Bill Clinton photo

Remarks in a Health Care Roundtable With Small Business Leaders

March 22, 1994

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 business people here from all over America, and we thank you for your presence. We're here primarily to hear from the small business people who are here on the panel, and perhaps some others 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 business people, 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 which 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 the struggle 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 discrimination for preexisting conditions or based on the age of the work force. It protects Medicare. It does provide, both for Medicare people and for the work force and their families, a prescription medicine benefit and a phasedin, 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 into the panelists, hear their stories, and give them a chance to comment.

I'd like to start with Mona Castillo, who founded Monarch Graphics, a trophy and plaque manufacturer in Chicago, and who was the Chamber of Commerce national minority entrepreneur of the year award winner in 1993. And I'd like to ask Mona to talk a little bit about her difficulties in providing coverage for her employees and finding an insurance company who will do it.


[At this point, Mona Castillo, chief executive officer, Monarch Graphics, Chicago, IL, discussed difficulties presented by having uninsurable employees; Betty Hall, owner, Hall Manufacturing Co., Inc., Brookline, NH, discussed loss of coverage by Blue Cross/Blue Shield, limiting her company's options for health care coverage; and Spence Putnam, chief operating officer, Vermont Teddy Bear Co., Shelburne, VT, discussed difficulties in providing coverage for employees.]

The President. Thank you very much.

Let me just try to emphasize a couple of the points that were made here, 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 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 for 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 grocery 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.

I want to introduce now Murray Horowitz, who currently covers his employees today but has had to take some pretty strong steps to keep covering them. Murray, would you like to speak about that?

Murray Horowitz. As a pawnbroker, I represent one of the most misunderstood industries in the country.

The President. Want to come to work up here? [Laughter]

[Murray Horowitz, owner, City Pawn Shop, Baton Rouge, LA, discussed increasing costs, increasing deductibles, and employees who are uninsurable because of preexisting conditions.]

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 now 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 lose in 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.

[Representative John J. LaFalce discussed town meetings in which constituents described dramatic cost increases, increasingly limited choice, and increases in deductibles and copayments.]

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.

[Elaine Stone, owner, American Aviation International Corp., New York, NY, discussed her desire to provide coverage for all employees and described her current self-insured plan which splits funding between the corporation and the insurance company.]

The President. Thank you very much.

Let me say because of the unique sort of semi-self-insured 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 works, again, like everything else—it may work very well for large employers, but for someone with a couple of dozen employees, it is a very highrisk 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 would 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 very much want to cover folks.

And the press will remember, we were in an 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?

[Judith Ann Wicks, owner, White Dog Cafe, Philadelphia, PA, said she was able to provide insurance coverage for only a small percentage of her employees and that the health care plan would provide full coverage for only a small increase in cost while placing all restaurants on an equal competitive footing. Representative La-Falce then discussed sources of opposition to the plan and reiterated that it would place all restaurants in the same competitive position.]

The President. Do you think he feels strongly about that? [Laughter]

Thank you.

Erskine 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.

Eric Sklar. 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]

[Mr. Sklar, owner, Burrito Brothers, Washington, DC, discussed the plan's benefits for the restaurant business, citing the advantage of having employees with health care coverage, and indicated his willingness to pay more to secure health care for 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.

[Administrator Bowles introduced Garth Sheriff, owner, Sheriff Associates, Los Angeles, CA, who discussed the dilemma of having to choose between keeping an employee or keeping health insurance for his firm and the difficulties presented by a group of aging workers in terms of insurance costs and then strongly endorsed the health care plan.]

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.


[Brian McCarthy, owner, McCarthy Flowers, Scranton, PA, discussed the problem of attracting unskilled workers from welfare who would lose health care coverage from Medicaid for their families and also attracting skilled managers who would not take positions without adequate health care coverage.]

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, you know 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 be 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 is 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?

Chris Maas. 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. Every one of you has a oneliner for that, don't you? [Laughter]

[Mr. Maas, owner, Potomac Consulting Group, Arlington, VA, discussed problems he confronted in hiring older employees due to health insurance issues and stated that health care should be viewed as a business issue rather than a political issue.]

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. And I'd like to start with Stephen Hightower of the Hi-Mark Corporation in Franklin, Ohio, and talk about how the absence of that has affected his business and his family.


[Stephen Hightower, president, Hi-Mark Corp., discussed the difficulty of keeping employees without offering health care benefits and emphasized the link between welfare reform and health care reform.]

The President. I'd like to now to go to a small family business, Kathleen Piper, who owns the Pied Piper Flower Shop in Yankton, South Dakota. I first met her a little over a year ago when she represented small business at the economic conference we held in Little Rock shortly before I assumed the Presidency. I'd never met her before, and I didn't know anything about her, but I was deeply impressed by the comments she had to make, and we asked her to come back here today because of her own experience on health care.


[Ms. Piper discussed her inability to continue to provide health insurance for her employees and then thanked the Small Business Administration for its work in educating small business owners on the health care plan.]

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 young 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, 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 6 to 8 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 5 and 50 workers an opportunity to band together and 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 that joined these alliances had experienced declines in premium costs of between 5 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.

Administrator 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]

Administrator 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. 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, 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, Mr. Sheriff here, if he were able to get back into the health insurance market, 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've got to wrap up. We have one more person to hear from, and the Congressman wants to make a comment.

[Representative LaFalce indicated that the health care plan offered better quality care with its emphasis on preventive medicine and pointed to the Hawaii system as a model of success.]

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.

[John Sorenson, owner, WECO Supply Co., Fresno, CA, told the story of an employee who, because of job changes and changes in the company insurance plan, incurred the full cost for the births of two premature children and ultimately suffered bankruptcy, loss of credit rating, loss of his job, and separation from his wife. Mr. Sorenson concluded that the issue of coverage for preexisting conditions was the cause of the employee's problems.]

The President. It was.

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

The President. Well, let me tell you, the votes that really matter here—first of all, let's give him a hand. I think that was quite a moving thing. [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?

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

Thank you. We're adjourned.

NOTE: The President spoke at 10:46 a.m. in Room 450 of the Old Executive Office Building.

William J. Clinton, Remarks in a Health Care Roundtable With Small Business Leaders Online by Gerhard Peters and John T. Woolley, The American Presidency Project

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