This is a rush transcript from "The Journal Editorial Report," July 18, 2009. This copy may not be in its final form and may be updated.



PRESIDENT BARACK OBAMA: We will pass reform that lowers cost, promotes choice and provides coverage that every American can count on, and we will do it this year.


GIGOT: President Obama's health care scramble among falling poll numbers and Democrats in disarray. Will he get the bill he wants when he wants it?

Plus, your stake in the overhaul. Can you really keep your current insurance plan? Will the middle class get stuck paying the bill? We're breaking down the policy and the politics of health care on this special edition of "The Journal Editorial Report."

Welcome to "The Journal Editorial report." I'm Paul Gigot.

From a prime-time press conference to a town hall meeting in Ohio, it was a full court press by President Barack Obama to sell his health care reform plan to a skeptical republic. A new FOX News Dynamic opinion poll shows half of all Americans, 45 percent, think the quality of their family's health care would be worse under the proposed reforms, 29 percent think it would be better. Are they right to be worried?

Former New York Lieutenant Governor Betsy McCoy, is a patient advocate and chairman of the Committee to Reduce Infection Deaths.

She joins me now.

Good to have you back again.


GIGOT: You wrote this week that seniors could be the biggest losers under this health care reform plan emerging in Congress, how so?

MCCOY: Seniors bear the brunt under the House bill and the companion Senate bill produced largely by Senator Kennedy's staff for several reasons. One, they will pay for with it cuts to Medicare. The $1 trillion to $1.6 trillion price tag on these bills will be paid for by tax hikes. Everybody has heard about those. By at least $500 to $550 billion in cuts to Medicare.

GIGOT: Estimated over 10 years.

MCCOY: That's right. That's about a 10 percent cut in the Medicare budget. At the same time that Medicare enrollment will be increasing 30 percent as the baby boomers reach Medicare age.

GIGOT: This is fascinating. How can they cut Medicare spending because doctors are already complaining they get reimbursed by Medicare only 20 percent or 30 percent less than the real cost of their procedures. Hospitals as well.

MCCOY: It is going to mean reductions. hip replacements, knee replacements, bypass surgery, angioplasty, the major proceed there's have enabled this generation of the elderly to avoid disability, avoid deteriorating in nursing homes, and instead lead active lives.

GIGOT: How is that going to happen? I mean, doctors are not going to stop prescribing these things. How is that — what is that mechanism...


MCCOY: Well, they will have to. Tucked into the stimulus package that was signed into law February 17th, was a provision for computers to be in doctors' offices and hospitals at bedsides, computers that would deliver protocols to doctors electronically on what the government deems cost- effective and appropriate care. There will be penalties built-in for doctors who are not meaningful users of this system. In March, the president appointed Dr. David Blumenthal, national coordinator of health information technology, and he's going to oversee insuring that doctors obey these protocols. In fact, on April 9th, in the New England Journal of Medicine, he wrote an article describing how he's going do it. He said he doesn't anticipate some push-back billion from doctors who don't like losing their economy over what is good for patients.

GIGOT: I would think push-back too from Congress. Do you think is something the American public is going to stand for? Won't Congress push back?

MCCOY: That's why Peter Orszag, head of the office of Management and Budget, again, part of the White House, went to Congress earlier this week and asked for permission to remove these decisions from Congress. He asked Congress to delegate the authority to make these decisions about what Medicare covers and how doctors are paid, instead to a body outside of Congress, either MedPAC, a body that already exists, their advisory board, or a council created within the White House.

GIGOT: This MedPAC idea, the president hit it at his press conference this week. This would be a group of council of wise men and women, medical experts presumably, who would propose protocols for spending — for saving costs in particular, trying to be more effective, they say, with medical procedures, then present those as a package to Congress, which could vote up or down. What is wrong with that? Why shouldn't we turn this away from these political types in Congress and give it to a panel of experts?

MCCOY: Congress is accountable, and seniors would certainly raise a lot of fury if suddenly they could not avoid the crippling affects of arthritis by getting a knee replacement. The president likened this proposal to a base closing commission so it would be immune from popular impacts.

I don't believe we can count on the doctors that would be appointed to make the right decisions, for example, the doctors that the president has already chosen to be his chief health advisers are ardent advocates of limiting care for the elderly. Dr. Ezekiel Emanuel, for example, the brother of chief of staff, Rahm Emanuel, a highly educated man who has written extensively on his views that the elderly should get less care, that Americans are too enamored with high-tech care, and that people who have incurable illnesses, and he uses specifically the example of dementia, should not be guaranteed health care because they no longer contribute to society. These are views that most of us don't share.

GIGOT: We certainly need a debate about this.

Let's get another clip of the president on this point.


OBAMA: Overall, our proposals will improve the quality of care for seniors and save them thousands on prescription drugs, which is why the AARP has endorsed our reform efforts.


GIGOT: Why would the American Association for Retired Persons oppose this if what you say is in fact going to happen?

MCCOY: I'm shock at AARP's behavior. To me, they've betrayed seniors. I'm amazed seniors continue to pay their dues to the AARP. The AARP says they support universal coverage. Well, seniors already have that. And they have so much to lose under this.

One of the other things very dangerous to seniors in this legislation is the dramatic shift in funding for — away from specialty medicine to primary care on the misconception that Americans over use specialists and drive up health costs in the process. Study after study showed that people with heart disease who rely on primary care medicine are frequently misdiagnosed and incorrectly treated.

GIGOT: Cardiologists are better at heart care.

MCCOY: That's right. They are readmitted to the hospital far more often and they die sooner.

GIGOT: All right, Betsy. Thank you so much.

We're going to have much more.

When we come back, the House and Senate health care plans up close. What exactly is in the proposed legislation? How do they plan to pay for it? Our panel breaks it down and answers the big questions, next.



OBAMA: If you have health insurance, the reform we are proposing will provide with you more security and more stability. It will keep government out of health care decisions, giving you the option to keep your insurance if you are happy with it.


GIGOT: Perhaps the biggest concern for many Americans, being able to keep their current plan. President Obama says you can. But for how long?

We are back with Betsy McCoy. Also joining the panel, Wall Street Journal assistant editorial page features editor, James Freeman; senior editorial page writer, Joseph Rago; and Washington columnist, Kim Strassel.

All right, Joe, let's take them one by one. Let's start with the claim you will be to keep plan if you want to, is that true?

JOSEPH RAGO, SENIOR EDITORIAL PAGE EDITOR: I don't think so at all. First, you'll have a government insurance option like Medicare, but open to the middle class, that will pay doctors and hospitals sub-market rates, undercut private insurers. Private insurers will be regulated to within an inch of their life basically. Then you have the government mucking around with some of these rules that allow large employers to offer coverage to their employees.

GIGOT: And avoid state mandates and state rules because they have national plans.

RAGO: And a lot of federal rules too. Now this will be subject to a health choices administration that will gradually make employer-sponsored coverage work just as poorly as the rest of the insurance markets.

MCCOY: It is not a matter of speculation or prediction. The letter of the bills say that you will be able to keep your existing plan. You will be forced to move into a managed care plan that restricts your access to specialists and diagnostic tests.

If you look on the Senate bill, page 15 through 17, or in the House bill — excuse me the House bill, 15 to 17, the Senate bill, 56 to 58, you will see that you are required to enroll in a qualified plan. That means a plan that the government deems appropriate. And it has to be managed care. That's spelled out in the bill. If you get your insurance through your employer — if you get your insurance through your employer, as most Americans do, your employer will have a grace period in which to move you into managed care. If you buy your insurance individually, through a broker, for example, you won't have a grace period. As long as anything changes in your current contract, your co-pay changes...

GIGOT: So once the contract changes, then you go into this government — new government regulation, OK.

MCCOY: So it would be in a few months, right, because usually those things change every year.

GIGOT: What about the fact that you have union plans that are done as a product of collective bargaining, done in good faith that often very good health care. Are they really going to abrogate these contracts?

MCCOY: Some of the union plans are exempted under these bills. But most employers will only have the grace period to move their employees, all of them, into these lower grade HMO's, because the point of these bills is not to just cover the uninsured. It is to limit everyone's health care consumption. And using managed care will do that. And to insure that everyone has the same health care experience regardless of ability to pay. They don't want executives or people who go out and buy more expensive plans to have a different health care experience.

GIGOT: James, let me ask you about this public option. The president says, look, all this is going to compete with the private plans, to keep them honest. The insurers are making a lot of money right now. We need to keep them honest.

JAMES FREEMAN, ASSISTANT EDITORIAL PAGE FEATRUES EDITOR: Right. I think the beauty of this is we don't need to guess or estimate or just posit at what might happen because the people of Massachusetts since 2006 has been running the experiment for all of us and we can go to school on it.

GIGOT: Thanks to Mitt Romney, former Republican governor.


FREEMAN: That's right.

GIGOT: Or no thanks to Mitt Romney.

FREEMAN: And it's very clear what happens. Private insurance goes away, more people go on the public plan, costs explode, more costs go onto small business and people lose their jobs or get salary freezes.

MCCOY: That's a very important point that more and more people are losing their jobs in Massachusetts. I was reading about an employer just today, who had to close up part of her business, close one office, sell a couple of trucks, and lay-off an employee in order to meet the government requirement to pay for health insurance.

GIGOT: Kim Strassel, let me ask you about the cost question. That's important. CBO said — the president of the Congressional Budget Office said the House proposal will not save money. But can you save money overall, somehow, if you cover more people, if you cover 44 million more people? How do you save money?

KIM STRASSEL, WASHINGTON COLUMMNIST: The argument that the White House has made is if you did that and you had more competition and you managed to get more efficiency across the board, you could lower costs in the long term. The CBO has blown that up. They've done an initial analysis of the House bill. It says that there's going to be about $820 billion in new taxes, most on families and small businesses. Even with that, they are still going to be another $250 billion of more deficit spending over the next 10 years. Even then, that doesn't count in the fact that both of these bills, bear in mind, are designed to hide a lot of the costs that are going to come up front, and only have them start to kick in toward the end of the bill. What we are looking at is trillions in new spending over the upcoming years.

Joe, I'm going to give the House Democrats credit for one thing, by putting this tax increase on the table, a 5.4 percentage point surtax, they've showed people this is not going to be a free lunch, that somebody is going to have to pay for it. They claim it is only going to be the wealthy, to the tune of $550 billion. But this thing is going be enormously expensive.

RAGO: Yeah, all government health programs start small and grow over time.

GIGOT: That was the experience with Medicare.

RAGO: Experience with Medicare. And this is sort from the same playbook. On the taxes, you know when you've got some states, California, New York, with top rates pushing 50 percent...

GIGOT: Sixty percent, higher than Sweden!


Federal, state combination, or in Oregon, California, New York, New Jersey, top marginal tax rates, higher than almost all of Europe.

RAGO: The truth is you can't finance health care for 98 percent of the population with tax increases on 2 percent.

GIGOT: On 2 percent of the population.

RAGO: Eventually this is going to have to reach down to the middle class. There's just no way to make the money work.

GIGOT: All right, thank you all.

Still ahead, the politics of health care overhaul, amid the president's falling numbers and Democratic disarray. All eyes are on Republican Senator Chuck Grassley. We'll tell you why when we come back.


GIGOT: We'll get to the Republicans in a minute. But as the president touts his health care overhaul and his plan to tax the rich to pay for it, he's finding he can't even count on some members of his own party. There's the so-called blue dog coalition that met with President Obama this week at the White House. And some freshmen Democrats from the nation's wealthiest congressional districts are balking at the plan as well.

All right, Kim, what's the problem the president has with these Democrats, or maybe what problem do the Democrats have with his plan?

STRASSEL: The problem he has is that he stepped back and let some of the most liberal members of Congress write the bills that have come out of both the House and the Senate, so Ted Kennedy in the Senate and Nancy Pelosi and Henry Waxman in the House. These bills that have come out with these soaring taxes, these business mandates, individual mandates, the lack of choice for consumers have scared a lot of blue dog and freshmen Democrats.

Remember, Mrs. Pelosi's margin was based on winning a lot of seats in very conservative districts over 2006 and 2008. These guys do not want to go home and say they voted for a bill that looks like this. So he cannot get his caucus together.

GIGOT: So what the president is saying now to get the blue dog Democrats on board, who care a lot about costs, is he's talking about MedPAC, which Betsy and I talked about before, which is this idea that a council of wise men and women will propose things that would keep costs down.

Is that kind of cover going to work for them, Joe?

RAGO: It might. The blue dogs are always looking for a reason to roll over...

GIGOT: Roll over and vote for it, yeah.

RAGO: ... and vote for what they said they weren't going to.

The larger issue is that Congress tries all sorts of schemes like this all the time and it never happens, so spending continues to rise. The only thing that would prevent that from happening is when the liabilities are just so large that they are swamping the entire federal budget.

MCCOY: I predict there will be real rebellion to the decisions of this MedPAC commissioner other commissions because baby boomers are not going to want too live their later years in pain.

GIGOT: But will that happen before this passes, Betsy? That's the question.


GIGOT: The blue dogs are looking for political coverage and the president is trying to give it to them by saying we have this commission that will solve everything.

MCCOY: I'm curious about why the Republicans have not much more aggressively proposed a fix-what's-broken-leave-the-best alone alternative that reaches out to provide coverage for the 24.7 million or so people who are involuntarily uninsured, that can't afford a health care plan, they earn too much to be eligible for Medicaid or SCHIP. We could take this issue of the uninsured off the table in a compassionate way and say, we've fixed the problem.

GIGOT: But the Republicans have proposed some ideas like that through a refundable tax credit, for example. They haven't gotten a lot of publicity because everybody is focused, rightly so, I think, on what the Democrats who run Congress and the White House are proposing. So there are other ideas out there that could — you're saying solve this problem in a more humane and less costly way?

MCCOY: Yes, it would cost $28 to $49 billion a year, depending on the level of coverage provided to uninsured individuals in this income group, lower, middle-income families who are struggling to pay for health insurance. And it could be implemented quickly, because in all 50 states, a debit card technology has enabled state governments to deliver purchasing power to families, even people who need it temporarily. And 22 percent of the uninsured are just in a temporary dilemma.

GIGOT: I think those are excellent points. But that is not going to happen right now because the president is focused on these current efforts that we've been describing. That's where the Republicans come in.

RAGO: Yes, he'll have to abandon them. These alternatives are going to start to get more information. Right now, his sales pitch is higher taxes, less care for the elder, and Washington is going to decide whether your kid gets a tonsillectomy. This is not a winner as a political sales pitch. These alternatives, using the tax code, fixes to encourage more people to get coverage are going to start getting more attention.

GIGOT: In the immediate term, as he's dealing — trying to get through this Congress, Kim Strassel, what you are seeing is the president really trying to work with some Republicans in the Senate, particularly Iowa Republican Chuck Grassley, senior Republican on the Senate Finance Committee, to get him to sign on with Senate Democrats and maybe other Senate Republicans to some kind of compromise they can then get through the Senate, get the 60 votes they need. They are looking for that Republican cover. What role do you think Grassley is playing?

STRASSEL: Up to now — and you are right, this is about cover. They need Grassley to bring along a handful of Republicans and reassure their conservative Democrats. The role he's playing is — I mean, Chuck Grassley is increasingly the guy who is going to blow up some of these bad ideas, and he has the power to do that by stepping back and saying no, or the guy who may become the Republican known for delivering the nation socialized health care. So he's really in the middle. He's been working hard with Max Baucus to try to get a compromise. We don't know what is happening in those negotiations. They now have an extension of time because the president has said he will step back and wait to see what happens after the August recess.

GIGOT: The president hauled in the CBO director, Doug Elmendorf, who had given that bad score that brought him in with a phalanx of White House aides. Was that subtle pressure?

RAGO: I don't think it was subtle at all.


It sort of puts LBJ to shame. I think what the Republicans really have to do now is kill this thing as it is, so that opens up the space for other alternatives. Otherwise, they are going to be providing a bipartisan gloss on what is really a terrible plan.

GIGOT: But Republicans can't kill it. Democrats have to kill it. If every Republican voted against this, it could still pass.

MCCOY: When Democrats go home they will hear loud and clear from their constituents that people don't want to give up the plans they have now for the rigors of managed care. They rejected it in the 1990s, and they want to stick with the health plans they have.

GIGOT: All right, thank you.

When come back, our "Hits and Misses" of the week.


GIGOT: Time for our "Hits and Misses" of the week.

Kim, first to you.

STRASSEL: I want to give a hit to an American car company that turned a $2.3 billion profit in the second quarter.

GIGOT: Here, here.

STRASSEL: An American car company that increases market sharing in Europe and America. I'm speaking, of course, of Ford, who also happens to be the one American car company who did not go to the government begging for money or a bailout. Maybe this shows the disciplines and the pressure of the private market are the best way to get a company on the right track after all.

GIGOT: Alright.


FREEMAN: This is a miss to New Jersey's political class. New Jersey is so close to being the best state in the country.


Unfortunately, we just have these politicians who seem addicted to high tax rates and bribe taking. And so this is a miss this week. Not proven guilty yet, but more charges against New Jersey politicians for corruption.

GIGOT: I recommend this book the "Soprano State" by a couple of New Jersey reporters, detailing a lot of the stuff.

All right, Joe?

RAGO: I'd like to give a hit to the Bethel Center for the Performing Arts in upstate New York, which was built on top of the site where Woodstock was held in 1969. I was up there last weekend and what used to be a vast hippie wasteland has been converted into this very commercial place, very well manicured. And all the beer and food vendors are these major corporations. I would like to give a hit to the baby boomers for dumping everything they used to believe in, which was always pretty silly to begin with.


GIGOT: James, you were at Woodstock, weren't you?



GIGOT: And remember, if you have your own "Hit or Miss," send it to us at JER@FOXnews.com.

That's it this week's edition of "The Journal Editorial Report." Thanks to my panel and to all of you for watching.

I'm Paul Gigot. We hope to see you right here next week.

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