 to 65.

Q Then they also pay an extra amount --

SECRETARY SHALALA: No, no. We do that up front as part of the monthly payment.

Q Then my third question would be, on the COBRA folks, can we say that whatever their premium is for their employer, they could anticipate paying 120 percent --

SECRETARY HERMAN: That's the estimate right now. We're still finalizing those numbers.

Q There's no way, I guess, to get a dollar figure.

SECRETARY HERMAN: No, because it depends on what that existing COBRA arrangement would be.

Q So they would really be paying not only their contribution, but the employer's contribution as well.

SECRETARY HERMAN: It's more for the handling. When you do the add-on in terms of the COBRA management, it's more for the handling for that retiree that is now taking advantage of it.

Q I understand, but what I'm saying is if you're a person who is working and you're trying to figure out what would the payment be, you would figure not only the amount that's coming out of your paycheck, but also another amount that you don't see.

SECRETARY SHALALA: Again, this is an issue of access. We're not solving all the financing problems of the health care system.

Q What was the logic, if you're going to do limited targeting why on limited targeting to help this particular class of people? Is it politically more feasible to help people who are middle class --

SECRETARY SHALALA: You know, it's interesting, this is the group, people over 55, that have been losing health insurance at a higher rate. We've actually been looking at this group for some time, because the changing nature of the economy and what's been happening to health care in terms of employer-provided health care, this is the group. Now, some of it also is because they work in places that don't have COBRA and some of it is early retirement in the system as companies restructure.

So what we're trying to do here is to respond to a changing economy and what's happening to workers out there. We're also trying to respond particularly to spouse issues, as people enter Medicare. We've heard a lot about their spouses not being able to get into the Medicare system because they're a couple of years younger.

So we think we're responding to a real issue that both is reflected in the statistics in terms of what's happening to employer coverage, as well as in what people are saying to us about what they can't find out there in terms of health insurance.

SECRETARY HERMAN: Let me also add to that. I want to add to that, because the reality is when you look at the whole question of what we tried to do administration wide for dislocated workers, this is really a part of a broader comprehensive strategy on the part of the President.

You'll find that in the '99 budget that we will have actually tripled the support for dislocated workers. We tried to take serious reform efforts to help workers get reconnected faster to new job experiences. We know from all of the reforms and the efforts that we've been involved in to assist this particular population that the whole question of health care benefits and losing health care as a part of that change that's taking place in the work place is at the top of their radar screens.

And when you break it down age-wise, this is the population that has the most difficulty reconnecting to the labor force with health benefits intact. And so it was very strategic in terms of why we focused in this area.

SECRETARY SHALALA: The other thing is, from my point of view, having --

Q -- larger scale so that people who are on the bottom rung who cannot afford the premium will be able to have access.

SECRETARY HERMAN: And that's a very serious issue, still. I mean, as we said earlier, this is not a panacea in terms of being able to cover all workers. And clearly those with economic need is still very great to be able to afford it.

Q If you left with the impression that faced with a choice between being fiscally responsible and covering the people who most needed it, who you wanted to cover, you chose to be fiscally responsible. I'm asking.

MR. SPERLING: We just did a proposal that we fought for and in fact held the entire balanced budget agreement up for to get, not a compromise between zero and $24 billion, not a compromise between $16 and $24 billion; we fought for every penny of getting $24 billion to cover children, poor children.

Now, what -- there are important issues here. One, we're in a period right now where we are in between a balanced budget agreement where we just implemented significant Medicare savings, and we just had a significant new expansion for the children of working poor families. And we have a Medicare commission about to come back.

What we wanted to do is we saw an opportunity to do something that would help hundreds of thousands of people -- to be a safety net for people maybe who are more working families, but where they have some problems like the woman you saw today -- we saw a way to do that that could be self-financing. Now, the question is should we not do that because we can't solve every single problem with this?

Secondly, there are health care policy issues you have to look at. Whenever you do subsidies, we think that it is worth, at times, subsidizing and helping poor working families or people in need. But there is a health care issue. When you do subsidies you then have the very much more legitimate question of what kind of incentives do you provide. If the same person can now have coverage cheaper by the government than through their employer, then you do have incentives to drop coverage.

Now, sometimes when we look at these programs we think that you can come up with a positive enough program where the benefits in coverage in helping poor people outweigh any of the negative incentives. But those are real issues that you have to look at carefully when you go in, and that's one of the difficulties in doing -- a step-by-step process is one of the challenges, but we've been able to help hundreds of thousands, millions of people. So it's not a choice. We have had a proposal. We have had a plan. We do many things that focus very much on the poorest Americans and working poor Americans. But there's nothing wrong with also trying to address the needs of working families who, as Alexis says, for one reason or another, fall on poor health or hard times.

And again, I think your question should be, does this proposal make sense, is it fiscally responsible, is it a good health care policy. If the answer to all three of those is yes, you should be for that. Is the question, could we do more? Yes, we could always do more if it can meet those tests. And as

you can see, as you can see everything that happened, this administration is just getting going and the second term is just getting going, and I think the one thing we've put to bed is any notion that we don't have a lot of new ideas, a lot of new initiatives, a lot of new things to help the American people.

Q You had mentioned -- people as baby boomers age. What is out there that gives you no reason to believe that the private market won't figure out a way to offer health insurance given the increased number of people? And could you remind me what the subsidy is right now for Medicare for people who --

SECRETARY SHALALA: First of all, in some parts of the country people that are healthy that are 62 years old are going to be able to find health insurance perhaps a little cheaper than this. We are filling a need here for a group of people who have not been able to use the private health insurance market. We are not substituting for them, they have not been enthusiastic about 64-year-old women with preexisting conditions. So we are filling that gap with this option for people. So, clearly, we're filling a gap.

What makes us believe that the private sector won't develop some health insurance plan? Nothing makes me believe that. And in fact, if the private sector starts to respond by developing some health care packages, no one would be more enthusiastic than we would. And if we thought there was a private sector package out there for this group of people, it would be there right now. What the market has not done is produced a very good package in every part of the country. We want to make sure everything we do to reduce the number of people that don't have health insurance helps the rest of us -- helps us to keep our costs down in Medicare, helps us to keep our costs down in Medicaid and all the government programs and in the private sector.

What we don't need is a large number of people who are over 55 without access to health insurance who are delaying going to the doctor, going into hospitals when they need to, because in the end we'll pay for it in Medicare later as they put it off. So our strategy from the beginning of this administration has been to do everything we could to fill the gaps, to reduce the number of people without health insurance, whether it's children or the elderly or the middle-aged. That becomes important for everybody in the health insurance system.

Q How many people between the ages of 55 and 64 don't have health insurance today?


Q And can you go through the numbers on the 300,000 who you think will sign up for this -- what category --

SECRETARY SHALALA: Three hundred thousand people will benefit over all and -- we'll get that for you, Susan, in terms of specifics.

Q The total who are eligible?

SECRETARY SHALALA: Well, the people that are eligible are both people who are in the individual market as well as don't have health insurance. We have identified 3 million people without health insurance between 55 through 64. But there are also people in the individual market who are paying very high premiums or about to lose those premiums one way or another. So I think our number of 300,000 ought to stand because that's what our actuaries believe are estimating the number of people that will take up one of these options.

For every single one of those spread across the country, every single one of you is going to hear from one of them because from the time we started talking about this, all of us have run into people in our families or someplace else who can't get health insurance that think this is a wonderful opportunity.

MR. SPERLING: Susan, there's about 1 million uninsured in the 62 to 64 category, and there's about 700,000 in that group who are buying their health insurance through the individual market. So if you're looking at that 62 to 64 you could say a reasonable pool that would be very interested in it would be about that 1.7 million in the 62-65. And the majority, once this is up to speed, would be about 300,000. The overall majority of that group is from the 62 to 65 part of this initiative.

SECRETARY HERMAN: The retirees -- while that population is 1.5 million, we have had cases of about 87,000 that we've worked with.

THE PRESS: Thank you.

END 12:57 P.M. EST