This is a rush transcript from "On the Record," November 4, 2009. This copy may not be in its final form and may be updated.

GRETA VAN SUSTEREN, FOX NEWS HOST: The GOP has hammered the House Democrats' health care bill, and critics have fired back at Republicans, Oh, yes? Do you have a better idea? Well, today House Republicans say they do. They officially released the Republican health care reform bill. So what's it all about?

Republican congressman Mike Pence joins us. Good evening, sir.

REP. MIKE PENCE, R - IND.: Good evening, Greta.

VAN SUSTEREN: So what is the Republican health care reform bill, and how is it different than what the Democrats are proposing?

PENCE: Well, the Democrat bill, all 1,990 pages of it, with hundreds of billions of dollars in taxes and mandates and bureaucracy, is really, we believe, a government takeover of health care that's driving toward their goal of what they call universal coverage.

Republicans believe we've listened to the American people and heard that the real concern among the American people is the cost of health insurance. And so the bill that's on line today -- there's a one-sheet version of it, or you can read all 219 pages, Greta. What we do is we allow people to purchase health insurance across state lines. We allow groups of employers to purchase health insurance on a nationwide basis, the way the big corporations can. We pass medial malpractice reform to lower the cost of health care, end defensive medicine and junk lawsuits. And then we use those savings to strengthen those insurance funds at the state level that will cover preexisting conditions for Americans. And so our bill is intended to lower the cost of health insurance, rather than growing the size of government, and we think it's going to resonate with millions of Americans.

VAN SUSTEREN: All right, let me start first with the medical malpractice reform. In your particular bill, are you likewise limiting the legal fees on both the plaintiffs' lawyers and the defense lawyers? Because I don't think there's any possible way that you can have true reform unless you put the lid on both. Typically, there's only a lid put on one side. Do you put it on both sides?

PENCE: Well, we're talking in the bill -- you can look at the details with your extensive legal background. We're talking in the bill about capping punitive damages. When you look at theses massive jury awards in medical malpractice cases, the hundreds of millions of dollars in punitive damages, that's what's driving up people's health insurance premiums. And the doctors I talk to back in Indiana tell me that it's -- it's essentially the fear of litigation that causes many doctors to prescribe, you know, more tests and more treatments than they believe are absolutely necessary. It's called "defensive medicine."

So yes, we're advocating those kind of caps, Greta, but it's all, we believe, a part of a long-term strategy to lower the cost of health care, lower the cost of health insurance, and again, use those savings to cover preexisting conditions in the state funds that exist today.

VAN SUSTEREN: All right, my guess is, though, the punitive damages -- that scares doctors and they may do defensive medicine as a result, but that in reality, that punitive damages are rarely awarded, that the bigger problem is -- in some ways, is that the inability of the two sides to really look at a problem and see if it should be resolved -- and I really think that if you do any reform, you got to put the cap on lawyers for sides so you make them sit down and evaluate fairly and stop scaring the doctors.

PENCE: Well, you know, it's a terrific point, and it's one of the deficiencies of the Pelosi health care bill, Greta, is that they actually make reference to medical malpractice reform. They create some state grants. But then they rule out states like Indiana or California that already have caps in medical malpractice cases. I mean, really -- it really works a hardship on states that have tried to bring about reasonable litigation reform in the area of the practice of medicine. And so they just talk a little about it. They nod at it.

One of the centerpieces of the Republican alternative, which you can read all about it, Healthcare.gop.gov, is medical malpractice reform, along with letting people purchase insurance all across this country.

VAN SUSTEREN: All right, what's your cost? And will this -- and how many more Americans do you anticipate being covered by your Republican proposal?

PENCE: Well, as I stand here with you right now, I'm not sure the CBO cost is yet out, but we'll be talking about that. I think it's going to be a very pleasant surprise for Americans that are troubled about this $1.3 trillion government takeover that Democrats are moving through the House. I think the CBO number is going to be rather impressive. And I won't preempt that. I'll let the Congressional Budget Office describe that for you. But your second question was, again?

VAN SUSTEREN: How many people do you expect to be covered, how many more people, with your...

PENCE: Right. Right. Thank you for that. You know, Democrats are trying to get at this business of universal coverage through mandates, through bureaucracies, through taxing people that don't purchase health insurance and creating a new government-run insurance plan. We believe you get at the coverage issue by lowering the cost of health insurance. I don't know too many small business owners back in Indiana that don't want to offer health insurance for their employees. They just can't afford it.

So Republicans, by focusing on the cost of health insurance, believe that we are going to take our country in the direction where -- where we also deal with the tens of millions of people that -- that -- and employers that struggle with providing insurance.

VAN SUSTEREN: All right, here's a novel idea. Have you marched your bill up to Speaker of the House Nancy Pelosi to have her take a look at it? She may see things that she finds appealing, or you might find some of her ideas appealing. Can that be done? Can you -- can you talk a little bit between the two sides?

PENCE: You know, members of Congress, despite what it looks like on television, actually talk across the aisle all the time. And I believe it would be possible for us to move in the direction of the kind of health care reform that Republicans are talking about. I think Senator Ron Wyden over here on the Senate side actually has a bill that allows people to purchase health insurance across state lines.

But it's all going to have to begin with stopping this freight train of big government that is the Pelosi health care bill. We've got to stop this bill in its tracks. Then I think this conversations can begin, and we can begin to work together in a way that, on an incremental basis, pursues the kind of reforms that'll really lower the cost of health insurance for the American people without permanently growing the size of government.

VAN SUSTEREN: Congressman, thank you, sir.

All right here's something you viewers might not know. Not every Democrat supports the Democratic House health care bill. Does House Speaker Nancy Pelosi have trouble within her own party?

Democratic congressman Gene Taylor, a Blue Dog Democrat, opposes the Democratic health care bill. Congressman Taylor joins us. Good evening, Congressman. And what's your -- what's your beef wit your party's bill?

REP. GENE TAYLOR, D - MISS.: Well, Greta, I -- my beef is that the nation, you know, just nine years ago was about $5 trillion in debt. George Bush led us to -- with the Republican Congress doubled the national debt. In fairness, the Obama administration and Congress have made it even worse, and so as we bump up against a $12 trillion national debt, and with obligations to our military retirees, to our veterans, to people already on Medicare, people on Medicaid, I just don't think our nation needs to be making any new promises when we're having a hard enough time keeping the promises the nation's already made.

VAN SUSTEREN: Well, you must be...

TAYLOR: In regards to health care.

VAN SUSTEREN: You must be a very unpopular guy in your caucus.

TAYLOR: I don't know. I think a lot of people know that I'm saying - - what I'm saying is the truth and that, you know, there are some things we ought to be doing. Number one, we could repeal McCarran-Ferguson and get real competition in the insurance industry. That's something that would save everyone some money. We could repeal the so-called Tauzin language that on the Medicare Part D actually keeps our nation from using our huge purchasing power for getting a better price on those prescription drugs that we buy through that Medicare prescription drug benefit plan.

And lastly, we -- for those things our nation buys, we could do a better job of using generics. A typical generic is about one tenth the cost of the name- brand product. So whenever a doctor thinks it makes sense for the patients, we ought to be buying generics. And right now, about two thirds of what Medicare buys are generics. That means there's a third that are name brands. Maybe we could save some money there. Same thing for Medicaid. Same thing for the VA hospital system. Both of those systems, only about half of what we buy are generics. And again, I think what we ought to be all about is seeing how we can save some money for the taxpayers while we provide a good service.

VAN SUSTEREN: Congressman, in terms of the Democratic bill, I imagine that the majority of your party in Congress must come to you and sort of try to twist your arm into having a very different viewpoint on this. How does that happen behind the scenes? Are you getting some -- are you getting phone calls or people knocking on your doors? Are you getting bad- vibed? I mean, what is it?

TAYLOR: No, Greta. I've been -- I've been fortunate enough to do this for 20 years now, and people know that when I say I'm going to do something, that's what I do. So I really have not been lobbied by the House leadership. In fact, I've been spending a lot of my time with my fellow members who are kind of going from pillar to post, saying, Look, we don't need this. We can't afford this. Let's think it through. Let's do some -- you know, some bullets that make the system better, rather than this -- this shot gun approach that, as Mr. Pence pointed out, is sneaking up on 2,000 pages that very few people fully comprehend.

VAN SUSTEREN: Does that mean that if you had your choice, you would vote for the Congressman Mike Pence Republican version of the bill and not the Democratic Congress bill that's being -- the House bill?

TAYLOR: Well, number one, Mike hasn't given me the 72 hours they keep talking about to read his bill. So we'll start with that. But I pointed out some things that -- you know, he's talking about letting people buy insurance across state lines.

I say repeal the insurance industry's anti-trust exemption. They're one of only two businesses in America that are exempt from the anti-trust laws. Everyone else has to compete. They should have to compete. No one else is in a position to call each other up and say, Hey, let's raise our prices, let's cut our services. They shouldn't be able to do it, either. So that's a common sense thing we ought to be doing. If it'll help my home owners in Mississippi get a better deal on their home owners' policies, on their car insurance and on their health insurance.

The other two things is, we can save a lot of money on those pharmaceutical drugs that we've already promised -- and again, already about 46 cents out of every health care dollar is taxpayer money. Most of that's federal money. But that is a substantial contribution towards the health care of Americans. And with a nation that is $12 trillion in debt, we just have to be very, very judicious with the new promises our nation makes.

VAN SUSTEREN: Congressman, thank you, sir.

TAYLOR: Thank you.


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