This is a rush transcript from "On the Record," October 7, 2009. This copy may not be in its final form and may be updated.

GRETA VAN SUSTEREN, FOX NEWS HOST: Total estimated price tag $829 billion. And according to the Congressional Budget Office, the Senate Finance Committee's health care bill will cost $829 billion over 10 years.

Senator Chuck Grassley, ranking Republican on the Finance Committee, says there is an untold story.

(BEGIN VIDEOTAPE)

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

SEN. CHUCK GRASSLEY, R - IOWA: Yes, good to see you, Greta.

VAN SUSTEREN: Senator, the Congressional Budget Office has come out with their number, and they say that the Senate Finance bill is $829 billion over 10 years. What do you think?

GRASSLEY: Well, I think it will be closer to $1 trillion. And the huge untold story here is that in all of this process of spending this massive amount of money is going to lead to a massive involvement of the federal and government in the health care.

And untold story is the 85 percent of the people who have health insurance today will see their premiums go up, and spending near $1 trillion, we are still going to have 25 million people who do not have health insurance.

VAN SUSTEREN: All right, before we get back to the number, you mentioned the fact of the size of the government going up. Let me tell you about a quote from Senator Harkin from your state. He says, "I can assure that the bill that gets to the president's desk will have a public option."

Is he right on that? Is there a public option that will be on the president's desk? Do you agree with Senator Harkin?

GRASSLEY: Well, I don't agree with him -- well, listen. I could agree with him that that can happen. I hope it doesn't happen. And for sure, it is going to be in the House bill, and it could be in the Senate bill going to the floor when they merge the Senate Health Committee bill with the Senate Finance Committee bill.

But Senator Harkin knows how I feel about this. I feel that a public option is going to lead to, as Barney Frank says, being a Trojan horse for a single-payer system like Canada has.

And we have think tanks like Heritage Foundation, which says 83 million people -- Luan Group says 120 million are going to be forced out of their employers provided insurance into a public program. And when you have that number of people forced into a public plan, it will not be long, you will not have any private health insurance.

The president will not be keeping his promise to the people that you can keep what you have if you want to, and you will end up with a single- payer plan like they have in Canada, and you'll have the rationing, the denial of care, the delay of care.

And you can get instances of this every day. It is not just my saying so. Just one example -- you have to wait three months for an MRI, as an example. You do not have to do that in the United States, and I don't think that we want our health care system to deteriorate because of rationing.

VAN SUSTEREN: Now, back to the Congressional Budget Office and this $829 billion. You say that 85 percent of people with insurance their premiums are going to go up. If it goes up a dollar no one is particularly alarmed. But the question is how much will it likely go up, because that's where people start to get concerned?

And secondly, how are we paying for this? Even if it's not $900 billion -- I mean, $829 billion seems a lot better than the $900 billion that we thought we might see today from the Congressional Budget Office, but where are we getting the $829 billion?

GRASSLEY: Ok, it will let me give you some figures. They will not be entirely right, but over $400 million from Medicare cuts. And that will scare seniors in this country.

It's coming from more than $400 million of an increase in taxes, like when employers have to pay a fee when their insurance does not meet the actuarial value that the bill calls for. You will have to pay for those people to get subsidies.

There is going to be a tax on Cadillac-type plants, the high-cost plans, 40 percent.

When an individual doesn't take insurance under an individual mandate -- in other words, the federal government in this bill says if you do not have health insurance and you're a family, you will pay $1,500 tax to the federal government because you are not buying health insurance.

And that kind of adds up to about half of the amount of money that is coming in as increased revenue.

So -- yes, go ahead.

VAN SUSTEREN: So that is only about half of the $829 billion about, and I realize these are just estimates.

Let me ask you about the numbers -- the $400 million that is going to come out of businesses or employers, I guess some attention should be on that, because that is where jobs are generated, and that, of course, brings us back to the state of our economy.

How much are these employers really going to feel the pinch because there is an awful high interest in making sure they feel they are thriving rather than feeling pinched?

GRASSLEY: Well, any employer of over 50 will be hit by that. It does exempt employers under 50, but it is a tremendous time to have -- a tremendously bad time to have this sort of tax on business because of the recession and because small businesses are the ones that create most of the new jobs in America.

VAN SUSTEREN: All right, the $400 million in Medicare cuts. What does that actually mean to an individual? You hear these giant numbers. What does that mean to someone who is 75 years old and has a health problem?

GRASSLEY: Well, for instance, $155 million will come from cuts in hospitals, as an example. So we have a difficulty maintaining hospitals because the federal government only pays 80 percent of the cost of Medicare, it will make it more difficult for those hospitals to operate, maybe some of them will have to close.

And having doctors in rural America is another big problem. When you cut these things in health care delivery, you may have inadequate care for seniors that are in those areas.

And then another area where $123 billion is coming from, Medicare Advantage, and 20 percentage of the seniors are in Medicare Advantage. And that $123 billion provides extra services that you cannot get in traditional Medicare.

So they are going to see their premiums go up or their benefits go down.

VAN SUSTEREN: In terms of the taxes going up, I realize the taxes going up in the Cadillac plans. That's anticipated or at least right now being discussed in terms of these bills. What about personal income tax? That is not going up?

GRASSLEY: No, except for the IRS is going to enforce this individual mandate.

So if I am a person that decides I do not want to buy the mandated insurance that the federal government says every individual has to buy, then I will have to pay $1,500 to the Internal Revenue Service, which is not really an income tax, but is still really a tax for not having insurance. So that is where that's involved.

But not the income tax rates are involved. But you're going to have a tax on the insurance industry, and that is going to be passed through as increased premiums.

VAN SUSTEREN: In terms of the Medicare Advantage that is going to take cuts, who finances the Medicare Advantage? Is that financed by the government or somebody buying that extra protection?

GRASSLEY: Well, you take different plans, make bids, and if they win the bids, then they get the people who come into those plans. They have to sell memberships.

And there is paid more for Medicare Advantage because there is more benefits and they of wellness programs and things like that. And when this cut goes through, those benefits are going to be cut or there will be an increase in premiums for those people.

(END VIDEOTAPE)

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