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An Inside Look at the Health Care Bill ... Is Public Option Still Alive?

This is a rush transcript from "On the Record," October 5, 2009. This copy may not be in its final form and may be updated.

GRETA VAN SUSTEREN, FOX NEWS HOST: It's coming, probably this week, Senate Finance Committee's health care bill. That means it will likely be voted on this week. What will be in it? Earlier, Republican Senator Jon Kyl, a member of the Senate Finance Committee, went "On the Record."

(BEGIN VIDEOTAPE)

VAN SUSTEREN: Senator, nice to see you, sir.

SEN. JON KYL, R - ARIZ.: Thank you. Good to be with you.

VAN SUSTEREN: All right, Senator, where does the Senate Finance Committee stand right now with the health care reform bill?

KYL: Sometime this week, presumably, the committee will get back together. And when we hear the cost of the bill, will then vote on it. And presumably, the Democrats have enough votes on the committee, whatever its cost, to send the bill then on to the next step. That step is to combine it somehow or other with the bill that came out of the Health Committee -- Health, Education, Labor and Pensions Committee.

Now, they're two very different bills. And so the majority leader and a couple of the committee chairmen on the Democratic side -- no Republicans in the room -- will somehow meld those two bills together, and that bill will come to the Senate floor. And that's the bill maybe in a couple of weeks that we'll actually be debating on the Senate floor.

VAN SUSTEREN: All right. It sounds like a good idea, I mean, in terms of process, that it seems to work. However, the big -- there's a big difference in these two bills. It's not like these bills can sort of just be coordinated or reconciled. These are two very different bills, even on the question of a government -- a public option.

KYL: That's right. You're exactly right. Even though they're both Democratic bills, they approach the problem in a very different way. They cost -- the cost is a lot different, the way that they raise taxes to pay for it. All those things are different. And so what decisions will they make about what to put in the bill and not to put in the bill? The government-run insurance company is just one of many, many different issues. And unfortunately, Republicans will have nothing to say about that. We'll read about it in the news -- you'll probably know before I do what's actually in it.

VAN SUSTEREN: But the interesting thing is, is that it's already sort of a -- most people assume the Republicans are not going to be voting for it. I mean, we've been listening to you all along, all the Republicans. The interesting thing, though, here is that with the public option, if it - - it's either got to be in the bill or not in the Senate bill, one or the other. The HELP says it's in. Senate Finance say it's out. And if Senator Reid chooses one or the other, does he lose all those other Democrats?

KYL: Very good question. But they always find a way to maneuver it so that they can keep their group together. And what they might do, for example, is to not put the public option, or government-run insurance company, in on day one, but instead have a trigger in there that says if certain things don't happen by a certain date -- let's say, if insurance companies don't reach a certain goal within three years, then the public insurance would automatically be triggered. It's called a "trigger."

My concern is it'll be a hair trigger, that the condition for the public option to take place will be not much of a condition at all, and therefore, maybe we don't see it on day one, but maybe in three years we do see it. The liberals who favor the public option can say, Sure, we're willing to wait three years because we know it'll happen, and those moderates who don't want to be seen back home as voting for the public option can say, We didn't vote for the public option, and maybe they can get away with that.

VAN SUSTEREN: All right, with a trigger, though, it also creates another sort of issue. Is that -- is that an opportunity to peel off at least one Republican senator, Senator Olympia Snowe, because she apparently liked the trigger option at one point? Does she now vote with the Democrats likely, and if so, does it now become a bipartisan bill?

KYL: I don't think very many people believe that if you have one Republican out of 100, that therefore, it's a bipartisan bill. I don't know what Senator Snowe will do, but I know right now that she's very concerned about the cost of the bill and the fact that the Congressional Budget Office is not able to provide us with an accurate cost of what the bill is. They say that they have to have legislative language before they can do that.

We've only been talking in concepts so far, and they say that their cost estimate could differ significantly once it's put into actual legislative language. So she's taking the position until she sees that, she's not going to commit. And so I don't know where she's going to be at the end of the day.

VAN SUSTEREN: All right, are taxes going up on people who make less than $250,000 year?

KYL: Absolutely yes. When the president said this bill won't raise taxes for anybody making under $200,000 a year, that promise cannot be kept under this bill. Taxes do go up for everybody. And in particular, there are several taxes that will be imposed on people below $200,000, yes.

VAN SUSTEREN: Any estimate of how much taxes will go up on people who make $250,000 and less and those who make $250,000 and more?

KYL: Yes, and I unfortunately don't have the numbers right off the top of my head, but on one provision alone, almost a quarter -- I think the number's 21 percent of the people who would pay the tax have incomes less than $40,000 a year. These are people at the 200 percent of poverty level. These are not rich families. And I think something like 87 or 83 percent of the taxes are paid by people that pay less -- that make less than $100,000 a year. So these are not wealthy families, and they will be paying increased taxes under this bill.

VAN SUSTEREN: All right, the bill that you anticipate's going to come of Senate, when these two Senate committees' bills are reconciled, do you expect it to be anything remotely like the bill that's going to come out of the House?

KYL: The House bill is much more left-leaning. It's more like the bill in the HELP Committee that Senator Kennedy chaired. So you got the Financing bill, which is the least liberal but still raises a lot of taxes on people. My guess is that the bill will only move left, that the Finance Committee bill will move left when it's combined with the HELP Committee bill, that the bill that comes a lot of the Senate will move left when it and the House bill are somehow dealt with together. And so you'll see the bill continually move to the left, which means it'll cost more for people, it'll have a lot more government intrusion and undoubtedly result in the rationing of health care for Americans.

VAN SUSTEREN: Senator, thank you, sir.

KYL: Thank you.

(END VIDEOTAPE)

VAN SUSTEREN: Does the White House have a secret plan to make a government-run public option happen? Now, something is reportedly happening behind the scenes very quietly. Joining us live is Jon Weisman, White House reporter for The Wall Street Journal.

Jon, is the president doing anything to lobby or to -- to aggressively get the public option in that bill?

JON WEISMAN, WALL STREET JOURNAL: You know, Rahm Emanuel, the chief of staff, is on the phone with, you know, the Senate leadership, the House leadership all the time. I know last week, Larry Summers, his chief economic adviser, Nancy DeParle, the chief health care adviser, was up on the Hill meeting with the House leadership.

Yes, they want to get the public option back in. There's no question about it. The president still supports it, and he's looking for a way to do that.

VAN SUSTEREN: Is there any expectation at the White House that it's going to -- that it's going to be back in? I realize that in the House bill, it's going to be there. But is there any expectation it's really going to happen?

WEISMAN: Absolutely. I mean, the way they want to do this is when -- after the Finance Committee reports out its bill, what they would like to do, if they can make sure they have the 60 votes, is have some version of the public option, probably a public option "lite," in the bill that Harry Reid actually brings to the floor of the Senate.

Now, what they would like to do is combine a smaller bill that would cost less, which would satisfy and maybe make some conservative Democrats happen, that would involve fewer tax increases, with a public option to make the left happy. So you can actually make a smaller bill that still moves -- you know, moves to the right in some ways by making it less costly, but to the left in some ways by including a public option.

VAN SUSTEREN: Is -- are you talking about a public option lite or are you talking about a trigger mechanism that if -- that it may later get triggered?

WEISMAN: Could be a trigger, but it could also be this idea that Senator Tom Carper from Delaware was talking about, which is to allow states -- not mandate but allow states to put a public option in their own -- these health care exchanges. And they could band together regionally. For instance, if the Dakotas and Montana wanted to have a Plains public option for their three states, they could do that. They'd have the option. It would be legal. But they wouldn't be mandated to it. That's what I would call public option lite.

VAN SUSTEREN: All right, paying for it -- president said deficit- neutral, which (INAUDIBLE) he's going to pick up a lot of -- according to his plan, by -- by fraud and making the system more efficient, but somebody's got to pay for it. What's -- what's the plan for who's going to pay for this?

WEISMAN: Well, you know, the big -- obviously, the big cuts are going to come from these things called Medicare Advantage, these Medicare plans that are offered by private insurers, like HMOs, and they're subsidized by the federal government. That money will just disappear. That's a huge sum of money.

VAN SUSTEREN: Who's in that category? I mean, what kind of people usually have those?

WEISMAN: You know, a lot of -- a lot -- the -- some of the senators from rural areas, like Chuck Grassley from Iowa, they're very unhappy about this because managed care companies won't go into places with, you know, not a whole lot of old people unless they have some help because there just aren't a lot of people in there, but a lot of people really like these plans. I mean, they're private insurance, rather than going through a government-run Medicare plan. A lot of other people just do it because they feel more comfortable with private plans. We don't know if these plans are going to stay around if they don't have a subsidy. They might disappear, or they may become more efficient.

Now, the big tax increase is the tax on so-called Cadillac plans, and that's going to hit rich people, you know, who work for Goldman Sachs, but also people who work for unions that have been negotiating very good health benefits.

VAN SUSTEREN: We only have 20, 30 seconds left. Is the White House feeling pretty confident it's going to have a public option?

WEISMAN: I think they are. I think they feel like if they can get -- yes, I think that they're going to have some kind of public option in there. I really do believe they believe that. And you know, it's just a - - it's just a question of counting votes and seeing what they have to give up to get that.

VAN SUSTEREN: Jon, thank you.

WEISMAN: Thank you.

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