This is a rush transcript from "On the Record," February 17, 2012. This copy may not be in its final form and may be updated.
GRETA VAN SUSTEREN, FOX NEWS HOST: In a grand ceremony in Boston, Governor Mitt Romney signed the Massachusetts health care law. That was in 2006. Now six years later in 2012 he is fighting attacks on his signature legislation. And one of the burning questions, who really paid for the Massachusetts health care plan? Turns out it was you, the taxpayer. Not just the Massachusetts taxpayer, but the nation's taxpayer helped out. That's right. Even if you don't live in Massachusetts, you helped pay for it. How did that happen? We asked former Health and Human Services secretary, Tommy Thompson.
VAN SUSTEREN: I want to take you to January 14, 2005. That was your last day as secretary of HHS, right?
TOMMY THOMPSON, FORMER HEALTH AND HUMAN SERVICES SECRETARY: That is correct.
VAN SUSTEREN: You had a very important meeting that day with Governor Mitt Romney of Massachusetts, then governor, and Senator Edward Kennedy, U.S. senator from the state. Tell me what happened, what the purpose of that meeting was.
THOMPSON: The purpose was the see whether or not I would approve a waiver for the state of Massachusetts to try something new in healthcare. And it's also the way that I was able to when I was governor get welfare reform started. I know President Clinton and Newt Gingrich take credit for it, but it was started in Wisconsin. And I did the same thing in Wisconsin getting a waiver from then Secretary Shalala.
VAN SUSTEREN: Did any other state get that particularly waiver?
THOMPSON: Massachusetts is the only one that asked for the waiver. That's the way the waiver process is. A state comes in with an idea, an innovative idea, and it has to get approval to waive federal laws to do something different. That is what Ed Kennedy, Senator Kennedy, and Governor Romney wanted to do.
VAN SUSTEREN: All right, it's reported as being a two-hour meeting. Were you hard to convince?
THOMPSON: It was a meeting, but also not only on that waiver. It was also going away party put on by the staff. So I was called away. And Ted Kennedy came up and also spoke at the going away party by all of the staff. So it was not all two hours on that waiver. It was about a 45-minute discussion on the waiver.
VAN SUSTEREN: All right, as I understand it, correct me if I'm wrong, is that as a result of the waiver was it about $583 million went to the state of Massachusetts to help them with their healthcare?
THOMPSON: No, it was $583 million that was already in the state of Massachusetts that the state of Massachusetts had saved other federal programs and wanted to use that money for trying something new on healthcare, the same way I was able to save money under the welfare by changing it and went to Donna Shalala and got waiver for healthcare reform in Wisconsin.
VAN SUSTEREN: If you hadn't given the waiver, what would have happened to that $583 million?
THOMPSON: That would have gone back to federal treasury.
VAN SUSTEREN: So that was something they obviously wanted to hang on to?
VAN SUSTEREN: No other state came and asked for the same sort of deal.
THOMPSON: No other state asked for a deal like that. I was very big on waivers. I always believed that states should have the opportunity to try something new. That is where the laboratories of democracy. That's where we get real new innovative ads. We did that in Wisconsin. I was really the forerunner of the waiver process. I have more waivers any other governor in Wisconsin and Massachusetts applied for a waiver. And I was very big on giving states the opportunity to try something new.
VAN SUSTEREN: Did any other state as you recall while you were secretary actually give money back to the federal government? That $583 million is not insignificant sum. Was money coming in the treasury from the other states?
THOMPSON: Well, it depends whether or not the states were able to save money. This is money that was saved from federal programs that they were going to use for new programs. That is how it came about.
VAN SUSTEREN: Other states --
THOMPSON: Other states had not saved the money or applied for it, Greta.
VAN SUSTEREN: Why was Massachusetts able to save the money? Going back to 1997 they had been getting, Senator Kennedy worked with then Governor Wells.
THOMPSON: There was a program called Disproportionate Share that the state of Massachusetts was very successful in getting underway. The United States Senate and the United States House tightened the rules and the laws on Disproportionate Share. And they want to take money saving on the Disproportionate Share and use it for healthcare. That is how the state of Massachusetts was able to get that money.
VAN SUSTEREN: All right, for lack of better words, but kind of, is it fair to say that going back to 1997 that Massachusetts had sort of a special deal? From -- no?
VAN SUSTEREN: Going back to '97?
THOMPSON: I would say at that time from 1997 up until about 2004, I would say about 22 states had the same kind of deal.
VAN SUSTEREN: All right. So then, senator --
THOMPSON: I'm not exactly sure on that.
VAN SUSTEREN: Give --
THOMPSON: It was about two dozen states.
VAN SUSTEREN: The reason I am asking is as I see it, this decision was very influential, the decision that you made with Senator Kennedy and Governor Romney at the time was very instrumental in Massachusetts being able to do their healthcare reform. Is that -- you agree?
THOMPSON: That's correct.
VAN SUSTEREN: And the money they used was money that they had saved, with the federal funds so they were saying can we hang on to this money.
THOMPSON: That is correct.
VAN SUSTEREN: And without that money they could not have done their healthcare as they did it. It would result in a raising of taxes or some other --
VAN SUSTEREN: OK. And they would not have had that money but for going back to about 1997 when Senator Kennedy and then Governor Wells met with Clinton administration and was among the 22 states that got that Disproportionate Share.
THOMPSON: That is correct.
VAN SUSTEREN: So basically the other states do the math essentially a little bit funded what has happened in Massachusetts, their health care.
THOMPSON: Well, we all did. All of the states did. This is all federal dollars. You don't know where the federal tax dollars are going. But the federal dollars went to Massachusetts, but Massachusetts saved money. And then they said let's try something else.
VAN SUSTEREN: The money they saved was from the 22 state deal to begin with.
THOMPSON: Well, it's from Disproportionate Share, which was an allowance that federal government allowed states that had a lot of individuals, a lot of poor people applying for health care and was not able to afford it. And the federal Congress allowed them to apply for it.
VAN SUSTEREN: It seems to me, though, that to those who are talking about the success of Massachusetts health care program, it would not be financially solvent but for health of the federal government.
THOMPSON: That is correct. But you can make that same argument about any federal program.
VAN SUSTEREN: Right. But if you expand it to a national health care program we don't have outside source to fund the national health care that the federal did to fund Massachusetts.
THOMPSON: That is correct.
VAN SUSTEREN: So I suppose it wouldn't fair to say the success of Massachusetts could be seen as success of the United States.
THOMPSON: Absolutely not. And it was a completely different program.
VAN SUSTEREN: And in terms of funding Massachusetts, the seed money came from everybody else.
THOMPSON: That is correct, from the federal taxpayers.
VAN SUSTEREN: Since the $583 million, I realize you're no longer the secretary, are they still getting help from the federal government for health care program?
THOMPSON: I'm sure they are.
VAN SUSTEREN: To a greater extent than other states would be?
THOMPSON: I'm not sure about that. I don't know. This was a pilot program to allow state of Massachusetts try something new in health care, the same way I was given the same permission from the federal government to try something new in Wisconsin for welfare reform.
VAN SUSTEREN: To the extent that anyone says Massachusetts was a health care program and successful because it didn't require raising taxes, be a little bit of a stretch in my mind if we get funds from the federal taxpayers to fund it, and yours or not?
THOMPSON: I think it is.
VAN SUSTEREN: Because the rest of us funded it?
THOMPSON: Federal taxpayers did. Sure. But that's what you do when you want to try something new. You look at ways to fund a new program. And that is what the federal government and the states did. That's where we set up constitution of states right and allow states to be laboratories of democracy. We wouldn't have welfare reform if I didn't have the welfare waiver.
VAN SUSTEREN: If Massachusetts, if we tried Massachusetts in every state, would we be able to do it financially, juggle it, give states their seed money?
THOMPSON: I don't think so. That's why the Obamacare law is not going to be able to stand the test of fiscal sanity. That's why the Obama laws has got to be repealed.