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Wednesday, Jul. 29, 2009

TIME's Exclusive Interview with President Obama

By Karen Tumulty

TIME senior writer Karen Tumulty sat down with President Barack Obama on Tuesday afternoon to talk about his work both in public and behind the scenes to push a health-care-reform measure through Congress. Here's the full transcript.

TIME: I thought I'd talk to you a little bit about just sort of the whole degree to which this is really a test of leadership, health care is, as much as anything. And last year at the news conference, when somebody asked you — it was almost a flip question — whose job is this, you said, "It's my job, I'm the President." But the fact is that no President has been able to pull off anything of this order of magnitude in 44 years.
President Obama: Right.

And I understand that you've thought a lot and studied a lot, and that a few weeks ago, in fact, even Nancy-Ann [DeParle, the White House health czar] brought you a memo as to sort of just how LBJ pulled this off — not just making the case for it publicly, but really making the gears of government run. What of that experience speaks to this experience?
Well, as you point out, the last time we did something of this magnitude was 1965. And the circumstances in some cases were similar, in some cases were profoundly different. Obviously LBJ had just won a landslide reelection and had huge majorities in the Senate and the House. We have the largest Democratic majorities since LBJ. But the way that Congress works is a little bit different today than it was then. LBJ had to negotiate with Wilbur Mills and a handful of other folks. I think that Congress is more splintered. I think each member of Congress is a little more independent from party than they might have been in the past. I think the nature of the Republican opposition has changed. Today it's much more concentrated on the conservative end. And Medicare and Medicaid had been ideas first introduced by JFK, and his assassination obviously provided enormous emotional push that is different from today.

Having said that, I think in both circumstances, as President, you have to help make — help to make the case publicly, but then you also have to work through a wide range of divergent interests — geographical, ideological — and that involves combining firmness of purpose with some flexibility to get the job done. Whether we've struck that right balance we'll find out in the next couple of months.

So how much of your day are you spending on this?
Well, I think over the last two, three weeks I'd say I'm spending at least a third of my day focused on it. Now, that can manifest itself in different ways. Certainly we spend a lot of time with our health care team talking both policy and politics. I'm reaching out to members of Congress, meeting with them or talking to them on the phone to get their perspectives. Speaking to the public is absolutely critical, and so today, for example, I was over at AARP trying to answer questions of the public.

So whenever we're in the middle of a big legislative effort like this, it's going to attract a lot of my attention, as well as my team's attention.

Well, of all the big decisions that you've made strategically, one of the most important was really to lay out the broad principles and let Congress figure out how to get there. Could you talk to me a little bit about how and when you made that decision, and why you decided — because there are a lot of people right now on Capitol Hill who are saying, we need more from him; he's got to tell us what — where his bright red lines are on this.
The truth is we've actually, I think, provided more guidance than has been advertised. I mean, if you think about how we've moved this forward, we didn't simply put out some broad principles; we were fairly specific. We said we need to have insurance reform, and that's going to include things like preventing insurers from dropping people because of preexisting conditions. We said that we are going to need to expand coverage; that an insurance exchange that would provide people a menu of options was an important mechanism to expand choice and help to deliver help to people who didn't have health insurance or were underinsured. We talked about the need for a public option as part of that health care exchange.

Although you didn't define what a public option really is.
I would say, Karen, actually we defined it fairly clearly in terms of what we thought would work best. What I said was, is that it shouldn't be something that's simply a taxpayer-subsidized system that wasn't accountable, but rather had to be self-sustaining through premiums and that had to compete with private insurers.

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And would a co-op fit that definition?
Well, I think in theory you can imagine a co-operative meeting that definition. Obviously sort of the legal structure of it is less important than practically how can it operate. There are concerns that in the past, attempts at setting up co-ops have not been successful because they just haven't been able to get off the ground; sort of the start-up energy involved may not exist if you're doing a state-by-state co-op effort as opposed to a broad national plan.

But to go to your earlier question, I guess — and I also said at the beginning that it was very important for us to alter delivery systems so that we could reduce costs. And as the process has moved forward, we have further refined those aspects of the system that can be changed to deliver more bang for the buck.

Now, if you look at the results, the 80% of all the various bills that are out there that people have agreed to, reflect our — most of our ideas from the start of this process. So we haven't had trouble in moving the process to most of the things that we want to see in health care, which we think will help the American people have quality, affordable health care.

But the 20% that right now is still the holdup would have been a holdup if we had put forward a plan, hadn't put forward a plan, had left it to Congress, had written it ourselves — because it represents some longstanding ideological divisions in our Congress and, frankly, in our society.

So, let's just take one example, and that is how do you pay for the uninsured who would be receiving some help, some subsidies, through this plan? Very early we identified over $500 billion from Medicare and Medicaid savings, such as the elimination of all the subsidies for Medicare Advantage, that would cover up to two-thirds of the cost of covering the uninsured.

We knew we were going to have a third left. We've put forward what I continue to believe is the most sensible way of financing that final one-third, and that is simply to lower the deductions, the itemized deductions that wealthy individuals can take. That would have covered it.

Now, we put that forward very early. The fact that that has not yet been adopted I don't think is reflective of me not giving clarity to Congress. It has to do with the fact that members of Congress are skittish about anything involving taxes, even though these are taxes that would not be imposed on anybody making less than $250,000 a year. It's just tough politics. Those are things that people are vulnerable to be attacked on.

The second area where we still haven't arrived at agreement had to do with the public option, and we've already started to discuss that. There is just a — not only an ideological suspicion of the public option on the part of many Republicans, but many of them also saw it as an opportunity to try to resurrect the old scare tactic of government-run health care, socialized medicine, eliminating your ability to choose your own doctor. That was going to exist regardless of whatever tactics we employed.

And then the final part of this, which we knew was always going to be contentious — and I actually think that the way this process has evolved, I like where we are right now but it's still tough — has to do with the issue of how do you bend the cost curve, because you can't say we're going to control cost inflation except nothing changes; something has to change if health care inflation is going to be reduced.

And that was always going to be a wrestling match because even if these are benign changes — changes in how the delivery system works, reimbursing doctors for quality as opposed to quantity, trying to reduce the number of tests, trying to discourage hospitals from readmitting patients, or at least providing them bonuses for getting it right the first time — all those things mean that people are going to have to change their practices.

And when you have a system this large, with this many players involved, it was inevitable that not only would that be contentious but that, again, the public would be suspicious of the possibilities that, well, somehow this means that my doctor is not going to be able to give me what he or she thinks I need.

But isn't that going to happen occasionally or at least that I'm not going to be able to get what I want? I mean —
Well — yes. I mean, here's what I've tried to say. Here's how I've described it, and this is the truth as I see it: There is nothing that — there is nothing that would make you healthier that health reform would prevent you from getting. What we are interested in doing is giving doctors and patients the ability to sort through what's effective and what's not, and not purchase things that don't make any improvements in your health.

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But what if it would make me just a little bit healthier, but it would really cost a lot of money and I want it?
Well, what you're describing is — what you're describing is the status quo now. There are all kinds of things that people want that would make them a little bit better and they don't have. Every single person who goes to the emergency room goes through that. Every single person who is denied reimbursement for something by an insurance company is going through that. Every single person who's got an $8,000 deductible, who foregoes a mammogram or a pap smear or a regular checkup or dental care is going through that.

So what you described is the status quo. And my point is, is that if we could save some money on things that are unnecessary, then less frequently would people be in a position where they had to forego things that are necessary.

Well, you know, a few months ago, when you brought up your own grandmother's situation [her choice to have an expensive hip-replacement operation, despite the fact that she was terminially ill], I mean, it was, I think, painful and personal because every family, if they haven't hit some wrenching decision like this, is going to. As you think back on that, I mean, was that the right decision? Is this the — for your family, for her? Is this the kind of thing that a reformed system, as you see it, would change the dynamic of that decision?
You know, first of all, unlike my mother, who had a difficult time with her cancer in part because her insurance was a little bit unreliable and she had just taken a new job, my grandmother had been signed up under Kaiser Permanente for years. And it's actually one of the models of high-quality, cost-efficient care that's out there right now, partly because they maintain such a stable base of patients and they construct a whole team approach that has proven to be very effective.

So my grandmother was generally very happy with her care, and if we could actually get our health care system across the board to hit the efficiency levels of a Kaiser Permanente or a Cleveland Clinic or a Mayo or a Geisinger, we actually would have solved our problems.

Now, even in those systems, there's still going to be hard choices, right? But the fact of the matter is, ultimately, my grandmother was able to get that hip replacement even though she had terminal cancer and even though the operation was full of risks. And so from a purely economic point of view, there would be some who argued that wasn't a good use of health care dollars. I guess my point is that —

Do you believe that was?
I guess my point is, is that you don't even get to those really tough decisions, you don't even have to get to those really tough decisions before you've already saved a huge amount of money and made people healthier and made sure that Medicare was solvent and bent the cost curve. I mean, there's 20, 25% of the cost — of the system that is wasteful right now, even before you get to tough decisions about end-of-life care.

Now, you ask me do I think it's worth it? Of course, it was my grandmother. So anything that would relieve her pain or her suffering or extend her life in a way that she wished is something I wanted to do, and I would have paid for it out of pocket if I had to. But not every family is going to make those same decisions.

Right. But that decision, however, will, you're saying, be still there for the family to make, will be —
It's still going to be a decision that the family has to make. I guess — this is my point, I think that there's this perception that you either have rationing that is very stringent and sort of makes you wait for months before you can get your cancer treated or you can never get your knee replaced, right, all the horror stories you hear from the British model or the Canadian system that people who are opposed to reform always trot out. Or, alternatively, you just have this bloated system in which we don't even try to make it rational, we just sort of live with what we have. And what I'm trying to suggest is, is that there's this huge space in between where we could make the system much more efficient, much more cost-effective, make people much healthier, and still not have to resort to some of the rationing that people are fearful of. But that — it does require changes in how we approach things.

Let's just take one example, and that is testing. It turns out that we pay 10 times what Japan pays, for example, for CAT scans and MRIs. Well, why is that? And it turns out, by the way, that we are having those tests five, six, eight times as often as folks in other countries who have just as good outcomes.

Now, some of that may have to do with reimbursement models. There may be differences that have to do with the approach that hospitals here take in recovering costs for expensive equipment. There are a whole range of reasons why that might be true, but the point is, is that it's not like people out there are — would automatically be prevented from getting CAT scans if we just tried to think when is a CAT scan or an MRI working and appropriate in improving care and when it's not.

And what we've said is that if doctors and patients had that information, and you start changing some of these delivery systems, you will see significant changes in the cost of health care and you will see improved outcomes and improved convenience, because if people are going through a battery of tests when one test would be sufficient, every time they're going to the doctor, that's gas, babysitting, sitting around for two hours, a day off work. We're not even factoring in those costs.

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I went back and read your announcement speech again, and it struck me that even then — you brought up health care maybe three or four times, but you even then were framing it in — as a cost-containment issue, not just a coverage. In fact, you seem to be putting more emphasis on cost containment.

In fact, you seem to be putting more emphasis on cost-containment. So that's been really consistent with your approach to this issue since 2007.

But some things have changed. I mean, for instance you were very much against an individual mandate. Could you describe how your thinking has evolved on this issue as you've sort of gotten — and also at the time you defined success as universal coverage by the end of your first term.
I feel pretty good that I've been pretty consistent on this. The individual mandate is probably the one area where I basically changed my mind. The more deeply I got into the issue, the more I felt that the dangers of adverse selection justified us creating a system that shares responsibility, as long as we were actually making health insurance affordable and there was a hardship waiver for those who, even with generous subsidies, couldn't afford it. And that remains my position.

I think other than that we've been pretty consistent about how I think we need to approach the problem. And by the way, I in no way want to suggest that cost is more important than coverage. My point has been that those two things go hand in hand. If we can't control costs, then we simply can't afford to expand coverage the way we need to. In turn, if we can expand coverage, that actually gives us some leverage with insurers or pharmaceutical industry or others to do more to help make the health care system more cost-effective.

That's your carrot.
Yes.

What about — you mentioned that subsidies have to be there. What's — you're hearing now — 300% [that the government would provide assistance to people earning up to 300% of poverty]. Is that enough? Is that really —
Until I actually see the numbers, I don't want to give a definitive answer on that. I do think that if we can figure out what is a fair, appropriate percentage of your income that you're paying on health care, and peg it — peg subsidies so that it's meeting that test, potentially with some regional variation then we'll get it right. And I think that the committees are working on that. That's the kind of detail that we had anticipated working through in conference. If it turns out that Congress just can't get there and that's the holdup, then we'll give a very definitive idea of where we need to go on it.

Can I ask you, if you go to the polling, which I'm sure you never do, but if you ever did —
No, actually, on this — I will confess: I don't spend a lot of time looking at my polls. I do look at the polling on health care, partly because I think that there is a terrific case to be made to the American public. But it is — this is complicated, it's difficult. Without giving you a hard time, Karen, because I think you've been terrific in reporting this, the press gets bored with the details easily, and it very easily slips into a very conventional debate about government-run health care versus the free market, et cetera, which is not at all what the real debate is about, but that's a lot of times how it gets shaded or framed in the press — all of which feeds the public spheres, even though they know that the system we have isn't working very well.

And I will say that this has been the most difficult test for me so far in public life, trying to describe in clear, simple terms how important it is that we reform this system. The case is so clear to me. And when I sit with our policy advisors — we had somebody here sitting right there this morning who is a medical expert, worked at McKinsey for a while, he's now working on our health care team — and he just ran through: We pay 77 percent more on prescription drugs, we're paying $6,000 more per individual on health care than any other industrialized nation; here's all the failures in the delivery system that account for it. It's not just because we are somehow more obese or more unhealthy. It turns out actually we're a little bit healthier than most of these other countries because our smoking rates are lower and we're younger. So we should actually be paying less than they are.

And when you just start hearing the litany of facts, what you say to yourself is this shouldn't be such a hard case to make, because the American consumer is really not getting a good deal.

And so when I see polls saying that it's 50-50 and people are still worried about whether this is going to somehow increase their costs when every bill that's out there would lower them, or that this is going to mean that they lose their doctors, or their health care is rationed, or, you know, all the other things that they're worried about, it leads me to spend a lot of time thinking about how can I describe this in clearer terms so that we can get the health care that the American people deserve.

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I've noticed that you're lately referring to it as health insurance reform.
Well, I think partly because we're just trying to provide some additional definition. Now, I do think that some of the insurance reform proposals are easier for people to understand. So if you just say insurance companies can't block you from getting insurance because of a preexisting condition, people I think are familiar enough with those issues that it immediately resonates with them personally.

Some of these other issues, when it comes to the discussion we just had about delivery systems, get more complicated.

And how do you think the fact that you're trying — on the one hand I thought trying to do this in a middle of a recession, when everybody is looking at people around them losing their jobs would sort of make people more anxious for something to grab onto that would seem secure. The polling would suggest that people —
It's not true.

Why is that? Or is that the case? Or is it because of the bailout or —
Here's what I think has happened. I think that we came in and had to take a series of emergency measures to stabilize the economy, and that meant a recovery package that was $800 billion. As circumstances had it, President Bush and the previous Congress hadn't dealt with their budget so we had an omnibus that had earmarks in it which got publicized. Then you had our budget that we had to introduce, that even though it actually reduced long-term budget projections, we had still inherited a $9 trillion deficit — so that number gets put out there. Then you add the supplemental, which even though the majority of the American people certainly still support making sure that our troops are safe and well-equipped, that was a big chunk of money.

So you have — and then obviously the TARP bank bailout money — didn't happen under our watch, but we had to administer it. We then took on making sure that GM and Chrysler didn't collapse, because that would have potentially created additional fear in the marketplace at a time when the economy was most vulnerable. But that got advertised.

So you add that all together and I think the American people's feeling for six months was, gosh, that's just a lot of stuff; that's a big load to take on — which then gives traction to this notion that we are interested in expanding government; which then feeds into suspicions that somehow health care is another big government project that we can't afford. And it's very hard, particularly when the figures get thrown out there — "This is going to cost $1 trillion" — even though it's $1 trillion over 10 years, even though we've identified $600 billion of the trillion dollars so that we're really talking about raising somewhere between $300 and $400 billion over 10 years, or $30 or $40 billion a year, which with very modest changes to the tax code could be easily paid for and would pay significant dividends. It's still — in people's minds it's just a big expensive thing that may end up resulting in me paying more taxes.

So ideally if — you know, you asked earlier about tactics. Had we not been in the worst financial crisis since the Great Depression I would have led with health care reform, made the case, and potentially we might have had it done by now.

But I disagree with this idea that because of the financial crisis somehow we can afford to put this off. In some ways I think it's just made it more urgent for some of the reasons you just said: A lot more people are losing their jobs, are vulnerable to losing their health care; our deficits are even bigger, which means the load on Medicare and Medicaid is just going to get worse. If we don't do this now we are going to be in a world of hurt later.

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Can I just ask, every time you say, "If you like what you have, you can keep it," I wonder what about if you don't like what you have? What if you think your employer's plan is too expensive or you don't like the doctors that are on the list? The House and the Senate have two different approaches on this.
Here's what we're trying to balance. On the one hand we want to make sure that employers don't dump their coverage and try to just put the burden onto the government. That's been one of the concerns that I had originally during the debates with John McCain about completely eliminating the exclusion. The majority of people still get health insurance from their employers. For them to suddenly just lose that and get some sort of tax credit and have to go out on the open market would be a radical change that I think would increase people's vulnerability as opposed to increasing their security.

At the same time, as you said, there are people whose premiums are going up or out-of-pocket costs are going up or so constrained that they might be able to access a better deal through the health insurance exchange that we've set up. I think right now what we're thinking is that certainly the uninsured can access the exchange. Small businesses who want to provide coverage can access the exchange. The self-employed can access the exchange.

If you are getting health insurance through your employer there are going to be some criteria that would allow you to switch off. If the deductibles are so high or the premiums are so high or the levels of insurance are so poor that you are effectively underinsured, then we want you to be able to access other options through the exchange. If on the other hand your employer's health insurance is good then you're still going to benefit from the insurance regulatory rules on preexisting conditions, but you probably don't need the mechanism of the exchange and the subsidies in order to stay healthy.

All right.

Well, again, thank you very much.
Thank you so much.

I just so appreciate you doing this.
Well, I appreciate you. You've been doing a good job on the reporting on this.

Thank you so much.
It's hard stuff and you've been very serious about it, so we appreciate it.